Order 2001-6-20 / OST-00-7181 /
OST-01-9185 / Order Granting Outside-The-Perimeter Slot Exemptions at Reagan
National / June 22, 2001
UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
Served: June 22, 2001
Issued by the Department of
Transportation on the 22nd day of June, 2001
Applications of
ALASKA AIRLINES, INC. AMERICA WEST AIRLINES, INC. AMERICAN
AIRLINES, INC. CONTINENTAL AIRLINES, INC, DELTA AIR LINES, INC. FRONTIER
AIRLINES, INC. NATIONAL AIRLINES, INC. UNITED AIR LINES, INC. VANGUARD
AIRLINES, INC.
Dockets OST-2000-7181 / OST-2001-9185
For exemptions from 14 C.F.R.
Part 93, Subparts K and S, pursuant to 49 U.S.C. § 41718(a), Special rules for
Ronald Reagan Washington National Airport (beyond perimeter slot exemptions)
ORDER GRANTING OUTSIDE-THE-PERIMETER SLOT EXEMPTIONS AT RONALD
REAGAN WASHINGTON NATIONAL AIRPORT
By this order the Department
grants the application of Alaska Airlines, Inc., for two slot exemptions at
Ronald Reagan Washington National Airport (hereafter "DCA') in order to
provide nonstop service between DCA and Seattle, Washington.
On April 5, 2000, the President
signed into law the Wendell H. Ford Aviation Investment and Reform Act for the
21st Century
(AIR-21). Among other things, AIR-21 liberalized slot and slot exemption access
at the four airports now subject to the provisions of the High Density Rule, 14
C.F.R. 93 Subparts K and S. Specifically, at DCA, new 49 U.S.C. §41718(a), as
added by Section 231 of AIR-21, provides that the Secretary shall grant 12 slot
exemptions to air carriers for the provision of nonstop air transportation
outside the
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1,250 mile
perimeter established for civil aircraft operations at DCA under 49 U.S.C. §49109.
AIR-21 directs the Secretary to distribute those 12
slot exemptions if the Secretary finds that the exemptions will (1) provide air
transportation with domestic network benefits beyond the 1,250 mile perimeter;
(2) increase competition by new entrant air carriers' or in multiple markets;
(3) not reduce travel options for communities served by small hubs airports and
medium hub airports within the 1,250 mile
perimeter; and (4) not result in meaningful travel delays.
On July 5, 2000, the Department issued Order 2000-7-1, which granted a total of 12 slot
exemptions at Ronald Reagan Washington National Airport (DCA) for services
outside the 1,250 mile perimeter to the following carriers: America West
Airlines, Inc., Frontier Airlines, Inc., National Airlines, and Trans World Airlines,
Inc.
Under the provisions of that order, Trans World was
granted two slot exemptions to provide nonstop service to Los Angeles,
California.
On January 10, 2001, Trans World filed for Chapter
11 bankruptcy protection and concurrently, American Airlines, Inc., proposed to
acquire substantially all of Trans World's assets. By letter dated January 23,
2001, the Department of Transportation informed American and Trans World that
the language of AIR-21 does not permit the two AIR-21 slot exemptions to be
transferred or conveyed. The letter further advised that, were Trans World to
cease to use the exemptions, they would be recalled by the Department. The
letter was placed in Docket 2000-7181.
On March 12, 2001, the Bankruptcy Court approved
American's bid for substantially all of Trans World's assets, over competing
offers. On March 15, TWA Airlines LLC, a wholly-owned subsidiary of American
and the entity that would acquire TWA's assets at the conclusion of the
bankruptcy proceedings, advised that TWA would cease to use the slot exemptions
as of the closing date in the bankruptcy case, an event the parties were
seeking to have expedited. Given the Department's intention to recall the
exemptions at that time, TWA Airlines LLC also applied for pendente lite authority to operate the Los
Angeles route until the Department could select a long-term replacement carrier
to use the exemptions. American thereafter completed its acquisition of Trans
World's assets.
1/ AIR-21 amended
the previous definition of "new entrant," and its statutory
applicability. Under the revised 49 U.S.C. § 41714(h)(3), as added by section
231 of AIR-21, the term "new entrant," for purposes of the slot
exemption provisions including those at DCA, means "an air carrier that
does not hold a slot at the airport concerned and has never sold or given up a
slot at that airport after December 16, 1985, and a limited incumbent carrier
as defined in subpart S of part 93 of title 14 code of federal
regulations." The latter term, again as amended by AIR-21, is defined as
an air carrier or commuter operator that holds or operates (or held or
operated, since December 16, 1985) fewer than 20 slots and slot exemptions at
the high density airport in question.
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By Notice issued April 3, 2001, the Department
invited proposals from eligible carriers for reallocation of the two slot
exemptions awarded to Trans World Airlines by Order 20007-1 to provide nonstop
service to DCA from airports beyond the 1,250 mile perimeter. The Notice
specified that applications were to be submitted by April 16 with comments due
by April 30. The Department also noted that due to the restrictions of AIR-21,
we may not be able to accommodate the slot times requested by applicants.2
By Order 2001-4-8, issued April 6, 2001, the
Department granted the request of TWA Airlines LLC for pendente lite authority
to operate the DCA-Los Angeles service formerly provided by Trans World pending
a final selection decision by the Department.
Below is a brief description of the carriers'
proposals and comments that we have received in response to those proposals.
See the Attachment for a much more detailed description of all the filings.
Alaska Airlines Inc.
Alaska requests two slot exemptions in order to operate
one daily round trip between Seattle and DCA with 120-seat B- 737-700 aircraft.
Alaska asserts that it would also provide Anchorage with the first one-stop DCA
single-plane beyond service, and that it operates a substantial network of
connecting services at Seattle and Anchorage. Alaska argues that the Department
found previously that proposals from new entrant carriers should be given
significant decisional weight and that Alaska is a new entrant carrier with no
service at DCA. The Port of Seattle and Northwest filed answers in support of
Alaska's application. Seattle argues that Alaska is the only new entrant carrier
in this proceeding and that selection of Alaska would bring competition to the
monopoly Washington-Seattle market. Northwest contends that Alaska's proposed
service provides two distinct advantages to the Northwest proposal that was not
selected last year-Alaska's new entrant status at DCA and the significant
network advantages of its Anchorage- Seattle-DCA service.
Other carrier applicants oppose Alaska's proposal,
arguing that the Department rejected a similar proposal by Northwest, in part
due to the limitations of Seattle's geographic location, and that Alaska has
not demonstrated a commitment to serve cities in the east. They further argue
that Alaska would use small aircraft, thus reducing the number of passengers
that could benefit from the service.
2 TWA's
allocated slot times for its nonstop DCA-Los Angeles service were in the 1100
and 1300 hour periods. 49 U.S. C. § 41718(c)(2) does not allow us to assign
more than two slot exemptions per one hour period, and most one hour periods
were fully subscribed by the Department's Notice dated August 2, 2000.
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America West Airlines, Inc.
America West requests two slot exemptions to operate one
additional round trip between Phoenix, and DCA using B-757 aircraft (190
seats). In the alternative, if the Department determines that preserving the
current DCA-Los Angeles is a primary public interest consideration, America
West requests that it be considered as an applicant for such service. America
West argues that an additional DCA-Phoenix frequency would enable it to be an
effective competitor at DCA, and that it is the only airline with both a large
network and low fares to compete with large incumbent carriers in multiple
Washington markets.
Other carrier applicants oppose America West's
proposal, arguing that it has already been granted more DCA slot exemptions
than any other carrier, that the Department has previously rejected America
West's request for more than four slots in the Phoenix-DCA market, and that its
proposal to serve the Los Angeles-DCA market should not be accepted since it
would prefer to provide additional service to Phoenix.
American Airlines, Inc.
American requests two slot exemptions to provide one
daily round trip between DCA and Los Angeles using B-757 aircraft (176 seats).
American argues that the reasons for selecting Los Angeles in the first
proceeding remain in effect, and that its request should be granted because its
significant presence at Los Angeles would allow it to best compete with the
largest Los Angeles carrier, United.
Other carrier applicants oppose American's request,
arguing that it already has a strong presence at Los Angeles and at DCA and
other Washington airports. As such, it is a dominant carrier in the Los
Angeles-Washington market and it operates substantial connecting service
between DCA and Los Angeles via within-perimeter hubs such as Dallas/Ft. Worth
or Chicago.
Continental Airlines, Inc.
Continental applied for two slot exemptions to provide
one daily round trip to Los Angeles with B-757 aircraft (183 seats). Continental
contends that its selection would duplicate the benefits ascribed to TWA's
award, i.e., Continental has a relatively small DCA presence and would provide
enhanced competition to the large incumbent carriers at both DCA and Los
Angeles.
Other carriers argue that in fact Continental has a
relatively strong presence at DCA but very few operations at Los Angeles,
seriously limiting its ability to provide network benefits.
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Delta Air Lines,
Inc.
Delta requests two
slot exemptions to provide one daily round trip to Salt Lake City using B-757
aircraft (183 seats). Delta argues that its proposal would best satisfy the
objectives of maximizing domestic network benefits, that its Salt Lake City hub
is well located for low circuity DCA connecting service for numerous
communities, and that it would provide the best and strongest competition for
American and United. The Utah Air Travel Commission and the Salt Lake City
Department of Airports (Utah and the Salt Lake City Parties) filed answers in
support of Delta's application. They argue that Delta's strong Salt Lake City
presence and the excellent geographic position of Salt Lake City for low-circuity
routings to DCA make Delta the superior choice.
The other applicants
have stated that Delta already is a large operator at DCA and that most of the
markets that could connect at Salt Lake City already have the ability to
connect one-stop to DCA via one of Delta's interior hubs at Atlanta or Cincinnati.
Frontier Airlines, Inc.
Frontier requests two slot
exemptions to operate one additional round trip between Denver and DCA using
13- 737-300 aircraft. Frontier states that its DCA-Denver service authorized by
the Department has been successful, that it operates at a significant
disadvantage compared with other carriers operating more flights in the
Washington-Denver market, and that it could offer better service and compete
more effectively with a second daily round trip. Frontier also argues that due
to increasing airline industry concentration it should be awarded the two
available slot exemptions as a way to improve airline competition generally.
The City and County of Denver filed an answer in support of Frontier's
application. Denver asserts that Frontier has substantially improved
competition at Denver, but the selection of Frontier's proposal is critical to
the full development of Frontier's DCA-Denver service and Frontier's continued
growth generally as a new entrant carrier.
Parties opposing the Frontier
application argue that due to Frontier's previous selection for DCA-Denver
service, an award to Frontier in the instant case would add no new communities
receiving first-time, single-connecting service to DCA. They further state that
Frontier is no longer a new entrant at DCA, that Frontier's small aircraft size
provides only limited benefits, and that Frontier has only a modest hub at
Denver.
National Airlines, Inc.
National requests two slot
exemptions to operate one additional daily round trip between Las Vegas and
DCA. National argues that the Department gave significant weight to improving
competition and providing additional service alternatives by awarding DCA slot
exemptions to carriers with only a limited DCA presence, and that the same
reasoning remains valid for an additional service award to National.
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Other carriers-objected to National's proposal on
the grounds that the only realistic connecting opportunities, i. e., network
benefits, would be to Los Angeles and San Francisco, cities that already have
significant service to Washington, including substantial connecting service to
DCA.
United Air Lines, Inc.
United requests two slot exemptions to operate one
round trip between Los Angeles and DCA with 182-seat B- 757 aircraft. United
contends that maintaining the DCA-Los Angeles service should be given priority
since Los Angeles has the largest population, greatest commercial center and
largest connecting hub of any beyond-perimeter community, and that grant of its
request would not only allow the benefits of TWA's DCA-Los Angeles service to
be preserved, but also to be significantly expanded.
Other carrier applicants oppose United's request,
arguing that it already has a strong presence at Los Angeles and at DCA and
other Washington airports. As such, it is a dominant carrier in the Los
Angeles-Washington market and it operates substantial connecting service
between DCA and Los Angeles via its within-perimeter hub at Chicago.
Vanguard Airlines, Inc.
Vanguard requests two slot exemptions to provide one
daily round trip between DCA and Kansas City with beyond service to Los
Angeles. Vanguard acknowledges that Kansas City is within the perimeter, but
asserts that a literal reading of AIR-21 allows for consideration of its
application because its Kansas City hub would provide network benefits to
passengers and communities beyond the perimeter. Vanguard argues that its proposed
service would bring low fares to the beyond perimeter markets that Vanguard
serves from Kansas City.
Other carriers argue that Vanguard should be
dismissed outright on the grounds that Kansas City is within the 1,250
perimeter.
We have decided to select Alaska Airlines for
nonstop service to Seattle. Our selection is premised on our conclusion that its
proposed service best meets the statutory requirements for allocation of DCA
slot exemptions that are specified in AIR-21.
The Congress, in establishing the additional slot
exemptions at Reagan National Airport, stipulated four criteria that the
Department must consider in awarding these exemptions. These criteria supplant
the broader "public interest" standard that the Department has
traditionally employed in deciding carrier selection cases.
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§ 41718(a)(1)directs that any slot exemptions we
award must provide "domestic network benefits" beyond the perimeter.
Second, under § 41718(a)(2), the slot exemptions awarded must also increase
competition by new entrant carriers or in multiple markets. Third, under §
41718(a)(3), the exemptions must not reduce travel options for communities
served by small hub airports and medium hub airports within the perimeter. Finally,
under § 41718(a)(4), the exemptions granted must not result in meaningfully
increased travel delays. Congress did not provide any specific guidance as to
the weight we should assign among these criteria in our decisional process;
however, the statute requires that any successful applicant meet all four
criteria.
Because we find, as discussed below, that each of
the proposals would not reduce travel options for communities served by small
and medium hub airports within the perimeter and would not result in
meaningfully increased travel delays, we focus our analysis in this proceeding
on the relative network benefits and enhancements to competition by new
entrants that are afforded by each of the proposals under consideration.
As was the case in our first DCA exemption
proceeding, applicants have tended to emphasize one or the other of these two
criteria, depending upon the strength of their existing presence at DCA. Those
with the strongest presence highlighted the scope and size of their respective
networks at their beyond-perimeter hubs and the competitive benefits that could
be brought to multiple markets via those networks. Applicants with a more
limited DCA presence stressed that the Congressional objective to advance
competitive benefits could best be addressed by granting their applications.
Carriers in this latter group argued that even though, in most cases, their networks
were smaller, their selection would produce a stronger competitive impact than
an award to any of the larger, more established DCA incumbents. With the
exception of Alaska and Vanguard, each of the applicants in the group with a
limited DCA presence received an award of at least two slot exemptions in our
earlier decision. They now argue that additional frequencies are required to
expand the service and competitive benefits of their previous selection.
In Order 2000-7-1, we concluded that Congress's
direction could best be met by giving primary consideration to carriers that
had either no presence or limited operations at DCA and that had proposed
services that would also provide competitive benefits in multiple markets. We
chose additional service opportunities by new competitors over existing
applicants at DCA because we determined that this course would produce a
greater competitive impact than would additional service by the larger DCA
incumbents, thereby best satisfying the statutory objective of increasing
competition.
As indicated, under § 41718(b)(3), the Department
must consider the effect of an award of exemptions for new outside-perimeter
service upon existing inside-perimeter operations. Specifically, we must ensure
that an award of exemptions would not reduce travel options for communities
served by small hub airports and medium hub airports within the perimeter. In
our earlier decision, we concluded that Congress sought to ensure that new
services provided though the AIR-21 exemptions would not displace or disrupt
existing services at small or medium hubs. In the instant proceeding, as was
the
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case when we4nitially awarded
these exemptions, there was very little argument by the parties that a specific
award to a city outside the perimeter would have an adverse impact on existing
service within the DCA perimeter. We recognize that the establishment of
additional service options may have the result of diverting some traffic from
existing services that are now provided from small and medium hubs inside the
perimeter. However, there is no persuasive evidence in the record of this
proceeding to suggest the level of such diversion would jeopardize the future
operation of any of those services.3
We have also reviewed the
statutory criterion that the exemptions granted not result in meaningfully
increased travel delays. As in the previous case, some commenters pointed out
that the General Accounting Office in 1999 found that additional operations at
DCA would not cause significant delays. We concluded in Order 2000-7-1 that 24
additional operations at DCA spread out over the entire slot-controlled period
to no more than 2 per hour as required by § 41718(c)(2), would not
"meaningfully" increase travel delays at DCA. We affirm that finding
here. We also conclude that the minimal addition of two operations at any of
the airports to which service has been proposed would not meaningfully increase
the delays there.
We have concluded that the
nonstop service between Reagan National Airport and Seattle proposed by Alaska most
completely satisfies the AIR-21 statutory criteria. No other application so
successfully combines enhanced competition as a result of new entry to DCA with
network benefits beyond the nonstop hub as does Alaska's proposal.
In light of the significance
placed on new entry by AIR-21, we find Alaska's initial entry into Reagan
National to be a compelling factor in reaching our decision to allocate a
single round trip service. Alaska is the only clearly qualified true new
entrant in this proceeding.4 With the exception of Southwest Airlines, Alaska is the
only major carrier that cannot now provide passenger service between DCA and
beyond perimeter cities via either of its
3 United has argued that America West's proposed Phoenix-DCA
or Los Angeles-DCA services is likely to result in reduced service at America
West's Columbus hub. While we have decided not to select America West for other
reasons, we are not persuaded that such reductions would likely have occurred
had America West been granted exemptions for either of these services.
4 Vanguard's assertion that the Department may award it
beyond-perimeter exemptions under §41718(a) for nonstop service to Kansas City,
a hub airport located within the perimeter, is highly debatable. It is true
that, unlike § 41718(b), § 41718(a) does not literally restrict award of
exemptions to airports on the basis of their geographic location. In
structuring the framework for the award of exemptions at DCA, Congress did set
out these separate authorities, but notably also provided for an equal number
of exemptions for each classification. The equipoise inherent in this approach,
which we believe Congress intended, would be unbalanced by Vanguard's assertion
that, effectively, it could receive awards for the same city under either
subsection. Moreover, the language of § 41714(a) specifies that the Secretary
"shall grant ... exemptions from the application of [among others] section
40109 of this title,' in making the awards thereunder. That provision would
have no purpose or applicability with regard to an award for nonstop service to
an airport inside the perimeter. Section 40109 provides that carriers may not
operate an aircraft nonstop between DCA and an airport outside the perimeter,
so an exemption from that section would not have been necessary in the case of
nonstop service between DCA and an airport within the perimeter such as Kansas
City. Congress should not be presumed to have mandated an exemption where none
is needed.
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principal network hubs, both of which are beyond the
DCA perimeter. Last year we gave significant weight to applicants with a
limited DCA presence such as TWA or even more importantly, no DCA presence,
such as Frontier and National. Given the framework outlined in our previous
decision, Alaska's lack of any current presence at DCA gives it a decided
advantage over competing applications, especially when the Department has so
few slot exemptions to allocate. In addition, Alaska's selection will provide
the carrier with a new market presence in the eastern United States.
In recognition of AIR-21's emphasis on the network
benefits that result from an award of these slot exemptions, we find that an
award to Alaska will bring substantial benefits to communities in the Pacific
Northwest region as well as benefiting a number of Alaska communities. It is
true that, in our initial DCA slot exemption order, we were concerned about
Seattle's geographic limitations as a connecting hub for east-west traffic.
However those concerns were raised in the context of Northwest's application in
that earlier case. We believe that the current proposal by Alaska contains
significant differences from Northwest's that serve to ameliorate many of those
concerns. First, Alaska does not claim many of the circuitous connections from
points in the Southwestern U.S. that Northwest listed as viable
single-connecting cities for DCA-Seattle service. Second, unlike Northwest,
Alaska has no inside-perimeter hubs that connecting passengers to DCA could
utilize with less circuity as an alternative to DCA-Seattle service. Thus, the
potential network benefits of Alaska's proposal are not diminished by the
potential self-diversion of passengers to other inside-perimeter hubs that was
evident in Northwest's proposal. Third, Alaska's proposed service, unlike
Northwest's, includes single-plane service beyond Seattle to Anchorage,
Alaska's other hub, thereby enhancing competitive alternatives to DCA from
Anchorage and smaller, more isolated, Alaskan communities. 5
For the above reasons, we conclude that Alaska's
DCA-Seattle proposal best meets the objectives that the Congress sought to
promote in authorizing these exemptions and that it should be awarded the two
slot exemptions that are at issue in this proceeding.
Clearly, Delta's proposed service to Salt Lake City
also offers significant network benefits. Delta operates a substantial
connecting hub at Salt Lake City and selection of Delta would bring DCA online
single-connecting service to a substantial number of communities in the North
and West. However, unlike Alaska, Delta already has the ability
5 We
acknowledge that Alaska is proposing to operate its proposed service with B-737
aircraft, which are relatively small. However, we believe this is outweighed
here by the network and competitive benefits otherwise apparent in Alaska's
proposal. In Order 2000-7-1 we awarded Frontier two DCA slot exemptions under
similar circumstances. (Note: In the Consolidated Answer of Alaska Airlines at
6, filed April 30, 2001, the applicant alluded to the possibility that it might
be operating its proposed DCA-Seattle service with a new B-737-900 aircraft
configured for 172 seats. On May 23, Alaska filed Amendment No. 4 to its
application in which it advised the Department that with the selection of its
DCA-Seattle proposal, it is prepared to utilize the B-737-900 aircraft in this
service. On June 5, Alaska also filed a motion and leave to file an answer to
Frontier dealing with this same issue. We will grant the motion, but since
these latter two filings was made so late in the proceeding, we did not
consider them in making our decision.)
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to serve, though its within-perimeter
hubs at Atlanta and Cincinnati, most of communities to which it has proposed to
offer single-connecting service.
Further, Delta already has a
significant presence at DCA, operating the second largest number of slots of
any carrier serving that airport. Consequently, its selection would not afford
the benefits of competition by a new entrant carrier that represent one of the
most important factors in our decision to select Alaska.
Frontier's DCA-Denver proposed service
is attractive in several regards. First, Frontier, while no longer representing
a potential new entrant at DCA, has only a very limited presence. Second,
Frontier's new code-share agreement with Great Lakes Aviation would boost
Frontier's online single connecting service to 37 communities as compared to
the ten connecting cities that Frontier claimed in the first case. Finally,
Frontier's DCA-Denver service has demonstrated success with a 65 percent load
factor and significant network benefits for passengers traveling beyond Denver.
Frontier argues that a single daily round trip in a given market does not
provide a level of service attractive to passengers nor does it represent a
credible competitive alternative for many DCA beyond-perimeter travelers.
However, this concern is shared
by most of the carriers that were awarded slot exemptions last year. Only
America West, in the Phoenix-DCA market, received an award sufficient to enable
two daily round trips. Every other award in that proceeding was for only a
single daily round trip in each city-pair market. While an additional round
trip for Frontier, or any of the other carriers awarded DCA slot exemptions
last year, would strengthen their respective services and market positions, we have
concluded that the benefits of Alaska's proposal to establish an additional new
competitor at DCA, coupled with the network benefits of its Seattle service,
outweigh the benefits accruing from the augmentation of existing, albeit
valuable, services.
Both America West and National,
having received awards in our previous decision, also seek to add an additional
round trip to augment their existing service. Several of the parties have
argued that the grant of additional slot exemptions to America West for a third
DCA-Phoenix roundtrip or to National for a second DCA-Las Vegas roundtrip6
would not be equitable given that other beyond-perimeter communities have not
yet received any DCA nonstop service. As many of the parties have noted,
selection of either America West or National would add no new communities receiving
first time online single-connecting service to DCA. As with Frontier's
proposal, while we are sympathetic to the difficulties of mounting effective
competitive service with only limited available slot exemptions, in order to
maximize the network and competitive benefits contemplated under AIR-21, the
Department believes that we should maximize the number of DCA competitive
players in concert with increasing the number of new communities receiving online
single-connecting service.
6 In fact, with a selection of National, Las Vegas, as in
the case of Phoenix with a selection of America West, would receive its third
DCA roundtrip since America West also received slot exemptions for DCALas
Vegas service.
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We have decided not to award slot exemptions for Los
Angeles service and we regret that our action here will, by necessity, result
in the cessation of the nonstop DCA-Los Angeles round trip operated initially
by TWA and now by TWA Airlines LLC. When we initially awarded TWA the
opportunity to operate a daily round trip between DCA and Los Angeles, we found
that TWA would satisfy the dual objectives of advancing competition at DCA, by
enhancing its limited presence there, and affording network benefits to a
number of smaller cities beyond Los Angeles. Given the requirements of AIR-21,
those objectives remain unchanged. But the DCA-Seattle proposal of Alaska
represents, in the context of this proceeding, a significantly better option
for achieving them, particularly when compared to the current proposals for
service to Los Angeles.
The Los Angeles applicants fall into two groups:
American and United, with significant Los Angeles hubs and Continental and
America West, with more limited Los Angeles operations but that would bring new
competition to the Los Angeles-Washington market.
Our previous decision recognized the drawbacks of
selecting either American or United in light of the criteria established by
AIR-21. Both have a significant presence at DCA and are major participants in
the overall Washington-Los Angeles market. While both carriers argued the
advantages of their respective Los Angeles networks, even American acknowledged
that American and United held a combined 80 percent market share in the
Washington-Los Angeles market./7 We concluded that regardless of the network benefits
that American or United would provide, selection of either carrier would
increase the dominant position that the pair already maintains in the
Washington-Los Angeles market. In addition, we concluded that an award to
either would not optimize the pro-competitive goals of § 41718 given the
significant DCA operations of both airlines. Nothing in the current American or
United proposals have persuaded us to alter our earlier conclusion.
Continental's network operations at Los Angeles are
considerably smaller than those of either American or United and, consequently,
the network benefits to communities beyond Los Angeles are more modest.
Continental would depend on American Eagle to provide connecting feed traffic
to its nonstop Los Angeles-DCA flight. As noted by United and Delta, a review
of TWA's experience with a limited Los Angeles network shows that the
connecting traffic, and consequently the domestic network benefits, provided by
TWA's service were meager. Moreover, Continental's operation of 43 DCA slots
cannot be characterized as a limited presence, especially as compared to only
13 DCA slots operated by TWA last year. Finally, like American and United,
Continental operates withinperimeter hubs that allow its west coast passengers
to make single connections for service to DCA.
Given its limited network presence at Los Angeles
and the significant scope of its operations at DCA, we cannot conclude that the
selection of Continental would best satisfy the criteria specified by AIR-21.
7
Answer of American Airlines, April 30,
2001, at 21.
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America West applied for slot exemptions for DCA-Los
Angeles only if we determine that Los Angeles requires nonstop DCA service.$
American, Continental, and United have made the argument that we should
maintain DCA-Los Angeles service based on the large size and importance of Los
Angeles and especially the local Washington-Los Angeles market. However, as
Delta correctly notes, the size and significance of the local market are not
AIR-21 selection criteria, and accordingly we cannot make a finding that any
one city, such as Los Angeles, deserves DCA nonstop service on this basis.
Given this fact, together with America West's stated preference for additional
Phoenix service,9 we have chosen to concentrate on America West's
DCA-Phoenix proposal, which was discussed earlier in this order. However, we
would note that America West's proposed Los Angeles service, like
Continental's, would offer only minimal network benefits because of its limited
Los Angeles presence.
We have chosen not to select Vanguard, not only
because of its dubious claim to eligibility given its proposal to offer nonstop
service to a city within the DCA perimeter, 10 but also because it
failed to provide sufficient evidence showing how its proposal would meet the
AIR-21 statutory criteria. Specifically, Vanguard has failed to satisfactorily
demonstrate the domestic network benefits flowing from its proposed service nor
did it adequately outline the competitive advantages of its proposal.
Assignment of Slot Times: We
are directing Alaska Airlines, Inc. to
file in the Docket no later than July 30, 2001, the proposed flight schedules and
effective date for inauguration of operations authorized by this order. The
actual inauguration of service must be no later than October 28, 2001. As we
stated in our Notice of April 6, 2001, the slot times currently allocated for
TWA's DCA-Los Angeles are in the 1100 and 1300 hour periods. Since 49 U.S.C.
§41718(c)(2) does not allow us to assign more than two slot exemptions per one
hour period, and most one hour periods were fully subscribed by the
Department's Notice of August 2, 2000, Alaska should contact the Slot
Administration Office of the Federal Aviation Administration as soon as
possible to determine available slot times. The Department will determine the
final slot times assigned to Alaska in accordance with the provisions of 49 U.
S.C. §41718(c)(2). Thereafter, Alaska may request the FAA Slot Administration
Office to approve exchanges of the assigned slot exemptions times with other
slots or slot exemptions for the purpose of conducting the operations
authorized by this Order in a different hour. In acting on such a request the FAA
will employ standard practices in conjunction with applicable statutory and
regulatory requirements for the utilization of slot times between and among
individual air carriers. Regardless of subsequent slot time exchanges the slot
times assigned by the Department or the FAA's Slot Administration Office
pursuant to this order will be tagged. If any of the service
8 Application of America West at 2.
9 Even America West discounts the value of DCA-Los
Angeles service as compared to additional DCAPhoenix service, Consolidated
Comments of America West Airlines at 11.
10 See footnote 4.
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granted by this-,Order is suspended, or
is not inaugurated in a timely manner, the Department will withdraw the slot
exemptions based on their tagged slot time rather than by any subsequent slot
time operated.
Transition of Service. By
Order 2001-4-8, issued April 6, 2001, the Department granted the application of
TWA Airlines LLC for pendente lite authority
to operate two slot exemptions at DCA for nonstop service to and from Los
Angeles pending a carrier selection in this case or for 90 days whichever came
earlier. In order to ensure a smooth transition of service and full utilization
of the available slot exemptions, we are amending the provisions of Order
2001-4-8 to allow TWA Airlines LLC to continue to use the slot exemptions until
Alaska Airlines begins service. In that regard, we direct Alaska Airlines, Inc. to file in the Docket no later than July 30,
2001, a proposed effective date for inauguration of service for the operations
authorized herein that shall not be later than October 28, 2001. If Alaska
Airlines does not inaugurate serviced by October 28, or if it inaugurates
service and later discontinues it for any reason, the slot exemptions will be
immediately recalled to the Department for redistribution.
We expect TWA Airlines LLC and Alaska Airlines to
work cooperatively to facilitate an orderly transition of service. Before TWA Airlines
LLC suspends its Los Angeles-DCA service, we expect it to contact passengers
that hold reservations on the flights to be cancelled and to assist them in
making alternative reservations.
Although 49 U.S.C. §41718(e) specifically exempts
our action here from environmental review' /11, we remain sensitive
to the environmental impact of increased operations at DCA. Consistent with the
statute, we will require that all operations authorized by this order will be
conducted with Stage 3 aircraft. We also note that 49 U.S. C. §41718(g)
requires the Department to submit a study to the Congress in fiscal 2001
comparing noise levels at the four slot-controlled airports with noise levels
experienced before 1991. DCA also has, and must give, priority for noise
compatibility planning and program grants, 49 U.S.C. §§ 47117(e), and
41718(e)(3).
As the FAA slot regulation makes clear "slot(s)
do not represent a property right but represent an operating privilege subject
to absolute FAA control (and) slots may be withdrawn at any time to fulfill the
Department's operating needs..." 14 C.F.R. 93.223(a). Under the provisions
of 49 U.S. C. §417140) these carriers may not sell, trade, transfer, or convey
the operating authorities granted by the subject exemptions unless otherwise
authorized herein.
11/ §41718(e)
states, "Neither the request for, nor the granting of, an exemption under
this section shall be considered for purposes of any Federal law a major
Federal action significantly affecting the quality of the human
environment."
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Further, granting of these exemptions in no way is
to be construed as allowing a carrier to operate services that it could not
otherwise operate, i.e., carriers must still meet all the requirements of the
Department of Transportation, the Federal Aviation Administration, and all
other statutes and regulations governing air transportation.
This order is issued under authority delegated in 49
C.F.R. 1.56(a).
ACCORDINGLY,
1. The
Department grants exemptions from 14 C.F.R. Part 93, Subparts K and S, to
Alaska Airlines, Inc., (two slot exemptions to serve Seattle, Washington) to
enable Alaska to conduct the operations described in this order at Ronald
Reagan Washington National Airport;
2. The Department
directs Alaska Airlines, Inc., to file in the Docket no later than July 30,
2001, the proposed flight schedules and effective date for operations
authorized by this Order. The effective date of the service must be no later
than October 28, 2001. The slot exemptions granted must be conducted with Stage
3 aircraft, may not be used for operations between the hours of 10:00 p. m. and
7:00 a. m., and may not increase the number of operations at Ronald Reagan
Washington National Airport in any one-hour period during the hours between
7:00 a.m. and 9:59 p.m. by more than two operations. Alaska is advised to
consider maximum flexibility in proposed operating times to ensure compliance
with these limits;
3. The
Department will make the final determination of slot times as soon as possible
after schedules are filed to enable the carriers to conduct the operations
authorized by this Order. The Department directs Alaska Airlines, Inc. to contact the Federal Aviation
Administration Slot Administration Office for the determination of available
slot times. The FAA will assign slot exemption numbers, effective dates, and
operating times consistent with statutory limitations;
4. If Alaska
Airlines, Inc., fails to inaugurate service by October 28, 2001, or if service
is inaugurated and subsequently suspended, the Department will reallocate these
slot exemptions;
5. The
Department extends the grant of authority as described in ordering paragraph 8
of Order 2001-4-8 through October 27, 2001, or until Alaska Airlines, Inc.,
inaugurates the services authorized by this order, whichever is earlier;
6. Except as
otherwise granted, we deny all other applications for exemptions from 14 C.F.R.
Part 93, Subparts K and S, filed in these dockets;
7. We grant
all motions to file late or otherwise unauthorized documents;
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8. The
authorities granted under these exemptions are subject to all of the other
requirements delineated in 14 C.F.R. Part 93, Subparts K and S, including, but
not limited to, the reporting provisions and use or lose requirements; and
9. We will
serve this order on all parties in Docket OST-2000-7181 and upon Vanguard
Airlines, Inc.
By:
SUSAN MCDERMOTT
Deputy Assistant Secretary for Aviation and
International Affairs
(SEAL)