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OST-00-6996

Continental Airlines, Inc.

Continental’s proposed service will introduce competition to the underserved Houston-JFK route and provide enhanced competition for passengers and cargo between JFK and points throughout the Americas served through Continental's Houston hub. At present, the Houston-JFK route is served by only one daily roundtrip flight operated by Delta. This solitary flight offers no meaningful online connections at Houston since Delta operates very few flights at Houston. Moreover, Delta operates its Houston-JFK flights at times convenient for transatlantic passengers, not local traffic. Continental's proposed service, therefore, would constitute the first service pattern on the route designed for the convenience of local Houston-JFK passengers, passengers connecting at Houston for points throughout the western United States, Mexico and Latin America, and passengers connecting with flights operated at JFK by Continental's partners.3 The public would benefit from the nonstop Houston-JFK service and from online fares for connections via Houston between JFK and points throughout Continental's Houston network.

Continental offers codeshare service with the following airlines which serve JFK: Virgin Atlantic, Northwest, KLM, Air France, and Alitalia. Continental's proposed Houston-JFK service also would constitute the only Texas hub-JFK service designed to meet the needs of domestic passengers. American and Delta each operate only one daily roundtrip JFK-Dallas/Fort Worth flight, and their flights are timed for transatlantic connections rather than for local traffic.

Continental proposes to operate Stage 3 B-737 jet aircraft. The operational and financial viability of the proposed service is ensured by Continental's ability to provide service between its Houston hub and JFK, a major airport and gateway which serves New York City and Long Island.5 Finally, Continental seeks to provide nonstop service on the underserved Houston-JFK route, which today receives only one daily nonstop roundtrip flight which offers neither convenient service to roundtrip business travelers nor online connections at Houston.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500

Continental Airlines, Inc.

While JetBlue vigorously supports increased competition in the airline industry, especially by other low fare new entrants, the application of Continental for two new entrant exemption slots at JFK for flights to and from Houston, Texas is neither supported nor opposed by JetBlue. JetBlue does have reservations, however, about applications for JFK exemption slots not necessarily based on the particular merits of a specific request, but rather based upon both the operational availability of exemptions and full compliance with all environmental laws and regulations. The Department’s grant of this, or any other application for an exemption at JFK, without first requiring that the appropriate operational and environmental work be performed, including the assumption that JetBlue’s operations will utilize all 75 slots granted in Order 99-9-11, would set a disturbing precedent.

JetBlue’s EA was based on the phase-in of an entire fleet consisting of thirty-two brand-new, state-the-art Airbus A-320s with the most environmentally friendly engines available. Emission and noise assumptions contained in the EA were based upon JetBlue’s specific operating proposal. According to Continental’s application, their proposed service is to be provided with Stage 3 B-737 aircraft, with engines that are different from those used by JetBlue and analyzed in the EA. The environmental analysis performed to support the introduction of the A-320 into JFK is not equivalent to an analysis that assumes the introduction of a B-737 aircraft. Even though Continental’s request is only for two slots at JFK, the Department should not grant the application solely by relying on the environmental work performed by JetBlue, especially in such a noise and emissions sensitive region as Queens, New York.

Counsel:  Dow Lohnes, Jonathan Hill, 202.776.2000

Continental Airlines, Inc.

Although JetBlue expresses "reservations ... about applications for JFK exemption slots ... based upon both the operational availability of exemptions and full compliance with all environmental laws and regulations," Jet Blue neither supports nor opposes Continental's application and "vigorously supports increased competition in the airline industry." JetBlue seems to be suggesting that applications for as few as two slot exemptions should be required to undergo the same environmental evaluation as its own application for 75 slot exemptions to create a hub at JFK with far more than 75 daily flights and that Continental and other airlines might pre-empt the use of slot exemptions allocated to JetBlue but not used by it. Clearly, the creation of a new airline hub at JFK has significant environmental impacts which are simply not present when a single roundtrip flight is added during the slot-controlled hours at JFK. Indeed, JetBlue has alleged no specific requirement that any environmental evaluation be undertaken for Continental's extremely-modest slot request. At the same time, unused slot awards cannot be permitted to pre-empt new entry at JFK or elsewhere, which is precisely why "use or lose" rules have always been applied to slots at slot-controlled airports. Nonetheless, Continental is confident that JFK has sufficient capacity to permit Continental's two additional flights without requiring the withdrawal of slots held by JetBlue or other carriers, and the slot exemption mechanism is used precisely to permit operations by new airlines without removing slots held by other airlines.

Counsel:  Crowell Moring, Bruce Keiner, 202.624.2500

Continental Airlines, Inc.

Counsel:  Queens Borough President's Office, Hugh Weinberg, 718.286.2880

Establishment of Slot Exemptions Proceedings 

By:  Bradley Mims

Wendell H. Ford Aviation Investment and Reform Act for the 21st Century

Continental's application meets each and every one of the statutory criteria for slot exemption awards established by 49 U.S.C. § 41716(b) and Order 2000-4-13. As Continental's original application indicated, Continental holds or operates (or held or operated since December 16, 1985) fewer than 20 slots and slot exemptions at JFK, and Continental will use Stage 3 aircraft for these flights. Moreover, Continental's original application provided the name of the community and airport to be served (Houston Intercontinental), the number of exemptions required (two), the planned effective dates (originally June 14, 2000; now September 7, 2000) and the times requested (1511 arrival, 1620 departure). The total number of exemptions requested, when added to the slots and slot exemptions held by Continental and its codeshare partners at JFK, will not exceed 20. Thus, Continental's exemption is now effective pursuant to Order 2000-4-13, and Continental will coordinate with the Federal Aviation Administration's Slot Administration Office regarding institution of its Houston-JFK flights.

Counsel:  Crowell Moring, Bruce Keiner, 20.624.2500, rbkeiner@cromor.com 

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