OST-00-8330

Spirit Airlines, Inc.

Spirit Airlines, Inc. respectfully requests an exemption pursuant to 49 U.S.C. § 41714(c) from the requirements of Subparts K and S of Part 93 of the Federal Aviation Regulations for four (4) new entrant exemption slots at Chicago O'Hare International Airport. Spirit seeks these slot exemptions so that it may offer new low-fare, nonstop roundtrip scheduled jet service between O'Hare and Myrtle Beach International Airport. 

The MYR-ORD market suffers from excessive market concentration. US Airways and Delta Air Lines together controlled over 98% of the MYR-ORD O&D traffic in 1999.  Because of their undisputed control of the MYR-ORD market, US Airways and Delta are able to demand a price premium from the passengers in this market. For instance, US Airways' average fare in 1999 was $108.93, versus an average fare in the Chicago (Midway)-Myrtle Beach market (MDW-MYR) of $91.35 and an average fare of $83.08 on Vanguard Airlines, the main low-fare carrier in the MDW-MYR market. This represents a 19.2% and 31.1 % fare premium over the average fares of the MDW-MYR market and Vanguard, respectively. Similarly, Delta's average fare in 1999 was $107.79, which represents an 18.0% and 29.7% fare premium over the average fares of the MDW-MYR market and Vanguard, respectively.

Counsel:  PA Consulting, Anita Mosner, 703.312.1446

Spirit Airlines, Inc.

Counsel:  Horry County, Robert Kemp, 843.448.1580

Counsel:  Myrtle Beach, Mickey McCamish, 843.477.8833

Slots at O'Hare have been concentrated in the hands of a few majors, effectively making O'Hare off-limits to new entrant, low-fare carriers. The Myrtle Beach-O'Hare market is no exception. It has endured high fares and high market concentration by a couple of major carriers for many years. Spirits proposed service would inject price competition, reduce fares, provide passengers with additional service options, and stimulate traffic in the Myrtle Beach-O'Hare market.

Counsel:  Myrtle Beach, Ashby Ward, 843.916.7234

Spirit Airlines, Inc.

The issue now pending before the Department -- whether Spirit should be the recipient of four new entrant slot exemptions at O'Hare so that Spirit can provide additional low fare, nonstop roundtrip scheduled jet service between O'Hare and Myrtle Beach -- is extremely important, in that Spirit, a carrier with a reputation as a low fare carrier, can enhance competition, increase convenience and passenger choice, and accommodate the expected growth in the O'Hare-MYR market. The City urges the Department to grant Spirit's request for four new entrant slot exemptions at O'Hare. Such an exemption will increase jobs in the Chicago region, benefit the Chicago and O'Hare economy, and enhance competitive benefits and consumer choice for U.S. consumers.

Counsel:  Winthrop Stimson, Kenneth Quinn, 202.775.9800, quinnk@winstim.com 

America West Airlines, Inc. and Mesa Airlines, Inc./Legend Airlines, Inc./National Airlines, Inc./Sun Country Airlines, Inc. and Spirit Airways, Inc.

We have decided to grant Spirit's request for four O'Hare slot exemptions for nonstop Myrtle Beach service by reassigning the four O'Hare slot exemptions awarded to Legend by Order 2000-5-20. This action will not preclude Legend from reapplying for these four slot exemptions plus additional slot exemptions that the carrier might require. As we noted in Order 2000-5-20, qualified applicants such as Legend may apply for O'Hare slot exemptions under the provisions of 49 U.S.C. § 41714(i).

Moreover, we note that under the terms of 49 U. S.C § 41717(a), effective July 1, 200 1, the period of slot controlled operations at O'Hare will narrow from the current 6:45 a.m.-9:15 p.m. period to a much more limited 2:45 p.m.-8:14 p.m. period and under the provisions of 49 U.S.C § 41715(a)(1), effective July 1, 2002, the High Density Rule (Subparts K and S of Part 93 of Title 14 Code of Federal Regulations pursuant to 49 U.S. C. § 41714 (c)) will no longer be in effect for O'Hare operations. These statutory provisions will make additional O'Hare access available to Legend.

As noted in Order 2000-5-20, Spirit certified in accordance with 14 C. F. R. 302.4(b), that it met the statutory criteria as a new entrant or I imited incumbent; i.e., that it and any affiliates pursuant to § 41717(k) hold or operate (or held or operated since December 16, 1985) fewer than 20 slots and slot exemptions at Chicago's O'Hare airport. In the instant application Spirit reaffirms that it operates only eight slot exemptions and that it will operate Stage 3 compliant aircraft. Nonetheless, to be consistent, we will require that Spirit certify that its proposed operations comply with the requirements outlined in Order 2000-4-15.

We find that grant of Spirit's request would improve competition in the Myrtle Beach- O'Hare market by providing new, lower-fare offerings and by operating additional service in a market with a strong, leisure-fare component. In addition, given the loss of Vanguard's service in the Midway-Myrtle Beach market, we agree that Spirit's proposal would significantly address a potential service shortfall in the overall Chicago-Myrtle Beach market.

By:  Francisco Sanchez

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