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OST-99-5587

American Eagle Airlines, Inc.

American Eagle Airlines, Inc., under 49 USC 41714, hereby applies for an exemption from 14 CFR Part 93, Subparts K and S, in order to provide nonstop service between Chicago O'Hare International Airport, on the one hand, and Baton Rouge, Louisiana and Huntsville, Alabama, on the other, using 50-seat Embraer regional jet aircraft. American Eagle requests four exemption slots for Baton Rouge service, and four for Huntsville service, or a total of eight slots. American Eagle proposes to operate three daily roundtrips in each market, and will provide the balance of the slots required through self-help means.

Counsel:  American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com

The Community of Shreveport, Louisiana

Application of The Community of Shreveport, LA, requesting the Department withdraw the four O'Hare slots utilized by American Eagle Airlines in the Shreveport/O'Hare market and reallocate slots to the community for a period of 180 days after on of the following dates, whichever is last: when American Eagle terminates its service on June 1, 1999 or when the Department issues an order awarding the four slots to the commnity. The community believes that other carriers are willing to operate the service to O'Hare if those four slots remained with the community. If another carrier agrees to provide the service, Shreveport is prepared to accept the identical conditions on the reallocation of American Eagle's four O'Hare slots as those inspired by the Department's Orders. If the community is unable to find a carrier within a reasonable period of time (180 days) to operate that service or that carrier's operations are not viable, the slots would be returned to the Department.

Counsel:  Ungaretti Harris, Edward Faberman

American Eagle Airlines, Inc.

ACA has observed that it is unfortunate that not all cities capable of supporting nonstop service to O'Hare are offered the service because of the limitations imposed by the High Density Airport Rule. But, it does not follow that Eagle should he able to gain additional access to serve other Louisiana and Alabama communities, having now forsaken its commitment to Shreveport and Montgomery. There are other larger, more deserving communities -Charleston and Mobile -- which ACA proposes to serve and there is a firm legal basis for granting exemption slots to ACA. On the other hand, as a matter of law and DOT precedent, Eagle is disqualified from receiving any more exemption slots.

Counsel:  Bagileo Silverberg, Robert Silverberg, 202-944-3300

United's objections in this and related dockets are not a result of competitive concerns, and in fact, United would support an immediate, complete lifting of the High Density Rule at O'Hare. Elimination of the HDR would provide a comprehensive solution: there would be no artificial constraints on competition; all carriers would be on a level playing field; any and all carriers could add service to communities that are now underserved; communities that desire new service would not have to overcome artificial barriers imposed by the HDR; and all applications for exemption slots at O'Hare now pending before the Department would be mooted and the communities could gain the access they desire. United's objections are a result of its concerns about how the Department has chosen to deal with the limitations the HDR imposes, resorting to "experiments" and strained interpretations of the current statutory exemption criteria in order to be able to accommodate requests for new service. The Department's community slot experiment is only the most recent example of such contortions. As United has emphasized in prior pleadings, that experiment is fraught with potential dangers, destroys the traditional motivation for cooperation between carriers and communities, and increases the likelihood that the mandates of political expediency rather than those of the marketplace will guide slot exemption proceedings.

Counsel:  United and Kirkland Ellis, Bruce Rabinovitz, 202-879-5116, bruce_rabinovitz@kirkland.com

American Eagle Airlines, Inc.

Counsel:  Bagileo Silverberg, Robert P. Silverberg

American Eagle Airlines, Inc.

We fully expect demand to be far stronger at Baton Rouge and Huntsville, as detailed in the two communities, pleadings in OST-99-5532 and OST-99-5533. The Department should promptly make awards to facilitate Baton Rouge-O'Hare and Huntsville-O'Hare nonstop regional jet service by American Eagle, by granting slots to the communities, or alternatively to American Eagle. Such an award will bring substantial benefits to passengers and shippers requiring service in the two local markets, as well as in markets throughout the United States and the world that are conveniently served via American's O'Hare hub.

Counsel:  Carl Nelson, Jr., 202.496.5647, carl_nelson@amrcorp.com

American Eagle Airlines, Inc.
Mobile Airport Authority-Atlantic Coast Airlines
Huntsville-Madison County Airport Authority
Greater Baton Rouge Airport District
Charleston County Aviation Authority-Atlantic Coast Airlines
National Airlines, Inc.

By this order the Department is amending its actions in Orders 98-4-21 and 98-9-24 by reallocating eight of the Chicago O'Hare Airport slot exemptions that were authorized to American Eagle in those orders. Specifically, slot exemptions that were previously designated for American Eagle to provide nonstop regional jet service to Montgomery, AL, and Shreveport, LA, are withdrawn and are redesignated for implementation of nonstop regional jet service between O'Hare and Baton Rouge, LA (two slot exemptions for American Eagle), Huntsville, AL (three slot exemptions for American Eagle) and Mobile, AL (three slot exemptions for Atlantic Coast Airlines). The reallocation of these slot exemptions is conditioned on their being used solely for implementation of service in the designated markets.

By:  Brad Mims

American Eagle Airlines, Inc.

Counsel:  American Airlines, Carl Nelson, 202.496.5647, carl_nelson@amrcorp.com

American Eagle Airlines, Inc.

On August 16, 1999, American Eagle filed a petition for reconsideration of Order 99-7-17 seeking, in part, the reallocation of two of the Lafayette-O’Hare slots to American Eagle for O’Hare-Baton Rouge service. Such an allocation will provide substantial benefits to both the Chicago community and the approximately 1,286,000 residents in the Greater Baton Rouge community. As demonstrated in Greater Baton Rouge’s Application dated April 12, 1999 and its Consolidated Reply dated May 6, 1999 in Docket OST-99-5532, nonstop Baton Rouge-Chicago O’Hare service is needed, will be supported by the community, and will bring important new competition to a market dominated by one carrier, with significant benefits to the public in service, quality and fare options. All of the factors the Department found sufficiently persuasive in Order 99-7-17 to deem Baton Rouge-O’Hare nonstop service deserving of exemption slots remain true today.

Counsel:  GKMG, Rick Russell, 202-342-5201

American Eagle Airlines, Inc.

One final comment on the American Eagle petition is warranted. Unlike ACA, which has already arranged with the FAA for the timing of its Mobile exemption slots (awarded by Order 99-7-17) and filed its schedules in all public media, American Eagle has yet to publicly announce its Baton Rouge and Huntsville service. Is American Eagle going to serve these markets without the award of additional slots? Is American Eagle once again showing the communities its commitment of service is less than firm? If American Eagle has established the award of additional slots as a precondition to its service commitment to Baton Rouge and Huntsville, it should say so. The communities which seek to gain O'Hare service are entitled to that information. Likewise, they are entitled to know why American Eagle is refusing to use self-help when only last month the carrier proposed to use self-help for Charleston. If American Eagle is not going to use the awarded slots they should be assigned to carriers that are capable of making full use of these valuable resources.

Counsel:  Silverberg Goldman, Robert Silverberg, 202-944-3300

American Eagle Airlines Inc.

As demonstrated by months of service, the Savannah/Hilton Head-O'Hare route is an established market. As the largest market with limited service, additional slots will allow the Savannah/Hilton Head O'Hare routes to continue to grow. With capacity restricted by FAA regulations so that only a few additional flights at O'Hare may be authorized, the capacity should be awarded to the community with the largest Chicago market and the community with proven service -- Savannah/Hilton Head. Therefore, the Parties respectfully request that if the Department is going to allocate additional slots to any community, it should first and immediately grant additional slots to Savannah-Hilton Head for use by ACA before it grants the recent request by American Eagle or any other party.

Counsel:  Ungaretti Harris, Edward Faberman, 202.639.7500

American Eagle Airlines, Inc.

American Eagle has demonstrated an unfortunate propensity to acquire O'Hare slots under the guise of meeting the Department's goal of serving small and medium-sized communities where "exceptional circumstances" apply, only to withdraw that service or to artfully juggle slots and services to comport with its own corporate goals. For example, within the last six months, American Eagle has pulled out of two small communities, namely Moline, IL and Wausau, WI, in favor of new regional jet service to Omaha, NE and Pittsburgh, PA, respectively. In addition, since January 1998, American Eagle has reduced service between O'Hare and other small communities including Champaign, IL, Green Bay, WI, South Bend, IN, Springfield, IIL, and Traverse City, ML These reductions have allowed American Eagle to make commuter slots available to commence regional jet service to two other large cities, namely Baltimore, MD, and Memphis, TN.  There were certainly no "exceptional circumstances" surrounding services between Chicago and the large cities to which American has diverted O'Hare commuter slots intended to be used for service to small communities. All of these cities enjoy nonstop service to Chicago from two or more carriers. American's cynical actions in diverting these commuter slots for regional jet service to these large cities belie its asserted willingness to commit its resources to the provisions of services meeting the Department's "exceptional circumstances" test.

Counsel:  Kirkland Ellis, Jeffery Manley, 202.879.5161

American Eagle Airlines, Inc.

Counsel:  American, Carl Nelson, 202.496.5647, carl_nelson@amrcorp.com

American Eagle Airlines, Inc. Greater Baton Rouge Airport District, The Community of Savannah, GA/Hilton Head, SC

We will grant American Eagle's petition for reconsideration of Order 99-7-17 and, on reconsideration, we will increase its reallocation of O'Hare slot exemptions for service to Baton Rouge from two to four. We noted previously that we accepted American Eagle's marketplace assessment that Baton Rouge will support regional jet service to O'Hare based on historical traffic data for Baton Rouge and other cities within its catchment area.' American Eagle stated in a document filed May 12, 1999, where it discussed its decision to end its Chicago service at Shreveport and Montgomery, that "we fully expect demand to be far stronger at Baton Rouge and Huntsville." American Eagle has implemented its slot exemptions to serve Huntsville, augmenting those exemptions with one additional slot of its own, thus providing the market two daily round trips. With the newly available exemptions occasioned by Great Lakes' aforementioned return of unused slots, and given the fact that only two exemptions could be allocated earlier for this market, we find it in the public interest to authorize two additional exemptions for American Eagle's proposed service between Baton Rouge and O'Hare?

We also will reallocate two more slot exemptions for O'Hare-Savannah/Hilton Head service. The experimental slot exemptions that we awarded for that market in Order 99-3-12 are being implemented by ACA, with impressive results. ACA is operating two daily round trips with the combination of the three experimental slot exemptions plus one slot that it acquired on its own. The Savannah-O'Hare market has responded extremely well with load factors on the nonstop services averaging 73 percent over the first seven months (May through November). ACA informs us that at these traffic levels it is unable to accommodate all who seek to use its nonstop service. ACA and the community have thus made a compelling case that the market will support additional frequencies. Moreover, ACA has had a record of supplementing any slot exemptions though self-help measures to increase the number of frequencies it provides for designated O'Hare markets, which we consider a positive factor in making allocation determinations.

By:  Bradley Mims

American Eagle Airlines, Inc.

Will inaugurate nonstop regional jet service between Baton Rouge and Chicago O'Hare on April 24, 2000, operating two roundtrips per day. American Eagle's schedules are shown in the attached press release.

Counsel:  American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com

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