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OST-99-6240

Midwest Express Airlines, Inc.

Upon the grant of this application Midwest Express will be able to offer a highly demanded additional roundtrip flight -- a new morning Milwaukee-Washington National nonstop flight and a new midday DCA-Milwaukee return flight thereby filling large gaps in Midwest Express' service pattern to its main hub. Based on the exceptional circumstances supporting this request, Midwest Express urges this application be approved in time to commence premarketing activities in anticipation of a service initiation date of February 1, 2000.  It is important to emphasize that the grant of -this Midwest Express request will not result in any increase in the number of operations authorized for DCA under the High Density Airport Rule. As a result there will be no net increase in noise impacting the area surrounding DCA if Midwest Express receives the authority it seeks herein. Midwest Express has two slots in the 2100 hour. By sliding these two slots to 1425 and 1500, the community will not have to accept any increase in the number of daily operations at DCA. Indeed, the grant of this request will be environmentally beneficial as the operation of the two exempted flights by Midwest Express will be conducted at a time of the day w hen ambient noise levels are higher than they are at 2100. Further, the number of air carrier operations at DCA will not increase in any one hour by more than one flight operation; an increase that likely will go unnoticed in the context of the allowable 60 hourly scheduled DCA operations, without regard to second section shuttle flights or unlimited VFR operations.

Counsel:  Silverberg Goldman, Robert Silverberg, 202.944.3300

Midwest Express Airlines, Inc.

While the ACAA supports additional access at high density airports for new entrants and limited incumbents, the distribution of slots has to be accomplished through a procedure that is fair, public and available to all carriers. Midwest Express notes that it responded "favorably to an offer by the FAA" for unused DCA slots. That offer was not made to all carriers. This "secret" allocation process should not be utilized to assist one carrier to increase its presence at National Airport while other carriers remain 'frozen out of the airport. Therefore, any allocations under this "offer" must be rescinded and made to all carriers not to only selected incumbent carriers. The FAA should not provide Midwest Express, a carrier that currently enjoys permanent slots which allow it to compete for service at LaGuardia and National, with added benefits when most new entrant carriers have no slots at National Airport and no permanent slots at LaGuardia. To allow Midwest Express to move its specially allocated 2100 hour slots to other time periods during the day would also block other carriers that may obtain 2 100 hour slots in a public process from moving to those other times.

Counsel:  Air Carrier Association, Edward Faberman, 202-639-7502

Midwest Express Airlines, Inc.

Counsel: Silverberg Goldman, Robert Silverberg, 202.944.3300

On September 17, 1999, Midwest Express Airlines, Inc., (Midwest Express) applied for an exemption pursuant to the provisions of 49 U.S.C. §41714 (d) to permit it to use its aircraft scheduling slots for the 2 100 hour at Ronald Reagan Washington National Airport (Washington National) in different hours of the day. The Metropolitan Washington Airports Authority (Airports Authority), is the operator of Ronald Reagan Washington National, the airport affected by this application. It appears from the application that Midwest Express has complied with the conditions of 49 U.S.C. §41714(d) for moving a slot from one hour to another. Therefore, the Airports Authority has no objection to the application.

The Airports Authority notes that the exemption is not to result in an overall increase in slots at National Airport. Indeed, one of the statutory conditions is that the exemption will not result in an increase in the total number of slots at National between 7 a.m. and 9:59 p.m. (49 U.S.C. §41714(d)(B)). Therefore, the 2100 slots moved by Midwest Express to the 1400 and 1500 hours are not available to be allocated for use in the 2100 hour. There must be two fewer slots in the 2100 hour as a result.

By:  MWAA, Edward Faggen, 703.417.8615

Midwest Express Airlines

Midwest Express notes in its filing that "the slots are issued on a temporary basis and are subject to FAA recall for possible future allocation pursuant to FAA section 93.229." Section 93.225 requires the FAA to distribute available slots through a lottery system. Since a number of slots have been allocated to Midwest Express and other incumbent carriers through the "temporary" process, it is time for the FAA to utilize its lottery process to permanently allocate the slots. The lottery and other formal distribution processes were inserted into the regulations to avoid private allocations to carriers that happen to be talking to FAA representatives at the time that slots become available. The FAA and the Department should utilize public procedures to allow all new entrant carriers the opportunity to establish service at National Airport. The FAA should recall all 2100 slots that have been temporarily allocated under Part 93 Subpart S and use lottery procedures to reallocate those slots.

Counsel:  Air Carrier Association, Edward Faberman, 202.639.7502

Counsel:  Air Carrier Association, Edward Faberman, 202.639.7502

Midwest Express Airlines, Inc.

Midwest Express's proposed slides will not result in a net increase in the total number of authorized slots at Reagan National during any day. Rather, it will decrease by two the number of operations that have been authorized in the 2100 period and will result in net increases of one authorized operation in each of the 1400 and 1500 periods. No other airline's slot holdings will be affected. And, because Midwest Express will be merely changing the timing of two operations, there will be no net increase in noise impact on the communities surrounding the airport. Thus, the proposal meets all of the statutory requirements described above, including the concern that MWAA raised, i.e., that grant of the application would not result in an increase in the total number of slots per day at Reagan National.

We noted in Order 94-9-49 that our authority to grant exemptions for slot slides at Reagan National is applicable only in limited circumstances to meet the specific needs of carriers holding a limited number of slots at that airport. Midwest Express currently operates only ten Reagan National slots, and it has demonstrated a need for the improved Washington-Milwaukee service that it will implement through the slot slide authorized here. The exemptions will enable Midwest Express to offer such service in both the local Milwaukee-Reagan National market and in connecting markets that Midwest Express serves beyond Milwaukee. For the latter markets, improved service to Reagan National will also strengthen Milwaukee as a competitive alternative hub, particularly for points in the Upper Midwest. Thus, the applicability of our slot exemption authority is appropriate under the exceptional circumstances Midwest Express has presented.

We do not agree with ACAA's assertion that other carriers did not have an opportunity to acquire the slots that Midwest Express obtained, nor do we agree that the slots should be recalled by the FAA and distributed through a lottery at this time. Pursuant to 14 CFR § 93.225, the FAA reserves the right to determine when a sufficient pool of slots is available for lottery.

By:  Bradley Mims

Midwest Express Airlines, Inc.

ACAA believes Midwest Express, all small incumbents and new entrants should be able to fully compete at Reagan National. However, ACAA opposes any Department decision that creates a special status for Midwest Express. Midwest Express, which has been at Reagan National for approximately 14 years, originally obtained slots in the last lottery held by the FAA in 1986. Although a "limited" incumbent that has sold some slots, Midwest Express has been able to increase its slot holdings. By allowing Midwest Express to obtain 2100 hour slots and move those "temporary" slots to a more "desirable" time period, the Department has given Midwest Express preferential treatment not available to new entrants. This is the second time that Midwest Express has added to its slot total under these regulations. In the 14 years that Midwest Express has been able to operate at Reagan National (and LaGuardia), no other new entrant has been able to enter into this lucrative and highly protected national market. The Department's Order has blocked any other new entrant from entering Reagan National and utilizing the same procedures utilized by Midwest Express.

Counsel:  ACA, Edward Faberman, 202.639.7502

Midwest Express Airlines, Inc.

It is inherent in the slot exemption process that the Secretary must allocate a scare resource such that not all requesting air carriers will necessarily have their route ambitions completely satisfied. Once the limited resource (in this case an airport slot) is fully distributed, others seeking access to a market or airport may not be permitted to enter no matter what the merits of their respective requests. The same situation arises in carrier selection entry-limited route cases. But this is not the same as saying the successful carriers have been preferred, in a legal sense, over non successful applicant carriers. It only means that the Secretary found that the public interest is better served by the successful carrier's application than would be the case had he approved the other applications.

Counsel:  Silverberg Goldman, Robert Silverberg, 202.944.3300

Midwest Express Airlines, Inc.

As to whether new entry has occurred at Reagan National Airport in the last 14 years, the record speaks for itself. While two other carriers have obtained access, those situations were both unusual. One carrier was only able to enter the airport because of a special arrangement it had with the nation's largest slot holder. Moreover, the Department's responsibility to implement airline deregulation is not dismissed because three carriers entered an airport in 14 years. While Midwest Express should be allowed to fully compete, all other new entrants should also be afforded the same opportunities. It will not be in the public interest to allow new entrants to obtain 2100 slots and then announce that they cannot move those slots earlier because Midwest Express and its affiliates have claimed the earlier time frames. Order 99-11-4 and the refusal to reallocate slots provided to the largest air carrier slot holders departs from the Department's position on new entry and slams the door on new entry at Reagan National while providing Midwest Express with opportunities not given to any other new entrant and increasing the domain of a few large carriers. Therefore, the Department should reconsider its order.

Counsel:  ACA, Edward Faberman, 202.639.7502

Counsel:  ACA, Edward Faberman, 202.639.7502

Midwest Express Corporation, Inc.

We have decided to grant ACAA's petition for reconsideration, but upon reconsideration to affirm our actions in Order 99-11-4.

As a threshold matter, we will address ACAA's contention that the Department should take action to promote new entry at Reagan National. As ACAA of course recognizes, takeoff and landing rights there, as well as at O'Hare, John F. Kennedy, and LaGuardia Airports. are restricted by the high density "slot" rule. Congress subsequently authorized the Department to grant new entrants and certain others exemptions from the slot rule under varying circumstances, 49 U.S.C. 41714. However, the exemption authority established at the other three airports that would allow the cap on IFR operations to be exceeded does not extend to Reagan National. Subsections (a), (b) and (c) of section 41714 specifically state that the Secretary may grant such exemptions "at high density airports (other than Washington National Airport)" (emphasis supplied). Thus, if we read ACAA's argument to be that the Department should use exemption authority to enable new entrants to exceed current operational limits in serving Reagan National, we must respond that it asks us to take an action that we are prohibited from taking under current law.

By:  Bradley Mims

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