Order 2002-2-10 - Sprit Airlines - Allowing Suspension of Service (LGA-Melbourne, FL)

Order 2002-2-10 - Sprit Airlines - Allowing Suspension of Service (LGA-Melbourne, FL)

Spirit Airlines, Inc.

Order 2002-2-10
OST-2001-11113

Issued February 12, 2002
Served February 12, 2002

Order Allowing Suspension of Service

Waiver of Notice and Early Termination of Service; LGA- Melbourne, Florida

We have decided to grant Spirit's request to suspend service. Despite this action, we take note of and are concerned with the procedural shortcomings in Spirit's notification to terminate its La Guardia-Melbourne service. Although on October 16, Spirit complied with the provisions of Department Order 2001-9-20 by notifying the Department of its La Guardia-Melbourne service termination of in the wake of September 11 events, that action did not relieve Spirit of its obligation to comply with the provisions of section 41716(d), especially the requirement that Spirit demonstrate operating losses for the La Guardia-Melbourne service. The notice requirements of Order 2001-9-20 were made in addition to, and not in place of, the section 41716(d) requirements. After October 16, when Spirit made its decision not to re-institute La Guardia-Melbourne service, the carrier should have immediately filed its section 41719 notice and demonstrated its operating losses as required by section 41716(d). In this regard, we view Spirit's December 5 filing as tardy.

Spirit has reported losses of nearly $850,000 during the first nine months of 2001 on the La Guardia-Melbourne route. Under these circumstances, we find that Spirit's losses may be deemed excessive and substantial. La Guardia, Melbourne will still receive access to the national air transportation system with nonstop service to Atlanta and Orlando. We also disagree with Melbourne's contention that, because Spirit received compensation under the Stabilization Act that was computed based on a formula that included the available-seat-miles it operated in August 2001 between La Guardia and Melbourne, there is an obligation for it to continue operating that particular service. The statutory formula in the Stabilization Act was intended to provide a measure of comparative operations for purposes of allocating compensation payments. We see no indication in the language of that Act or its legislative history that that formula was somehow intended to supersede the Airline Deregulation Act and re-impose federal controls over air carrier rates, routes and service.

By: Read Van de Water