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OST-2005-23496 - Chicago-Cancun Combination Service Proceeding - Instituting Order
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New York/Newark-Cancun Combination Service Proceeding / Chicago-Cancun Combination Service Proceeding / Los Angeles-Puerto Vallarta Combination Service Proceeding / Los Angeles-San Jose del Cabo Combination Service Proceeding Order 2005-12-18 OST-2005-22551 - Delta - Exemption - New York-Cancun OST-2005-22636 - USA 3000 - Exemption - Newark/Chicago-Cancun OST-2005-22620 - Delta - Exemption - Atlanta-Acapulco; Boston-Cancun; Los Angeles-Puerto Vallarta/San Jose del Cabo/Zihuatanejo; Washington, DC-Cancun OST-2005-22769 - America West d/b/a US Airways - Exemption - Los Angeles-San Jose del Cabo Issued and Served December 29, 2005 Instituting Order - Bookmarked By this order we institute proceedings to select one primary carrier and one backup carrier to provide direct carrier (own-aircraft), scheduled combination air services in the New York/Newark-Cancun, Chicago-Cancun, Los Angeles-Puerto Vallarta, and the Los Angeles-San Jose del Cabo markets, thereby implementing new rights available to US. carriers under the recently amended US.-Mexico aviation agreement. We grant the motions to consolidate applications into the relevant proceedings as described in this instituting order, and we consolidate the applications for the four city-pair markets addressed in this instituting order into the four carrier selection cases described herein. We grant the motion of Spirit Airlines, Inc. to withdraw its application for exemption authority to serve the Chicago-Cancun market and hereby dismiss that application. Procedural Timetable:
By: Michael Reynolds
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding January 4, 2006 Petition for Reconsideration of Frontier Airlines Frontier Airlines, Inc. hereby asks the Department of Transportation to reconsider the procedural schedule set forth in Order 2005-12-18 so that additional time is available to submit "Supplements/Amendments to Applications", "Answers", and "Replies." Frontier agrees that this proceeding should be handled in an expedited timetable, however, the timetable set forth in this Order is not only short but included time between the busy holiday week at the end of December and beginning of January. At the same time, there are other proceedings at the Department that need to be addressed. In order to ensure that all parties have time to file all needed information that will allow the Department to make appropriate and timely decisions, Frontier asks the Department to amend the procedural schedule as follows:
This would add approximately 2.5 weeks to the schedule. By adopting this modified schedule, the Department will provide each carrier with ample opportunity to respond and will help ensure that the record is complete. It would still allow the Department to award the authorities in time for initiation of services in the spring/summer seasons. Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.com
OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding January 5, 2006 Answer of Delta Air Lines to Petition of Frontier Airlines Delta does not oppose Frontier's request for a modification of the procedural schedule. While Delta favors expedition, the modest extension proposed by Frontier will not materially impact the timing of a final decision and will enable the carrier participants to present and critique proposals without undue burden on staffing and resources. Whatever procedural dates are adopted by the Department should apply to all of the above-captioned proceedings covered by Order 2005-12-18. Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding OST-2005-22767 - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta January 6, 2006 United hereby replies to the Petition for Reconsideration of Frontier, dated January 4, 2006. In its Petition, Frontier requests that the Department reconsider the procedural schedule set forth in Order 2005-12-18 with regard to two contested routes, Chicago-Cancun and Los Angeles-San Jose del Cabo, to allow additional time for the submission of the required pleadings. If granted, Frontier's request would add approximately two and one-half weeks to the procedural schedule set by the Department. United has pending applications for three contested routes which are subject to the procedural schedule set forth by the Department in the Order 2005-12-18: Chicago-Cancun, Los Angeles-San Jose del Cabo, and Los Angeles-Puerto Vallarta. Frontier is proposing to change the schedule of two of those while leaving the third (Los Angeles-Puerto Vallarta) unchanged. United has no objection to the request of Frontier with respect to the Chicago-Cancun and Los Angeles-San Jose del Cabo proceedings. Should the Department, however, now decide to grant Frontier's request and push back the procedural schedule with respect to those two proceedings, it should do so the same for Los Angeles-Puerto Vallarta. There is no reason to treat the Los Angeles-Puerto Vallarta proceeding different in this respect. Counsel: Wilmer Hale, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding January 6, 2006 Reply of USA 3000 to Petition for Reconsideration of Frontier Airlines and Answer of Delta Air Lines The Department has already recognized that the applications filed are already ripe and the need for an expedited schedule. See: Order 2005-12-18, p. 5 in view of the posture of the currently-pending competing applications in the Chicago-Cancun case, USA 3000 submits that the further delay requested by Frontier, now supported by Delta, is unnecessary and would in fact be detrimental to carriers like USA 3000 which desire a quick decision and actually can commence scheduled service to Cancun as soon as an award herein is made. Whereas it maybe in the interests of Frontier and Delta to delay a final decision in this Proceeding in order to delay start-up of operations to Cancun, this is an invalid reason for the delay sought. Contrary to Frontier's assertion, USA 3000 submits that the current schedule established by the Department provides ample opportunity for each party to submit the information requested to complete the record herein. Counsel: Pierre Murphy, 202-776-3980, pmurphy@lopmurphy.com
OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding Served January 9, 2006 Notice Amending Procedural Schedule By Order 2005-12-18, the Department instituted carrier selection proceedings for the four above-captioned U.S.-Mexico routes and established a uniform procedural schedule for the four proceedings. On January 4, 2006, Frontier Airlines, Inc. filed a timely petition with respect to the Chicago-Cancun and Los Angeles-San Jose del Cabo routes, asking that the Department reconsider and extend by approximately two and one-half weeks the procedural schedule set forth in the Order. Frontier notes that the Department’s instituting order established a short timetable that included a busy holiday period. The carrier does not view the limited extension it seeks as inconsistent with the Department’s goal, which Frontier supports, of conducting these proceedings on an expedited basis. Delta Air Lines answered in support of Frontier’s petition but stated that any extension should apply to all four proceedings. United Air Lines filed a reply asserting a comparable position. ExpressJet Airlines filed an answer in the Los Angeles-San Jose del Cabo proceeding taking no position on the Frontier and Delta requests but urging extension of the time frame established in the Order for answers to application supplements and amendments, from two days to five to seven days. JetBlue Airways filed a reply objecting to Frontier’s request were it to be applied to the New York/Newark-Cancun proceeding and USA 3000 filed a reply objecting to Frontier’s request as to the Chicago-Cancun proceeding. We will extend the procedural schedule as to each of the above named combination service proceedings, as follows: supplements/amendments to applications will be due no later than January 17, 2006; answers will be due no later than January 23, 2006; and replies will be due no later than January 27, 2006. We believe that this result reasonably accommodates the requests of certain of the parties for limited additional time in which to file, while preserving the Department’s stated objective of expedition. Persons entitled to petition the Department for review of the action set forth in this Notice under the Department’s regulations, 14 CFR 385.30, may file their petitions within two business days after the date of issuance of this Notice. This action was effective when taken, and the filing of a petition for review will not alter such effectiveness. By: Paul Gretch
OST-2005-22767 - United - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta January 17, 2006 Amended and Supplemental Information of United Air Lines - Bookmarked On October 17, 2005, United applied for exemption authority and designations to operate year-round services, inter alia, between Chicago-Cancun, Los Angeles-San Jose del Cabo, and Los Angeles-Puerto Vallarta. United plans to operate its Chicago-Cancun service twice daily during the peak season and daily during the off-peak, beginning April 2, 2006. United plans to operate its Los Angeles-San Jose del Cabo and Los Angeles-Puerto Vallarta services daily during the peak season and twice weekly service during the off-peaks' beginning April 2, 2006 for Los Angeles-San Jose del Cabo, and May 4, 2006 for Los Angeles-Puerto Vallarta. This is an increase in the number of peak and off-peak frequencies United originally proposed (11 peak and 7 off-peak), as reflected in Order 2005-12-18. If awarded a designation in time to commence Chicago-Cancun service on April 2, 2006, United will begin with nine frequencies (seven operated as "Ted" and two as mainline). United will operate all 14 peak season Chicago-Cancun frequencies and all seven of its off-peak frequencies using its "Ted" product. United will operate all seven of its peak season Los Angeles-San Jose del Cabo and Los Angeles-Puerto Vallarta frequencies using its "Ted" product, and its two off-peak Los Angeles-San Jose del Cabo and Los Angeles-Puerto Vallarta frequencies using mainline service. All "Ted" service will be operated with A320 aircraft with 156 seats in an all-economy configuration (including Economy Plus) currently in United's fleet. All mainline service will be operated with A320 aircraft with 12 first class and 126 economy seats currently in United's fleet. The "Ted" product was developed specifically for leisure markets such as Cancun, Puerto Vallarta and San Jose del Cabo, where its low‑fare service has been well received by consumers. Because of its success, United is expanding "Ted" service to more leisure markets in 2006, and would like Chicago‑Cancun, Los Angeles‑San Jose del Cabo and Los Angeles‑Puerto Vallarta to be among those. Counsel: Wilmer Hale, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
January 17, 2006 Supplemental Application of Frontier Airlines for an Exemption Frontier hereby applies for a two-year exemption from 49 U.S.C. § 40109 and any other provision of the Department's rules to the extent necessary to engage in scheduled foreign air transportation of persons, property, and mail between Chicago, Illinois, Midway Airport and Cancun, Mexico with services beginning in the second quarter of 2006. Frontier is fit, willing, and able to perform the U.S.-Mexico services proposed herein using Airbus A-319-111 aircraft, with an average seat configuration of 132 seats, which are currently in Frontier's fleet. Frontier reserves the right to serve this route with other aircraft from its fleet
Counsel: Frontier and Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.com
OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding January 17, 2006 Supplement/Amendment to Application of USA 3000 - Bookmarked By this Supplement/Amendment, USA 3000 hereby confirms its application for exemption authority and for designation in the New York/Newark-Cancun and Chicago-Cancun city-pairs: Chicago(ORD)-Cancun - Daily:
Chicago(MDW)-Cancun - Daily:
Newark-Cancun - Daily:
Newark-Cancun - Daily, plus double-daily on Saturday & Sunday:
Counsel: Pierre Murphy, 202-776-3980, pmurphy@lopmurphy.com
January 23, 2006 Frontier will operate the MDW-CUN service on a three days per week basis and expand the flights in the next peak season. The two incumbent carriers in the Chicago-CUN market and the other carriers seeking this authority will utilize connecting traffic to build the market. Frontier believes that the Chicago-Cancun market will significantly grow with low-fare based service. Frontier Airlines is the leading low-fare carrier serving Mexico and is the only low-fare carrier applying for this authority. If awarded the route, Frontier would bring critical low-fare options to travelers for the MDW-CUN market. Moreover, as it has done in its current markets (i.e., non-stop Cancun service from Salt Lake City, Kansas City, St. Louis, Indianapolis, and Nashville), Frontier will stimulate overall growth in the Chicago-CUN market by all operators. American Airlines in the ORD-CUN market along with United, which is applying for the third authority offer similar products and pricing for passengers interested in that market. While ATA Airlines currently serves MDW-CUN, it has announced that it will withdraw from all other the Mexico markets it serves and has withdrawn from many domestic markets. Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.com
OST-2005-22767 - United Air Lines - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta January 23, 2006 Answer of United Air Lines - Bookmarked United plans to use its low fare "Ted" product in all three markets for which it has applied. "Ted" was designed specifically for price-sensitive leisure destinations like Cancun, Puerto Vallarta and San Jose dell Cabo. By using "Ted" from its hubs, United provides not only low-fare service but also online connections to points throughout United's global network. Not surprisingly, "Ted" has been a tremendous success, and its burgeoning popularity has led to rapid growth. Since its inception in February 2004, "Ted" has spread to eight U,S.-Mexico markets, including service from various U.S. points to Cancun, Puerto Vallarta and San Jose del Cabo, and as just announced, "Ted" will add a ninth U,S.-Mexico market in December 2006 (Chicago-Puerto Vallarta). By expanding "Ted" to the Chicago-Cancun, Los Angeles-Puerto Vallarta and Los Angeles-San Jose del Cabo markets, only United will bring both new low fare and network competition to those markets. These services would generate significant public benefits, more than any of the other applicants can offer. Counsel: Wilmer Hale, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding January 23, 2006 Answer of USA 3000 - Bookmarked In light of the value of any CUN designation due to its limited entry nature, an important additional consideration should be the extent to which an applicant herein is currently using its existing valuable limited-entry CUN authority in other authorized city-pairs. USA 3000 submits that if an applicant is currently either not using or is under-utilizing any of the valuable CUN authority it already holds, then that applicant should not be awarded any additional CUN authority herein. USA 3000 further submits that an important special additional consideration to be taken into account when considering which applicant herein is going to be best able to provide the services proposed, is the current situation in Cancun and the surrounding area. As the Department is aware, Cancun was hit by a devastating hurricane last October. Whereas many of the hotels on the Riviera Maya may have re-opened, a number of hotels in the main Cancun area where the bulk of the hotels are located have yet to re-open due to the damage. Consequently, there remains a significant shortage of hotel beds in the Cancun area, and many carriers have significantly curtailed, and in some cases suspended, their authorized CUN services from their U.S. gateways due to this lack of hotel rooms. Due to USA 3000's total focus on the leisure market, USA 3000 has access to a sufficient number of hotel rooms in Cancun to satisfy the needs not only of its existing scheduled services to CUN, but also for the passengers who will be traveling on its scheduled services to CUN from MDW, ORD and EWR. Counsel: Pierre Murphy, 202-776-3980, pmurphy@lopmurphy.com
OST-2005-22767 - United Air Lines - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta January 24, 2006 United Air Lines, Inc. hereby notifies the Department that it has discovered two typographical errors in the Answer of United filed on January 23, 2006, in the above referenced dockets. In footnote 21, at page 11 of the Answer, the word "Cancun" should be "Puerto Vallarta," and, in footnote 25, at page 13, the word "Cancun" should be "San Jose del Cabo." Counsel: Wilmer Hale, Jonathan Moss, 202-683-6655
January 11, 2006 Chicagoland Chamber of Commerce Support of United Air Lines Application I am writing on behalf of the Chicagoland Chamber of Commerce to urge that the Department of Transportation approve United Airlines' application to operate nonstop service between Chicago and Cancun, Mexico. United's proposed service to Cancun would greatly benefit Chicago's economy by expanding travel and tourism opportunities as well as increasing business links between our two cities. For these reasons, we urge you to approve United Airlines’ application to provide nonstop service in the Chicago-Cancun market. Doing so would provide increased benefits not only for the people of Chicago and Illinois, but for the entire Midwestern United States. By: CCC, Gerald Roper
January 11, 2006 US-Mexico Chamber of Commerce Support of United Air Lines Application On behalf of the United States-Mexico Chamber of Commerce, Mid-America Chapter, I am writing to urge for Department of Transportation approval of United’s application to operate nonstop service between Chicago and Cancun, Mexico. United’s proposal to provide service to Cancun would improve access, convenience and competition that would benefit Chicago area travelers as well as boost employment opportunities in the Chicagoland area. Upon review, we have noticed that United’s proposal offers the most number of flights and seats to Cancun when compared to the other applicants in this proceeding. Furthermore, adding Cancun to United’s network at O’Hare would further increase the number of destinations available to travelers that regularly fly United. United currently provides service to 112 domestic and 22 international destinations with over 660 flights a day from Chicago. Adding service to Cancun would also complement United’s existing service to Mexico City, seasonal service to Cozumel and its soon to be launched service to San Jose del Cabo. We therefore, urge you to approve United Airlines’ application to provide nonstop service in the Chicago-Cancun market. Doing so would provide increased benefits for Chicago and Illinois. By: USMCC, Leroy Allala
January 27, 2006 Reply of Frontier Airlines - Bookmarked Frontier will operate the MDW-CUN service on a three days per week basis and expand the flights in the next peak season. The two incumbent carriers in the Chicago-CUN market and the other carriers seeking this authority will utilize connecting traffic to build the market. Frontier believes that the Chicago-Cancun market will significantly grow with low-fare based service. Frontier Airlines is the leading low-fare carrier serving Mexico and is the only low-fare carrier applying for this authority. If awarded the route, Frontier would bring permanent low fare options to travelers for the MDW-CUN market. If able to initiate service in this market, Frontier will positively impact the marketplace and stimulate overall growth in the Chicago-Cancun market by all operators. Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.com
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding January 27, 2006 Reply of United Air Lines - Bookmarked United has demonstrated that, with its low-fare Ted service and connecting services from its Chicago and Los Angeles hubs, its proposals offer more public benefits than those of any of the other applicants. United's Ted service and United's hubs would provide more improvements to the competitive market structure both for local markets and on a network basis than the services or networks of the others. In these circumstances, United urges that its applications in each of the captioned dockets be granted and those of the other applicants be denied. Counsel: Wilmer Hale, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding January 27, 2006 Reply of USA 3000 - Bookmarked USA 3000 submits that, based on its practice in similar prior proceedings, the principal decisional factor in these cases should be the level of capacity to be offered . As part of this analysis, however, the Department should also consider the likelihood of the proposed service actually being offered by a consideration of whether the applicant is currently making full use of its other Cancun authorities. USA 3000 further submits that an important special additional consideration to be taken into account when considering which applicant herein is going to be best able to provide the services proposed, is the current situation in Cancun and the surrounding area. As the Department is aware, Cancun was hit by a devastating hurricane last October. Whereas many of the hotels on the Riviera Maya may have re-opened, a number of hotels in the main Cancun area where the bulk of the hotels are located have yet to re-open due to the damage. Consequently, there remains a significant shortage of hotel beds in the Cancun area, and many carriers have significantly curtailed, and in some cases suspended, their authorized CUN services from their U.S. gateways due to this lack of hotel rooms. Due to USA 3000's total focus on the leisure market, USA 3000 has access to a sufficient number of hotel rooms in Cancun to satisfy the needs not only of its existing scheduled services to CUN, but also for the passengers who will be traveling on its scheduled services to CUN from MDW, ORD and EWR. In applying these criteria to the applications herein, USA 3000 submits that its applications will result in the maximum usage of the authority available herein and will achieve maximum public benefit. Counsel: Pierre Murphy, 202-776-3980, pmurphy@lopmurphy.com
Order 2006-4-22 Issued and Served April 25, 2006 We have decided that the public interest is best served by: (1) selecting United for primary exemption authority to provide foreign scheduled air transportation of persons, property, and mail on the Chicago-Cancun route; and (2) selecting USA 3000 for backup exemption authority on the route. Frontier offers the least amount of service and capacity of any of the applicants. It would offer only three weekly flights during peak, reducing that service to once weekly flights during off-peak, whereas United and USA 3000 would be offering no less than daily service year-round. Frontier would provide its service with aircraft offering only 132 seats. United and USA 3000 are both proposing to use greater capacity aircraft for their services (as much as 168-seat aircraft for USA 3000 and as much as 156-seat aircraft for United). While we recognize that Frontier’s new entrant status and proposed low fares in this market could present certain competitive advantages, we do not see these advantages as sufficient to overcome the clear competitive weaknesses in its proposal relative to the other applicants. Both Frontier and USA 3000 raise issues with respect to the viability of United’s proposal in this proceeding, stating that United has reduced service in many U.S.-Mexico markets. In response, United states that, effective June 6, 2006, United will be offering daily services in four of its five US.-Cancun markets. In response to USA 3000’s concerns about United’s proposal in light of the lack of hotel space in Cancun, United maintains that it is confident that it has access to hotel capacity sufficient to support its service proposal. The other applicants also tout their low-fare characteristics and challenge United as a high-fare carrier. However, given that United proposes to serve the route mostly through its lower-cost “Ted” service, we do not see fare differences as dispositive in this proceeding. We will issue to United two-year exemption authority for foreign scheduled combination service in the Chicago-Cancun market. In addition, we will issue to USA 3000 contingent exemption authority for one-year’s effectiveness for backup foreign scheduled combination service in the Chicago-Cancun market. By: Michael Reynolds
OST-2004-17490 - Exemption - Chicago-Cozumel February 5, 2008 Appication of United Air Lines for Renewal of Exemptions United hereby applies for renewal of the two above-captioned exemptions from 49 U.S.C. § 411 01 authorizing it to provide scheduled combination service in foreign air transportation of persons, property, and mail between Chicago, Illinois and Cozumel, Mexico and Chicago, Illinois and Cancun, Mexico. United's exemption authority for the Chicago-Cozumel market is currently effective through April 21, 2008. United's exemption authority for the Chicago-Cancun market is currently effective through April 25, 2008. United intends to continue its seasonal service between Chicago and Cozumel, as well as its year-round service between Chicago and Cancun. Counsel: United, Jeffrey Manley, 301-229-8571, jeffrey.manley@united.com |
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