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OST-2005-23497 - Los Angeles-Puerto Vallarta 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-2005-23494 - 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 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-2005-23494 - 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-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding January 17, 2006 Supplemental Application of Delta Air Lines - Bookmarked Delta's proposed nonstop schedules are provided at Exhibits DL-101 and DL-102. Delta intends to operate Los Angeles (LAX)-San Jose del Cabo and LAX-Puerto Vallarta service on a year-round basis using Boeing 737-800 aircraft configured with 16 first class seats and 134 coach seats. DL-103. Delta expects that its new nonstop service will benefit predominantly local passengers. Nonetheless, Delta has provided viable one-stop connecting schedules as requested by Order 2005-12-18. DL-201, 202. Delta intends to operate its proposed Los Angeles-Mexico services with aircraft on hand in its existing fleet. Delta has 71 Boeing 737-800 aircraft. Delta uses Boeing 737-800 aircraft on a variety of U.S. domestic and medium haul international routes to Latin America. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
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
OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding January 23, 2006 Delta hereby answers in opposition to the applications of United, Frontier, and Express Jet in the above-captioned proceeding. All four carriers have sought authority between Los Angeles and San Jose del Cabo. In addition, Delta and United have sought authority for Los Angeles-Puerto Vallarta. Only Delta has proposed daily, year-round mainline service to both destinations, and would best satisfy the Department's objective "to maximize public benefits." Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
January 23, 2006 Answer of ExpressJet Airlines - Bookmarked If imitation is indeed the most sincere form of flattery, ExpressJet Airlines, Inc. d/b/a Continental Express is flattered that each of the other applicants has belatedly decided to imitate Continental Express's proposal to offer daily year-round service between Los Angeles and San Jose del Cabo. If another applicant were awarded Los Angeles-San Jose del Cabo authority based on its recently-adopted proposal for daily service, it would operate thousands of empty seats on the route, particularly during off-peak seasons, and waste thousands of gallons of precious fuel operating aircraft too large for the market with at least five nonstop competitors serving it. For this reason, the Department should be very skeptical of the other applicants' proposals and should award authority to Continental Express, which originated the concept of daily year-round service, will offer a meaningful alternative to current service and is the only applicant that can provide year-round daily nonstop service on an economic basis. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.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-2005-22767 - 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
OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding January 27, 2006 Reply of Delta Air Lines - Bookmarked Delta will produce superior public benefits to any other applicant on each of the Los Angeles-San Jose del Cabo and Los Angeles-Puerto Vallarta routes. Delta's daily year-round schedules, combined with the most new capacity on the subject routes make it the leading contender for an award. Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.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
Order 2006-6-25 Issued and Served June 21, 2006 Order to Show Cause - Bookmarked By this order, we tentatively award (1) primary exemption authority to Delta Air Lines, Inc., and backup exemption authority to United Air Lines, Inc. in the captioned Los Angeles-Puerto Vallarta Combination Service Proceeding; (2) primary exemption authority to JetBlue Airways Corporation, and backup exemption authority to Delta in the captioned New York/Newark-Cancun Combination Service Proceeding; and (3) primary exemption authority to Frontier Airlines, Inc., and backup exemption authority to Delta in the captioned Los Angeles-San Jose del Cabo Combination Service Proceeding. We will afford interested parties ten calendar days from the service date of this order to file objections to our tentative decisions here, with answers to objections due seven calendar days thereafter. By: Michael Reynolds
OST-2005-23494 - New York/Newark-Cancun July 3, 2006 Given the Department's focus on the sustainability of service as a selection criteria, the evidence offered by United in the record and Delta's subsequent actions would alone have been a reasonable basis for an award to United; when coupled with the other, superior public benefits of United's proposal, an award to United is compelling. If the Department is serious about maximizing public benefits, including ensuring the maintenance of proposed Los Angeles‑Puerto Vallarta service, it should reverse its tentative decision and award the designation to United. Alternatively, if the Department were to finalize the tentative award to Delta despite significant questions over the sincerity and sustainability of Delta's proposed daily, year-round service, the Department should condition that award on the continuous commence and maintain daily, year-round service as proposed, the designation should automatically transfer from Delta to United without further action of the Department. This would ensure the realization of significant public benefits as envisioned by the Department and prevent Delta from benefiting from any route case gamesmanship at the expense of the traveling public. Counsel: United and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding July 10, 2006 In its objection, Delta harshly criticizes the awards to Frontier and JetBlue as being "fundamentally flawed, unsupportable by substantial evidence, internally inconsistent, arbitrary and capricious." When the Department commits many of those same errors in Delta's favor in tentatively awarding it the Los Angeles-Puerto Vallarta authority notwithstanding United's superior proposal, however, Delta's criticism vanishes and is replaced by acknowledgement and appreciation. But Delta's inconsistency cannot hide what its own objections clearly highlight -- the Department's tentative award of Los Angeles-Puerto Vallarta authority to Delta is flawed, and the authority should be awarded to United. It is clear from Delta's objection to the Department's award of two of the routes at issue that the Department's decision-making is seriously flawed. When the factors cited by Delta are applied to the tentative award to that carrier in the third market at issue (LAX-PVR), it becomes even clearer that the Department's analysis has migrated from the flawed to the capricious. By awarding one route each to Frontier, JetBlue and Delta (and the earlier award of Chicago-Cancun authority to United), the Department apparently hoped to make each carrier happy. This approach may be politically correct but it short-changes the consumer as well as the carriers that have invested in the development of network services at hub airports such as United has done at Los Angeles. Moreover, as noted above, in this case the Department's approach of rationalizing awards that maximize the number of recipients is doubly unfair to United since it fails to give United credit for the Ted product in which it has also invested to offer low-fare services to leisure markets. The Department is using the Los Angeles- Puerto Vallarta route to reward Delta for its participation in this ease even though it is clear that Delta is far more interested in the New York-Cancun route. Los Angeles-Puerto Vallarta thus becomes a sort of consolation prize designed to compensate Delta for having lost what it really wanted - Cancun service from its JFK hub. But Delta has no meaningful network connections at Los Angeles comparable to United's hub. And United, like JetBlue and Frontier, offers services by a low-fare specialist carrier in the form of Ted. It is United, not Delta, which maximizes consumer benefits for Puerto Vallarta passengers from Los Angeles as well as from network points served by United at its hub. This is amply demonstrated by the fact that Los Angeles civic parties supported United, not Delta. The Department should, for the additional reasons cited by Delta in its objections and discussed above, reconsider its tentative decision with respect to Los Angeles-Puerto Vallarta and award that route to United. In the alternative, as United suggested in its objection, the Department should condition an award to Delta on the continuous operation of daily, year-round service proposed by Delta for the full two-year term of Delta's exemption authority. If Delta fails to commence and maintain such service the designation should automatically transfer to United without further action by the Department. Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
July 10, 2006 Answer of Delta Air Lines to Objections of United - Bookmarked United's Objections are without merit and fail to provide any legitimate basis for reversing the Department's award to Delta. In fact, United's Objections contain little more than a regurgitation of arguments previously raised by United and already considered and rejected by the Department. Implicitly recognizing the weakness of its Objections, United asks the Department to condition the LAX-PVR award to Delta on a requirement that Delta operate daily, year-round service for the full two-year term of Delta's authority. Such a condition is unwarranted and, under these circumstances, would be unprecedented. Delta has offered a good-faith service proposal based on its analysis of the marketplace, and Delta is fully committed to operating that proposal. There is no basis upon which to dispute Delta's commitment. Indeed, the Department determined that Delta's proposal to offer and maintain daily, year-round service between Los Angeles and Puerto Vallarta, was "reasonable, based on the existing levels of service and traffic in the market." Nonetheless, United requests that the award of LAX-PVR authority to Delta automatically revert to United if Delta does not sustain daily, year-round service between these two destinations over the initial two-year period of the award. The Department has previously rejected similar conditions in prior carrier selection proceedings based on its well-settled policy "to afford carriers the necessary flexibility to tailor their services to the changing demands of the marketplace, rather than imposing specific service restrictions." The Department should follow its long-standing policy and precedent here and reject United's proposed condition. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
July 10, 2006 Motion of Delta Air Lines for Confidential Treatment Delta hereby submits this motion for confidential treatment of Table A to Delta's Answer to the Objections of United Air Lines, Inc., filed today in the above-referenced Docket. Confidential Table A contains international O&D data with respect to certain Los Angeles-Mexico routes. The Department strictly limits the release of Origin-Destination Survey data to, among others, air carriers directly participating and contributing to the Survey, in light of the fact that foreign carriers are not required to file similar data. For the same reason, the Department should withhold Confidential Table A from public disclosure. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
July 13, 2006 Reply of United and Motion for Leave to File The primary issue United has raised against Delta's selection is the sustainability of Delta's daily year-round service. In rebuttal to that, Delta cites the Department's finding that Aeromexico and Alaska Airlines, two of the incumbents, each offered daily year-round services in 2005. Delta urges that the Department's reliance upon these services provide a "clearly identified... evidentiary basis supporting" the Department's conclusion that Delta can also offer such a year-round daily service. But Delta goes on to admit that Aeromexico no longer operates the daily year-round service on which the Department relied. Indeed, as Delta concedes, Aeromexico presently offers no nonstop service between Los Angeles and Puerto Vallarta. Delta's own answer in this case and its position in the related U.S.-Mexico proceedings support a reversal of its selection for the LAX-PVR market. United urges the Department to award the route to United whose sustainable network service proposal will provide far more public benefits from its Los Angeles hub than would Delta's unsustainable point-to-point service. In the alternative, and at the very least, the Department should impose the condition proposed by United, similar to that imposed in the 1997 Brazil case cited by Delta, to activate United's backup authority in the event that Delta's service levels fall below the daily year-round frequency on the sole basis of which Delta was selected. Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
July 18, 2006 Surreply of Delta and Motion for Leave to File Surreply to Unauthorized Reply of United Not satisfied with filing an Objection, then an Answer to its own Objection and then an Answer to Delta's Objection, United somehow felt compelled to file an unauthorized reply to Delta's Answer. United's latest missive should be rejected because it is not authorized by the Show Cause Order and because it is entirely repetitious and adds nothing new to the record in this proceeding. To the extent the Department nonetheless considers United's unauthorized reply, Delta requests leave to file this brief Sur-Reply. First, United confirms the disparity between its LAX-PVR proposal and Delta's - specifically, that Delta would provide daily, year-round service as compared to United's substantial reduction in capacity during the off-peak season by operating only two weekly flights. There is no dispute on this point, which represents a fundamental underpinning for the Department's award. Second, United's continuing attempt to raise questions about the sustainability of Delta's proposal once again misses the mark. In its latest submission, United drops its fallacious "new entrant" argument because, as Delta pointed out, there is no Aeromexico nonstop service, much less Delta codeshare service, in the LAX-PVR market. Instead, it erroneously argues that Aeromexico's departure from this market means Delta cannot sustain such service without a hub at Los Angeles. Third, United unsuccessfully tries to distort the implications of DOT precedent cited by Delta which shows the inappropriateness of the condition United would like imposed on Delta's award. United argues that the restrictions placed on the frequencies in the 1997 U. S.-Brazil Combination Case are analogous to, and govern, the situation here. United's argument is wrong. There are no U.S.-Mexico frequencies at issue in this proceeding. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
Order 2006-9-8 Issued and Served September 11, 2006 Final Order - Bookmarked By this order, we make final our tentative findings and conclusions in Order 2006-6-25 to: (I) award primary exemption authority to Delta Air Lines, and backup exemption authority to United Air Lines in the captioned Los Angeles-Puerto a!lara Combination Service Proceeding; (2) award primary exemption authority to JetBlue Airways, and backup exemption authority to Delta in the captioned New York/Newark-Cancun Combination Service Proceeding; and (3) award primary exemption authority to Frontier Airlines, and backup exemption authority to Delta in the captioned Los Angeles-San Jose del Cabo Combination Service Proceeding. By: Michael Reynolds
OST-2003-14290 - Exemption - San Jose del Cabo-Ontario / Monterrey-Las Vegas March 25, 2008 Application of Delta Air Lines for Renewal of Exemptions Pursuant to these exemptions, Delta provides nonstop U.S.‑Mexico service, in some cases with its own aircraft, in some cases on a codeshare basis with Aeromexico or Delta Connection carriers, and in some cases both with its own aircraft and on a codeshare basis. Delta's exemption authority in Docket OST-2003-14290 also includes the Ontario-San Jose del Cabo route, but Delta is not seeking renewal of the exemption as it pertains to that route because the Aeromexico flights on which Delta had previously placed its code have been discontinued. In that regard, by letter dated February 20, 2007, filed in this Docket, Aeromexico notified the Department that it would not seek renewal of its Ontario-San Jose del Cabo exemption authority. Delta currently offers service on the Los Angeles-Mexico routes specified in Docket OST-2006-24984 by displaying its code on "small aircraft" regional jet services operated by ExpressJet Airlines, Inc. Although Delta would remain authorized to offer such services pursuant to 14 C.F.R. § 206.5, Delta is seeking renewal of its exemption authority to provide it with the flexibility to offer large aircraft service in the future. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com |
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