Virgin America, Inc.

OST-2008-0107 - Form 41 Confidentiality (Financial and Traffic)

March 14, 2008

Motion for Confidential Treatment

Virgin America began service in August 2007, and, during the October-December 2007 reporting period, served a total of six point-to-point markets: SFO-LAX, JFK, lAD and LAS; and LAX-JFK and lAD. Public release of the detailed operational, traffic and financial data contained in Virgin America's Fonn 41 submissions would cause Virgin America to suffer substantial competitive hann because the local nature of traffic in its point-to-point markets and the limited number of aircraft types operated will pennit Virgin America's competitors to: (1) obtain commercially sensitive competitive infonnation on Virgin America's service in these markets; and (2) accurately calculate a variety of market-specific information, including cost per available seat mile, yield, revenue per available seat mile and profit margins.

Although the public release of this Form 41 data has the potential to harm Virgin America competitively, the exclusion of the detailed Virgin America-specific data for a limited time period will have no appreciable effect on the Department's overall data collection and industry analysis efforts. First, Virgin America's operations during this initial phase of its service accounts for only 0.4 % of the total U.S. domestic available seat miles otherwise reported by the Department. Second, Virgin America will, in fact, be filing this data with the Department, albeit confidentially, so that the Department can use this data internally when carrying out its aviation policies, including its need to closely monitor the industry. At bottom, the purpose of the Department's Form 41 reporting requirements "is to provide Congress, DOT, and other Federal agencies with uniform and comprehensive aviation data that are accurate, timely, and relevant for use in making aviation policy decisions and administering aviation-related programs,"' not to provide detailed and sensitive information to carriers on their competitors' market-specific costs and profit margins, to wield as a weapon to thwart competition.

Counsel: Virgin America, David Pflieger, 650-762-7115, dave.pflieger@virginamerica.com

March 25, 2008

Answer of Alaska Airlnes and Motion for Expedited Decision

Virgin America’s request is so sweeping that it would have been far simpler for it to list the reports it is willing to make–examining the full list of required reports reveals that Virgin America evidently believes that it should only file monthly reports of its fuel consumption (Schedule P-12(a)) and annual reports of the number of its employees (Schedule P-10). Presumably, Virgin America is willing to make these reports because they provide information of little or no competitive interest to anyone.

And it is on exactly this point that Virgin America’s request in this docket rings especially ironic given that carrier’s many earlier statements about how it views its primary mission as one of introducing a new and enhanced level of competition. See Docket OST-2005-23307: Application of Virgin American Inc. for a Certificate of Public Convenience and Necessity at 5-6 (Dec. 8, 2005), and Objections of Virgin America Inc. to Order 2006-12-23 and Motion for Leave to File Additional Evidentiary Material at 36-44 (Jan. 17, 2007) (arguing that the Department’s 2006 Tentative Decision with respect to Virgin America’s citizenship inhibited competition and the expansion of low-fare, high quality service).

Alaska also asks that the BTS Director, rather than the BTS’ staff, assert jurisdiction over and directly rule on–and deny–Virgin America’s Motion as promptly as possible. Virgin America and others which may later similarly seek to invoke the Department’s confidentiality procedures in order to shield their public reports should not be allowed to count on six or more months of de facto confidentiality while first BTS’ staff and later the BTS Director separately consider the request. Indeed, it is reasonable to infer that the six months of de facto reporting confidentiality ExpressJet enjoyed because of the Department’s two step process is the principal, if not the sole, reason Virgin America filed its extraordinary request–fully recognizing that the Department would ultimately deny that request. Where the governing precedent is so clear as well as so recent, there is every reason for the BTS Director to forthwith assert jurisdiction over this request and promptly issue a decision. To do otherwise would mean that Virgin America’s various reports will unjustifiably be protected from competitive scrutiny for many months to come.

Counsel: Alaska and Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com

March 24, 2008

Answer of American Airlines and Motion for Expedited Final Decision

It would be highly unfair, prejudicial to other reporting carriers and adverse to the public interest to withhold Virgin America's data when the data submitted by all other carriers is released immediately. Timely release of carrier data is the key to its usefulness.

There is nothing unique about Virgin America that could justify the unique treatment it is seeking. Public disclosure of data enumerated in Part 241 is one of the obligations that comes with being a certificated carrier. If Virgin America's request were granted, other carriers would also attempt to opt out of the public data system by applying for confidential treatment of their submissions, and the data that did remain publicly available would be of diminished utility to the numerous stakeholders identified in the NPRM.

The Director should on an expedited bases issue a final order denying Virgin America's motion for confidential treatment, without awaiting staff action and a petition for review.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com

March 25, 2008

Answer of Delta Air Lines

Virgin America’s motion seeks reconsideration of an issue that the Department conclusively resolved less than four months ago when it rejected the far more limited request of ExpressJet for similar favoritism. ExpressJet asked for preferential treatment preventing the public release of its T-100 traffic data for scheduled passenger operations conducted under its own ExpressJet brand name for a one-year period. It claimed that the public release of this data would have an adverse competitive impact upon it, given the “unique operational aspects” of its point-to-point operation, and the fact that this Expressjet-branded service was “only in its infancy.” The supposedly adverse competitive consequences that ExpressJet complained of were that its competitors might make use of this public data – which all carriers are required to report – to compete with Expressjet and more effectively respond to consumer demand. Id. ExpressJet complained in particular that it was already facing stiff competition from American and Alaska Airlines in some of the markets it had chosen to serve.

Virgin American obviously hopes to gain a similar period of de facto confidentiality just by filing this frivolous request. The Department should not allow this cynical tactic to achieve its intended result. It
should grant American’s motion for immediate action by the Director of BTS pursuant to 14 C.F.R. § 385.7, or alternatively, the staff should summarily deny the request and specify pursuant to 14 C.F.R. § 385.6 that the filing of a petition for review will not preclude the action from becoming effective immediately.

Counsel: Delta, Scott McClain, 404-773-6514, scott.mcclain@delta.com

March 24, 2008

Answer of jetBlue Airways

As with the ExpressJet request, the relief requested by Virgin America could undermine the inherent usefulness of such data collected by the Department, on which many other entities besides Virgin America's competitors rely. Although Virgin America focuses on the potential for competitors to access and review its Form 41 Schedules data, it ignores that this data is used for several other purposes as well, including airports, consumers, manufacturers, industry associations, consultants, academics, researchers, financial analysts, investors, and the general public.

It must be said that its application appears to be an effort to game the system, and by filing its request and having all of its data withheld while the process moves to its completion, Virgin America is forcing the Department to dedicate its limited resources to an issue it has just resolved. jetBlue believes that the Department should not allow this game to again be played and it should summarily deny Virgin America's request. It is unfair to the traveling public and to all carriers to allow such a process whereby, by the mere filing of its motion, Virgin America makes its Form 41 Schedules data confidential until a decision is made by the Department on its motion.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000

March 25, 2008

Answer of Northwest Airlines

Northwest Airlines, Inc. hereby answers in opposition to the motion of Virgin America which seeks sweeping relief from the Form 41 traffic and financial reporting data required of all similarly situated U.S. carriers. Virgin America’s request is a clear violation of the fair and even-handed disclosure principles upon which Part 241 is based. The Department’s regulations expressly recognize “the damaging competitive impact . . . and adverse effect upon the public interest that would result from the unilateral disclosure of [ ] data” Part 241 sec. 19-7(d).

Virgin America’s motion should be summarily denied. Failure to act swiftly and decisively will merely encourage Virgin America and other carriers to “game” the system by filing frivolous confidentiality motions to delay the publication of sensitive Form 41 data which all carriers are required to report. The Department’s final ruling on the ExpressJet reporting matter took over six months from the date ExpressJet’s motion was filed - resulting in a lengthy period of de facto - and unilateral - confidentiality. In these circumstances, the Department should view Virgin America’s 90 page confidentiality submission on this simple and well-settled Form 41 reporting issue with skepticism.

Counsel: Northwest, Alexander Van der Bellen, 202-842-4184, sascha.vanderbellen@nwa.com

March 25, 2008

Answer of Southwest Airlines

As Southwest and other parties have made clear in the recent ExpressJet docket, there is simply no legitimate basis for excusing one airline from the public reporting obligations that all other airlines are required to abide by. In its September 10, 2007 denial of similar single-carrier exemption petitions filed by ExpressJet, the Department agreed. Accordingly, this issue should not again be subject to a time consuming debate. In fact, since a carrier's information remains confidential while the Department makes a determination, any delay is akin to a decision in favor of an unfair, single-carrier exception. Therefore the Department should reiterate its findings on ExpressJet's motions and immediately deny Virgin America's extraordinary request.

Without repeating all of the compelling reasons articulated in Southwest's previous filings, along with those given by other parties for denying ExpressJet's motions, it suffices to say that Virgin America has offered no legitimate factual or legal basis for the exclusive relief it is requesting.

Counsel: Southwest, Bob Kneisley, 202-263-6284, bob.kneisley@wnco.com

March 25, 2008

Answer of United Air Lines

United urges the Department to deny the Motion of Virgin to withhold most of its Part 241 reports from public disclosure. The Department’s reasoning and findings relating to its recent denial of the similar relief sought by ExpressJet apply with equal or even greater weight to the more expansive relief sought here by Virgin. In addition, United urges the Department to act quickly to deny Virgin’s motion to avoid the result in the ExpressJet case where most of the anticompetitive benefits sought by the carrier were achieved as a result of the delay in the Department’s decision-making process. These issues have now been fully ventilated and resolved in the ExpressJet case, and the Department’s policy and reasoning fully set forth in its decisions. That same policy should now be applied quickly to Virgin by expeditiously denying its Motion.

Counsel: Jeffrey Manley, 301-229-8571, jeffrey.manley@united.com

April 2, 2008

Motion for Leave to File and Consolidated Reply of Virgin America

Virgin America’s request is quite similar to those filed by Republic and Shuttle America–for which the Department has granted confidential treatment during the last 2.5 years. (See Motion of Shuttle America to Withhold Certain Information from Public Disclosure, Docket OST-2005-23354 (Dec.12, 2005); Motion of Republic Airlines Inc. d/b/a Republic Airlines to Withhold Certain Information from Public Disclosure, Docket OST-2005-23355 (Dec. 12, 2005).) For example, and as Shuttle America submitted with its confidentiality request, the airline only operates flights on a code-share basis (and does not operate flights under the Shuttle America brand). Unlike ExpressJet, release of all Shuttle America’s Form 41 Schedules would allow competitors to determine with relative precision Shuttle America’s code-share profit margins, information not otherwise publicly available.

Similarly, like Virgin America, Republic only operated under a single brand when it filed its confidentiality request (as US Airways Express), and argued that release of the information would allow competitors the ability to determine precise cost structure and profit margins. Additionally, and also like Virgin America, Republic was a relatively new airline at the time it filed its confidentiality request and had recently received confidential treatment for much of the same information during its certification proceeding.

Unlike Shuttle America and Republic however, which both operate extensive regional feeder flights from code-share partners’ hubs, Virgin America’s traffic is overwhelmingly local, given its point-to-point network. Therefore, segment-specific calculations reflecting allocated unit revenue in a particular O&D market is far more achievable with Virgin America’s data.

The competitive harm issues Virgin America has raised go well beyond those presented in the ExpressJet proceeding, and must be carefully vetted by the Bureau of Transportation Statistics and the Department. While American urges the Department to forego initial staff action,17 such a rush to judgment based solely on the ExpressJet decision would not be appropriate under the circumstances. Virgin America respectfully submits that it meets the applicable standard for withholding certain Form 41 Schedules, and that the Department ought to take whatever time is necessary to consider carefully the significant legal, policy, and competitive consequences of its action.

Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com

April 3, 2008

Re: American Airlines, Alaska Airlines, JetBlue Airways, Delta Air Lines, Northwest Airlines and United Air Lines Will Not File an Answer

Each of the undersigned representatives of carriers that file Form 41 reports with the Department has expressed opposition to the groundless request of Virgin America that it be accorded special treatment with respect to virtually all of the requirements of the regulations at 14 CFR Part 241. We hereby advise the Department that we do not intend to respond to the unauthorized consolidated reply filed yesterday by Virgin America, Virgin America's unauthorized pleading adds nothing new to the record, and, like its original motion, is merely calculated to gain tactical advantage over other Form 41 filers by creating procedural delay.

The record was complete when the authorized answers to Virgin America's motion were filed last week, and the reporting carriers identified below urge that the Department handle this matter on an expedited basis and promptly deny the motion of Virgin America.

Counsel: American, Carl Nelson; Squire Sanders, Marshall Sinick for Alaska; Dow Lohnes, Jonathan Hill for JetBlue, Delta, Scott McClain, Northwest, Alexander Van der Bellen; United, Julie Oettinger

April 4, 2008

Comments of Southwest Airlines

Southwest Airlines agrees with the joint letter filed by six carriers yesterday requesting that the Department promptly deny Virgin America's April 2, 2008 motion for leave to file an unauthorized consolidated reply in this proceeding.

Virgin America's latest motion adds nothing new to the record, and if granted will only delay Department action on the carrier's underlying request for confidentiality of its Form 41 reports - which, as Southwest's and other answers have shown, is totally without merit. Further pleadings are unnecessary and will only reward Virgin with confidentiality de facto to which it is not entitled de jure. Accordingly, Southwest will not file an answer to Virgin America's motion for leave to file, and urges the Department to deny its request for confidentiality as promptly as possible.

Counsel: Southwest, Robert Kneisley, 202-263-6284, bob.kneisley@wnco.com

April 8, 2008

Re: Confidential Treatment for Form 41, Schedules P-1(a) and P-12(a) - February 2008

On behalf of Virgin America enclosed are confidential Form 41, Schedules P-1(a) and P-12(a), for the month ending February 2008. The confidential Schedules are being provided in a sealed envelope labeled "Confidential Treatment Requested Under 14 C.F.R. § 302.12." 

Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com

OST-2005-23354 - Shuttle America - Motion to Withhold Information from Public Disclosure - Form 41
OST-2005-23355 - Republic Airlines - Motion to Withhold Certain Information from Public Disclosure - Form 41
OST-2008-0107 - Virgin America - Form 41 Confidentiality (Financial and Traffic)

May 14, 2008

Re: Request of United, Northwest, Alaska Air, jetBlue, American and Delta for DOT Decision

The undersigned air carriers are writing to request that the DOT immediately issue a decision in the referenced dockets. The practice of filing for confidentiality of traffic and financial data de facto grants confidential treatment to the data while a decision is pending. The DOT addressed this very issue, substantively, in the Staff Action dated September 10, 2007 and Decision of the Reviewing Official dated December 5, 2007 in ExpressJet, Docket OST-2007-28396. In that decision, after a protracted exchange of pleadings and extended consideration by the Department, ExpressJet's request for confidential treatment of certain Form 41, T-100 data was denied. That decision correctly determined that if regulations require the public filing of data by all air carriers, all air carriers should file the data publicly.

While there are certainly times when data must and should be held confidentially by the Department, where a clear decision has been made that is on point, carriers should not be allowed to game the system to their advantage and their competitors' disadvantage. It is fundamentally unfair for those who chose to game the system to keep their traffic and financial data from competitors. The undersigned make their data available as required by DOT regulations, thereby allowing their competitors, including Shuttle America, Republic and Virgin America, to see the information and use it for whatever purpose they may choose. The result is that our competitors see our data while we cannot view the same information for Shuttle America, Republic and Virgin America.

One option that must therefore be considered, if an immediate decision is not issued, is that the undersigned carriers may also file for confidential treatment of this data. That result is not what is intended by the DOT's regulations. These cases are ready for decision. We request that the DOT immediately issues its decision.

Counsel: Julie Oettinger for United / Sascha Van der Bellen for Northwest / Squire Sanders, Marshall Sincik for Alaska Air / Dow Lohnes, Jonathan Hill for jetBlue / Carl Nelson for American / Scott McClain for Delta

May 21, 2008

Re: Response of Virgin America to Joint Carriers Letter from May 14th

As Virgin America previously noted, the usefulness of Virgin America’s data to its competitors is simply not relevant to the proper analysis by the Department of the airline’s request under the standards of FOIA’s Exemption 4, as the proper analysis should be limited to whether disclosure is likely to cause substantial harm to Virgin America’s competitive position. The fact that these other airlines want to use Virgin America’s data for marketplace analysis and a competitive response is not a legitimate reason for disclosure. Indeed, their pitched and now collective effort only underscores Virgin America’s arguments about the true goals of these other airlines and the likelihood of substantial harm if this information is made available to them.

In short, Virgin America believes this latest argument from some of the same airlines that sought to thwart its initial certification remains without merit. Virgin America has properly demonstrated that disclosure of its Form 41 data would cause it substantial competitive harm. Thus, it has met the Department's standards for withholding such data from disclosure to its competitors, and it therefore satisfies the tests enunciated by Federal courts in their review of FOIA Exemption 4 requests. We trust that this latest collective effort from Virgin America's competitors will not influence the Department as it continues to carefully evaluate the particular circumstances and individual merits of what is clearly a legitimate request.

Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000

June 2, 2008

Re: Letter Expressing Concern Over Release of Form 41 Schedule Data

In our recent filing with the Research and Innovative Technology Administration, we noted that the stated purpose of the Department's data reporting requirements "is to provide Congress, DOT, and other Federal agencies with uniform and comprehensive aviation data that are accurate, timely, and relevant for use in making aviation policy decisions and administering aviation-related programs.'" It is not intended to supply competitors with powerful information that would allow them to target and harm new entrants.

That notwithstanding, our competitors have renewed their objection to Virgin America's modest request for confidential treatment of this data, and they now seek expedited review of the sensitive information. While we note that the Department has afforded two years for a similar request from ExpressJet, we believe it is more important to emphasize that none of our competitors have refuted our basic premise that disclosure of this sensitive commercial and financial information is highly likely to cause substantial competitive harm--the legal standard for protecting sensitive business information submitted to government agencies.

By: Virgin America, David Cush

June 17, 2008

Re: April T-100 Information - Confidentiality Request

On behalf of Virgin America Airlines Inc., enclosed is a confidential disc containing Virgin America's Fonn 41, April T-100 infonnation for April 2008. Virgin America hereby adopts and incorporates by reference the Motion for Confidential Treatment filed in Docket OST-2008-0107, which sets forth in detail the legal basis for confidential treatment of these reports. This submission includes a monthly report with updated information, similar to the data addressed in the pending motion.

Counsel: Zuckert Scoutt, John Gillick, 202-973-7939

June 26, 2008

Re: DOT (RITA/BTS) Denying Confidential Treatment

This letter is in response to the motion of Virgin America to withhold from public disclosure certain Form 41 financial, traffic, and Origin and Destination Survey (O&D) data submitted to the Bureau of Transportation Statistics (BTS) until such time as Virgin America becomes a Group III air carrier under the Department's regulations.

Virgin America has failed to demonstrate how the release of the Form 41 financial, traffic, and O&D reports is likely to cause substantial competitive harm. Virgin America seeks reconsideration of an issue that the Department conclusively resolved in the ExpressJet case where the grounds offered by ExpressJet in Docket DOT-OST-2007-28396 were virtually identical to those currently offered by Virgin America. ExpressJet asked for confidential treatment of its T-100 traffic data pertaining to its recently initiated branded service. The branded service consisted of point-to-point operations in relatively small city-pair markets utilizing small regional jet aircraft. ExpressJet asserted that the combination of these factors made public release of the detailed operational and traffic data particularly harmful to the competitive position of ExpressJet's new branded service. Virgin America has offered no legitimate factual or legal basis for the exclusive broader relief it is seeking.

By: M. Clay Moritz

July 7, 2008

Petition of Virgin America for Review of Staff Action Under 14 CFR 385.30 - Bookmarked

At a time when low fare airlines are rapidly disappearing and legacy airlines are slashing schedules, the BTS completely and inexplicably ignored the competitive implications of its decision. In essence, BTS has declared that Virgin America - a private company - may be forced, pursuant to a governmental rule designed to aid the government, not competitors, to make public its most sensitive cost and revenue figures, so legacy airlines can disaggregate this data and use it to harm competition. The BTS Decision will directly harm the competitive positions of new entrant and smaller carriers, like Virgin America, allowing unchecked dissemination of sensitive commercial information. It represents an open invitation for airlines to engage in predation or capacity dumping, which the Department, courts, and scholars have long recognized as highly difficult and expensive to challenge or prove. As network carriers continue to shift service patterns to counter mounting operating losses, their rivals’ segment and market-specific data are more useful than ever for rendering strategic decisions.

Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000