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OST-2008-0258 - American Airlines - Allocation for Seven Weekly Miami-Bogota Frequencies
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OST-2008-0258 - Allocation for Seven Weekly Miami-Bogota Frequencies August 19, 2008 Application for Allocation for Frequencies American Airlines, Inc. hereby applies for the allocation of seven U.S.-Colombia weekly combination frequencies from the unallocated pool in order to restore our third daily nonstop flight between Miami and Bogota, effective November 20, 2008. We instituted our third Miami-Bogota operation on December 13, 2007, using seven frequencies that had been duly allocated by the Department. Our triple daily service proved to be an immediate success in the marketplace, producing an overall load factor of 85 percent in the month of December. However, in a departure from well-established precedent, the Department withdrew seven of American's U.S.-Colombia frequencies for re-assignment to another carrier. See OST-2007-0006, show-cause Order 2008-3-4, March 2, 2008 and final Order 2008-5-27, May 21, 2008. American is challenging the Department's action before the United States Court of Appeals for the District of Colombia Circuit. American proposes to use 188-seat B757 aircraft (22C/166Y) on the Miami-Bogota route, and to resume service on November 20, 2008. On August 4, 2008, Spirit Airlines applied for same frequencies, proposing a daily flight between Fort Lauderdale and Medellin (OST-2008-0239). American will provide far greater public benefit by operating additional service from Miami, the largest gateway to Colombia, and by using larger aircraft (188-seat B757 v. 144-seat B319). In a carrier-selection proceeding, American will conclusively demonstrate why its application should be preferred. Counsel: American, Carl Nelson, 202-496-5647
OST-2008-0258 - American - Allocation for Seven Weekly Miami-Bogota Frequencies August 22, 2008 American’s proposal for a third daily flight between Miami and Bogota adds little added benefit to its current 2 daily flights, where it is already intent on cutting capacity from February 2009, despite claiming that it needs more. Given American’s track record of squandering frequencies to Colombia and its continuance in doing so: American is suspending 3 weekly frequencies on its Miami-Medellin flights from September 22nd to November 20th 2008, without adding them to Bogota, where it claims to be needing them, it should be clear that valuable frequencies to Colombia should not be wasted, but instead, awarded to an airline that would inject year round capacity on a new route with important potential, such as Spirit is offering. American’s grasp of the Colombian market must also be questioned, despite being the dominant US flag carrier to the country. Having started Miami-Barranquilla flights in December 2007 (and only after Spirit challenged American’s dormant frequencies) it is already pulling out in September 2008. I urge the Department to dismiss American’s application and to award the newly available frequencies to Spirit, who are in the best position to provide the greatest public benefit in the US-Colombia market. By: Juan Escobar
OST-2008-0258 - American - Allocation for Seven Weekly Miami-Bogota Frequencies September 2, 2008 Answer of Spirit in Opposition to Application of American and Reply in Support of Spirit's Application -Bookmarked The Department has all the information it needs to immediately allocate the seven frequencies being returned by Continental next month, without instituting a new carrier selection proceeding. Just three months ago, the Department found that the need for new entry in Colombia far outweighed American’s desire to operate a third daily flight between Miami and Bogotá. Indeed, the Department expressly stated that it would have liked to have awarded more frequencies to new entrants like Spirit. Absolutely nothing has changed in the competitive landscape of the U.S.-Colombia market since the Department’s decision. Service to important cities like Bogotá and Medellín is still restricted. Now, because Continental is eliminating its Cali service, the Department has the opportunity to award more frequencies to a U.S. new entrant that would provide low fares in an underserved market. Awarding the seven frequencies to Spirit will bring first time U.S. carrier competition to the large South Florida-Medellín market. Moreover, the service will be provided by a low-fare, new entrant carrier that has lived up to its representation and commitment in the Colombia Proceeding and has been the only carrier to avail itself of the open skies opportunities negotiated by the U.S. team with Colombia, even as American has ended service to Barranquilla, Continental has ended service to Cali, and Delta and JetBlue have delayed start up of their promised new Bogotá flights. the Department should, without further delay, deny American’s application, and grant Spirit’s competing application based on the recently developed record in the U.S.-Colombia Proceeding; the application, answer, and reply filed in Docket OST-2008-0239; and the application and answer filed in Docket OST-2008-0258. Counsel: Kirstein & Young, Joanne Young, 202-331-3348
OST-2008-0258 - American - Allocation for Seven Weekly Miami-Bogota Frequencies September 11, 2008 Reply of American Airlines and Motion for Leave to File Spirit's demand for "immediate" approval of its application, without carrier-selection procedures, should be denied. The Department should promptly institute a proceeding to choose between American and Spirit. There, we will show why the Department should reallocate Continental's seven ex-frequencies to American rather than to Spirit. MIA-BOG is by far the largest U.S.-Colombia O&D market, and Miami is vastly superior to Fort Lauderdale as an on-line connecting hub to serve cities throughout the U.S. The public will be best served when American is able to resume its full pattern of three daily nonstop flights between Miami and Bogota. Counsel: American, Carl Nelson, 202-496-5647
OST-2008-0258 - American - Allocation for Seven Weekly Miami-Bogota Frequencies September 18, 2008 Sur-Reply of Spirit Airlines to the Reply of American Airlines and Motion for Leave to File The Department can and should, in line with settled law and precedent, consider quickly and contemporaneously the recent applications of Spirit and American in Dockets OST-2008-0239 and OST-2008-0258 in the context of the comprehensive, recently completed 2007/2008 Colombia Proceeding. Based on such a review, Spirit respectfully submits the Department should further the pro-competitive objectives it articulated in that proceeding and award Spirit an exemption to operate the seven available frequencies to provide first time U.S. carrier competitive service in the important South Florida/Fort Lauderdale-Medellín market. An award to Spirit will achieve the Department’s goal of ensuring sustained viable competition in the South Florida-Colombia market, which today has only the most rudimentary competition made possible by the seven frequencies awarded to Spirit for Bogotá – enough to only operate one flight a day. The Department should contemporaneously reject American’s attempt to delay and regain the seven frequencies the Department, after notice and a lengthy proceeding with multiple filings and a full record, decided to withdraw from American rather than allow it to add a third daily flight between Miami and Bogotá. An award to American without question would significantly harm the newly created nascent competition established by the Department in the 2007/2008 U.S.-Colombia Proceeding, and would be contrary to the competitive objectives articulated by Congressional objectives, statute and Department precedent. Counsel: Kirstein & Young, Joanne Young, 202-331-3348
OST-2008-0239 - Spirit - Allocation of Seven US-Colombia Frequencies Returned by Continental Airlines Issued and Served October 3, 2008 On July 30, 2008, Continental Airlines, Inc. notified the Department that, effective September 10, 2008, it was returning to the Department for reallocation seven U.S.-Colombia scheduled combination frequencies that it had been allocated for Houston-Cali service. These seven frequencies are available for immediate use by any certificated U.S. air carrier for services between the United States and frequency-limited Colombian points. We have received applications for allocation of these seven frequencies from Spirit Airlines, Inc. and American Airlines, Inc. Spirit has renewed its prior proposal to launch daily service in the Ft. Lauderdale-Medellin market using A-319 aircraft, and American has repeated its proposal to operate its third daily service in the Miami-Bogota market using B-757 aircraft. Spirit and American filed a number of responsive pleadings objecting to each other’s applications. Spirit contends that, rather than instituting a new carrier selection proceeding to award these frequencies, the Department can rely on the decisional record recently developed in the 2007/2008 Proceeding, upon which the Department distributed 28 U.S.-Colombia frequencies available for use in 2008. American maintains that the Department must institute and conduct a carrier selection proceeding. We recently considered Spirit’s proposed Ft. Lauderdale-Medellin service and American’s proposed Miami-Bogota service in the 2007/2008 U.S.-Colombia Combination Frequency Allocation Proceeding. In that proceeding, both carriers filed evidentiary submissions in support of their respective proposed services. In the circumstances presented in that proceeding, we ultimately decided to select other proposals. See Order 2008-5-27, issued May 21, 2008, in Docket OST-2007-0006. In the interest of expedition and efficiency in awarding these immediately available valuable route rights, consistent with providing for an adequate decisional record, we will afford Spirit and American one additional opportunity to supplement their pending applications with such additional information they believe would be useful to us in reaching a decision in the allocation of the available frequencies. We will also allow for answers to the supplemented applications. However, we will not be favorably disposed to the submission of further pleadings. We will require supplements to applications to be filed by October 15, 2008, and answers to supplements by October 22, 2008. Following receipt of these submissions we intend to proceed directly to a tentative decision (show-cause order). By: Paul Gretch
OST-2008-0239 - Spirit Air - Allocation of Seven US-Colombia Frequencies Returned by Continental Airlines
October 15, 2008 Supplement to Application of American Airlines - Bookmarked The Department should re-allocate Continental's seven ex-frequencies to American rather than to Spirit. Miami-Bogota is by far the largest U.S.-Colombia O&D market, and Miami is vastly superior to Fort Lauderdale as an online connecting hub to serve beyond cities throughout the U.S. The public will be best served when American is able to resume its full pattern of three daily MIA-BOG nonstop flights. Counsel: American, Carl Nelson, 202-496-5647
October 15, 2008 Supplement to Application of Spirit Airlines for Frequency Allocation - Bookmarked Awarding Spirit the seven available frequencies to serve the South Florida/Fort Lauderdale-Medellín market will promote competition, strengthen a new entrant carrier in the U.S. – Colombia market, and help bring down the high fares now being paid by consumers. As between American, which currently controls 35 frequencies in the restricted entry U.S.-Colombia market, all of which it operates from Miami, and Spirit, which has only seven frequencies, an award to Spirit is clearly the only outcome that advances Congressional policies and the Department’s pro-competitive objectives. The award to Spirit would generate growth in the market, through additional service, and through the introduction of a new type of service – low fare service. Significantly, Spirit would bring first time U.S. carrier competition to the large South Florida-Medellín market, which is currently underserved, and would significantly help reduce the high fares that have dominated the market for years. With only seven frequencies, Spirit very much remains a new entrant in the highly restricted U.S.-Colombia market that is in need of additional frequencies to better compete with the incumbent legacy carriers, as the Department itself noted in the Colombia Proceeding. The Department must recognize that essentially returning to American the seven frequencies that it warehoused for more than five years will undermine the new competition the Department so carefully hoped to establish in the Colombia market. The ability of legacy carriers to oust low fare new entrants is an established fact. In a restricted entry market such as South Florida-Bogotá where Spirit cannot add a single additional flight, for the Department to give American a third daily flight and an overwhelming seat advantage is a recipe that will lead to less, not more, competition. Accordingly, and consistent with its decision in the recent U.S. - U.S.-Colombia Proceeding and its longstanding precedent, the Department should act to prioritize new competitive service in the Medellín market by Spirit over a third daily flight between Miami and Bogotá by American, the long-dominant U.S. incumbent carrier. Counsel: Kirstein & Young, Joanne Young, 202-331-3348
Order 2008-11-12 Issued and Served November 14, 2008 Order to Show Cause Allocation Seven Frequencies to Spirit Airlines We have tentatively decided to award Spirit the seven frequencies at issue here, along with underlying economic authority, to provide combination services in the Ft. Lauderdale-Medellin market. We also tentatively conclude that the record in this proceeding supports the selection of American for backup authority to the primary award to Spirit. We tentatively conclude that Spirit’s proposal for the first-ever nonstop Ft. Lauderdale-Medellin service would introduce beneficial competition in the South Florida-Medellin market by establishing first-time U.S.-flag competition with the double-daily Miami-Medellin services of American, while also providing competition with Avianca’s daily Miami-Medellin service. Specifically, Spirit’s proposed service would offer the significant South Florida-Medellin traffic base an attractive alternative option to the existing services of American and Avianca from Miami, providing competition for Medellin traffic between the two airports. In addition, the record indicates that a large population that is geographically located in the vicinity of Ft. Lauderdale could potentially benefit from the availability of more convenient Medellin service from Ft. Lauderdale rather than Miami. Spirit’s proposal would also provide new competition in the overall U.S.-Medellin market, as American and Avianca have long been primarily the only carriers that have offered U.S.-Medellin service. Moreover, an award to Spirit would improve the overall U.S.-Colombia market structure by promoting a wider variety of U.S.-Colombia services, enhancing the competitive stance of a newer entrant carrier against a more established incumbent. By comparison, American’s proposal, which would add a third daily flight to its already existing twice-daily Miami-Bogota service, offers markedly fewer competitive benefits. Also, while we recognize that the Miami/Ft. Lauderdale-Bogota market is the largest overall U.S.-Colombia O&D market, and that it is larger than the Miami/Ft. Lauderdale-Medellin market, it also currently enjoys far more service. There is also substantially more U.S.-Bogota service available overall, with U.S. and foreign carriers together providing an average of more than 12 daily nonstop flights in the U.S.-Bogota market, as compared to only four daily nonstop U.S.-Medellin flights. In addition, U.S.-Bogota services will soon be increasing to an average of more than 14 flights a day, when Delta institutes its New York (JFK)-Bogota service and JetBlue institutes its Orlando-Bogota service, on or before December 18, 2008 and February 15, 2009, respectively. We have reviewed American’s arguments concerning its proposed greater capacity and its more extensive connecting services at Miami. However, in this case we have tentatively determined that the valuable competitive benefits of Spirit’s first-ever U.S.-flag competition to American’s Miami-Medellin service, as well as the positive effect that it would have on the overall U.S.-Colombia market structure, outweighs the benefits of adding a third daily flight in a market that already has considerable service, including service to on-line connecting points. We direct any interested parties having objections to our tentative findings and conclusions set forth in this order and in ordering paragraphs 1 through 2 above, to file their objections in the above-captioned dockets no later than seven calendar days from the date of service of this order; answers thereto shall be filed no later than four calendar days thereafter. By: Michael Reynolds |
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