OST-97-2870 / OST-97-2873 / OST-97-2885 / Spirit / AirTran / Pan Am and Carnival / Slot Applications / September 15, 1997

Application of

For an exemption pursuant to 49 U.S.C. § 41714

Melbourne, Florida - New York (LaGuardia Airport)

Application of

For an exemption from Subparts K and S of 14 CFR Part 93 (Slot restrictions at Washington (DC) National Airport) so as to provide non-stop Docket OST 97- 2873 service between: Knoxville, TN & Washington (DC) National

Joint Application of

For an exemption from Subparts K & S of 14 C.F.R. Part 93 (slot restrictions at New York JFK International Airport)

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Three more undercapitalized new entrant carriers have jumped on the free slot bandwagon. One applicant proposes to operate in a major short haul market that already has almost 100 daily round trips; another proposes service to a secondary airport only one hour's drive from one of the busiest airports in the country; and the third would fly in a market already well served by commuter carrier flights of major airline affiliates. However, none have come close to meeting the public interest requirements of 49 U.S.C. §41714, which governs these proposed exemptions from the slot regulations. They do not make even a passing attempt to comply with the requirements of the statute, and one fails entirely to mention the statutory provisions. TWA hereby answers and respectfully requests that the applications be denied.

Before assessing the specific proposals of the applicants, it will be useful to review the statutory requirements that they have so studiously ignored. The general authority of the FAA to grant exemptions from the slot rules is extremely limited. Slots may be withdrawn only for international operations, essential air services or other operational requirements of FAA. FAR Section 93.223(a) states:

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The applicants make no pretense that there is any operational requirement of FAA that would justify granting their slot requests.

Because FAA's authority is so limited, Congress adopted Section 41714, which gave the Secretary specific authority to create additional slots by exemption. However, that statute is also highly restrictive. The general rule requires a finding that the grant of the exemption is not only in the public interest, but also that exceptional circumstances apply to the application. Washington National is not subject to the general rule, but is even more severely circumscribed. The language of Section 41714 is as follows:

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In response to congressional criticism, the Department in January announced that it would be more willing to consider competitive issues in determining whether an exemption meets the exceptional circumstances requirement of Section 41714. In response, it has been inundated with applications by new entrant carriers seeking to get free slots at restricted airports. None of these applicants have made more than cursory attempts to acquire slots in the marketplace. If granted, these applications would add substantially to congestion at slot restricted airports (slot requests at LaGuardia would consume more than a half hour of runway time).

Of equal importance, these applicants would make less efficient use of slots then if they went to large carriers serving hub airports. In each case, the applicants propose point to point service with small aircraft. This is clearly true of the Spirit and Airtran applications; Pan American proposes to use the slot to add a Boston tag to New York-Florida and Caribbean flights. In contrast, a slot used for service to a hub not only meets the needs of a major market, also increases competition to dozens of cities beyond the hub. The Department will act contrary to the public interest if it deprives all these cities of increased competition to New York, Chicago and Washington in order to add point-to-point service to secondary cities

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such as Melbourne and Knoxville. The buy/sell program encourages slots to be put to their best and most efficient use. If the Deppartment has additional slots to create, it should offer them to the highest bidder, who will put them to their most efficient use.

It is clear that none of the application here meet the "public interest" or "exceptional circumstances" requirements of Section 41714:

Spirit Airlines has requested an exemption pursuant to 49 U.S.C. § 41714 for LaGuardia slots that would be used to provide two daily round trips between LaGuardia and Melbourne, Florida. Spirit's proposal for service to a secondary destination that receives 32 daily nonstop flights to a neighboring airport, Orlando, fails to meet either the "public interest or "exceptional circumstances" requirements of the statute.

1. Service to Melbourne, Florida is hardly an efficient use of such a scarce resources as a LaGuardia slot. Melbourne is a declining market that has ample service at nearby Orlando airport. Traffic between New York and Melbourne has decreased substantially since Melbourne's peak traffic period in the 1980's.

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Melbourne's main problem is the enormous amount of service at nearby Orlando International Airport, which is only 62 miles and 62 minutes of travel time from the center of Melbourne (Rand McNally TripMaker, 1997). Orlando has 32 daily round trip services to New York, which provide a wide variety of low fare services to the tourist destinations of the Orlando-Melbourne area. Thus, Spirit's claim that the New York-Melbourne market is underserved is incorrect. It is well served, but at a different airport from the one at which Spirit proposes service.

2. Spirit's claim that LaGuardia is Melbourne's preferred airport (page 4) is equally invalid. In fact, Newark has consistently generated more traffic than LaGuardia.

Spirit has made no showing why it cannot meet the limited needs of the Melbourne market by service to Newark, which is not subject to slot controls.

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3. Spirit's argument that it needs access to LaGuardia to serve the Melbourne business market is contrived out of thin air (pp. 5-6). While Spirit alleges that "its traffic will be split between leisure travelers and business traffic", it carefully avoids explaining what that split will be. In fact, the business proportion of Melbourne traffic is so small that it cannot possibly drive airline scheduling decisions. If Spirit seriously expects that Melbourne business traffic will provide the support needed for two daily round trips, it is in for a shock.

4. Indeed, there is a serious question as to the viability of Spirit's proposal. As noted above, LaGuardia-Melbourne base traffic is only 36 passengers per day each way. Even if traffic tripled as the result of Spirit's service, it would still be only 108 passengers per day each way, many of whom will continue to move on Delta via Atlanta. Spirit would in all likelihood achieve less than fifty passengers per flight. Under these circumstances, Spirit could be expected to serve the market for the winter season, and then either sell the slots or transfer them to another route.

5. Spirit's claim that it made bona fide offers to purchase or lease slots at LaGuardia is invalid. On August 21, it sent a broadcast fax to carriers serving LaGuardia indicating its need for eight slots at the airport -- twice as much as it is apparently needed for its proposed service. However, it failed to show up at the industry slot trade meeting in Washington the following week, where TWA would have expected to see it if it were serious. That Spirit filed this application that same week indicates that it did not pursue the possible purchase of slots at LaGuardia.

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Airtran has applied for slots at Washington National for service to Knoxville, Tennessee. However, it has not even mentioned Section 41714 or the special requirements for obtaining slots at Washington National. It has failed to provide any basis for grant of its application.

1. Airtran has made no showing why Washington- Knoxville is affected by any unusual circumstances that are not applicable to the broad range of short and medium haul point-to-point markets. Washington-Knoxville is already well served by six daily commuter round trips -- more than enough to carry the 82 passengers per day each way in the market in 1996. While it complains about the allegedly high level of fares compared to Nashville, it uses the unrestricted fare, which is little used by the public, for purposes of comparison. While the current unrestricted fare is $528, the average DCA- Knoxville fare was only $158 in 1996. This compares favorably to the Baltimore-Knoxville average fare of $159. Airtran's comparisons of Knoxville to Nashville are irrelevant. In addition to service by Southwest, Nashville is a much bigger market with a higher proportion of tourist traffic. The average DCA-Nashville fare is $136, quite comparable to Knoxville. Thus, Washington-Knoxville is a normal point-to-point market, with fares that are not out of line with comparable city pairs.

2. The Department cannot legally grant Airtran slots at Washington National. Section 41714(c) specifically excludes slots at DCA. Section 41714(d) allows the Department to

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grant DCA slots only "to an air carrier currently holding a slot a Washington National Airport". Airtran does not currently operate at DCA and therefore does not qualify under Section 41714(d).

Pan American's application is disingenuous. The carrier has determined that its long haul New York-Florida/Caribbean service would be more profitable if it could add Boston tags to the flights. Therefore it has constructed an argument that a market with almost 100 daily frequencies urgently needs more service at the peak hours for JFK-Europe service. There are absolutely no unusual circumstance in the Boston-New York market that would justify grant of Pan American's application.

1. New York-Boston is a huge market with almost 100 frequencies spread among the three New York airports.

Source: Worldspan CRS Availability for 9/15/97

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Thus, JFK actually has more daily Boston flights than either of the other airports. There is clearly no need to add more to serve the needs of the local market.

Wherefore, TWA respectfully requests that the applications of Spirit, Airtran, and Pan American be denied.

Respectfully submitted,

Richard J. Fahy r.

Attorney for Trans World Airlines, Inc.

September 15, 1997