OST-97-2780 / Spirit / Melbourne-New York LaGuardia / Reply of Spirit / September 24, 1997

Application of

SPIRIT AIRLINES, INC.

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

Melbourne, Florida- New York (La Guardia Airport)

REPLY OF SPIRIT AIRLINES. INC.

The thrust of Delta's objection to Spirit's application is that the "benefits of [Spirit's] proposal are too speculative and the basics of its operations are too risky." Delta's comments are flatly wrong, and should be rejected as such. As a preliminary matter, the benefits of Spirit's proposal should be obvious to just about anyone. The Melbourne market presently receives scheduled service by a single carrier, Delta, to a single market, Atlanta. The Melbourne-New York market, Melbourne's largest 08D market, receives no nonstop service at all. By offering travelers in the New York-Melbourne market convenient, low-fare service, Spirit will inject an element of choice in the market, and fill a major service void. While this proposal may be of limited benefit to Delta, a would-be monopolist in this market, the benefits to Melbourne-area travelers, and the public interest, are significant indeed.

With regard to The of Spirit's proposal, Delta's "proof" that Spirit's proposal is not viable -- Continental's recent withdrawal from the market -- is rather thin indeed. Delta does not dispute that O&D traffic in the market is rich enough to support the service proposed by Spirit. Moreover, Delta does not acknowledge, let alone address, the fact that Continental withdrew its seasonal service before it had the opportunity to develop the market, and that Continental offered its service from Newark, which is not the airport of choice for traffic to and from Melbourne. As a low-cost, low-fare airline, Spirit is prepared to offer the traveling public a convenient and competitive low-fare product, and to do so profitably, and Delta has produced no evidence to the contrary.

The thrust of TWA's answer is that: (1) because there is abundant service in the Orlando-New York market, the Melbourne-New York market should do without such service; and (2) traffic in the Melbourne-New York market is too thin to sustain the service proposed-by-Spirit. moth claims are fatally flawed.

TWA argues, in essence, that the Melbourne market is indistinguishable from the Orlando market, and that Melbourne-area passengers need only drive 62 miles (or 62 minutes) to take advantage of the plethora of nonstop services to New York which are available at Orlando. TWA's argument ignores entirely the fact that the Melbourne market is not confined to downtown Melbourne. Melbourne also is the most convenient airport for passengers destined for the Disney Resort and Vero Beach, which lie 96 miles and 97 minutes driving time away from Orlando. Surely, TWA would not argue that services at Orlando are convenient for those travelers.

Moreover, if TWA's argument were taken to its logical extreme, then TWA would not itself be offering service to geographically proximate airports, on the theory that those airports serve the same "market." For example, TWA serves three Washington-area airports -- BWI, National and Dulles. Baltimore is a mere 30 miles and 32 minutes from Washington, but few would argue that their markets are "identical," or that the availability of service at BWI would be a viable or attractive alternative for a passenger from the area near Lorton or Occoquan.

TWA also asserts that there is no business traffic on the Melbourne-New York route. TWA perhaps is unaware that the Harris Corporation, a $3.6 billion corporation headquartered adjacent to Melbourne International Airport, alone generates more than 60,000 business trips each year. Moreover, Melbourne is home to a burgeoning high-tech industry.

With regard to TWA's comments on the size of the market, TWA ignores the fact that there is no service in the Melbourne-New York market, and that O&D traffic figures grossly understate-the market's true size. At presents New York-Melbourne traffic moves one of two ways - on a one-stop basis via Delta's hub at Atlanta, or by driving a long (and inconvenient) distance to Orlando. Plainly, the traffic which moves over Orlando is not captured in Melbourne's traffic figures.

TWA also urges that Spirit's application be denied because Spirit has made no showing why it cannot serve Melbourne from Newark, "which is not subject to slot controls." The naivete of TWA's comment is breathtaking. Surely, TWA cannot be asserting that, because Newark is not slot controlled, Newark is accessible. In fact, access to Newark is as constrained (if not more constrained) than access to LGA. Spirit for months has been attempting to obtain access to gates at Newark, and has been frustrated at every turn. /1 In fact, the GAO very recently recognized the severity of access constraints at Newark. See, GAO, "Airline Deregulation: Barriers to Entry Continue to Limit Competition in Several Key Domestic Markets," October 1996, at p. 10. /2

The objections of Delta and TWA to Spirit's application focus on the alleged shortcomings of the market chosen by Spirit, and their belief that Spirit will be unable to turn a profit there. While Spirit appreciates Delta's and TWA's "concern" for its financial well-being, Spirit wishes to emphasize that it shares none of the doubts expressed by TWA or Delta.

1/ TWA also insinuates that Spirit did not "seriously" attempt to purchase slots at LGA because Spirit did not attend an industry slot trade meeting held in early September. This contention is absurd. As a preliminary matter, Spirit wishes to note that it did not receive notice of the meeting. Moreover, Spirit wishes to point out that, even if it had received notice of the meeting, Spirit holds no slots at any slot-controlled airport, and would have had nothing to trade.

2/ The GAO cited Newark as one of the three U.S. airports "most frequently cited . . . as having competition limited by constraints in gaining access to gates."

The topic which was not addressed in the answers filed by TWA and Delta is, in Spirit's view, the most significant topic at issue here. Nowhere was it mentioned that, without the service proposed by Spirit, Melbourne will remain a one-airline town. Nowhere was it mentioned that, with the recent exit from the market by US Airways and Continental, passengers have no choice of scheduled carriers at the airport. Certainly, neither carrier mentioned that, with each day Melbourne remains a monopoly market, the risk increases that passengers there will have to endure higher fares.

WHEREFORE, Spirit respectfully requests that the Department grant Spirit an exemption from 14 C.F.R. Part 93 so that Spirit promptly may commence nonstop service between LGA and Melbourne.

Respectfully submitted,

Anita Mosner

GALLAND, KHARASCH & GARFINKLE, P.C.

1054 Thirty-First Street, N.W.

Washington, D.C. 20036

(202) 342-5200

Attorneys for SPIRIT AIRLINES, INC.

Date: September 24,1997