OST-97-2984 / American Trans Air / Exemption High Density Rule, Chicago Midway/St. Petersburg/Sarasota-New York LaGuardia / October 9, 1997

In the matter of the application of

AMERICAN TRANS AIR, INC.

for an exemption from 14 C.F.R. Part 93, Subparts K and S. pursuant to Section 206(c)(1) of the Federal Aviation Administration Authorization Act of 1994 (Chicago Midway-New York LaGuardia; St. Petersburg, FL-New York LaGuardia, Sarasota, FL-New York LaGuardia) )

Pursuant to Section 206(c)(1) of the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. § 41714(c) (the "Act"), American Trans Air, Inc. ("ATA") hereby applies for an exemption from Subparts K and S of 14 C.F.R. Part 93 to operate the following flights on a nonstop basis:

Chicago Midway - New York LaGuardia: 3 daily round trips (4 seasonally)

St. Petersburg, Florida - New York LaGuardia: 1 daily round trip

Sarasota, Florida - New York LaGuardia: 1 daily round trip (seasonal)

Accordingly, ATA requests a total of ten (10) slots at New York's LaGuardia Airport to perform its scheduled flights. ATA requests the following slot times at LaGuardia:

ATA would begin operations 90 days from approval of this Application.

The regulations in 14 C.F.R. Part 93, Subparts K and S. designate New York's LaGuardia Airport as a high density traffic airport, thereby limiting the number of allocated operations that may be reserved for specified classes of users. Pursuant to Section 206(c)(1) of the Act, new entrant air carriers may apply for an exemption from such regulations. ATA qualifies as a new entrant carrier for operations at New York's LaGuardia Airport because it does not now own or lease, nor has it ever owned or leased, slots at LaGuardia Airport.

Notwithstanding its "new entrant" status, ATA is certainly not a new carrier. It is currently the largest national air carrier in the United States. ATA operates a fleet of 45 aircraft consisting of B757, B727 and L1011 aircraft. It currently operates scheduled service flights, serving primarily Indianapolis, Chicago, Milwaukee, Las Vegas, Los Angeles, San Francisco, Honolulu and five (5) Florida cities. It is well established in the Chicago market (it is the second-largest carrier at Midway Airport) and in the Sarasota and St. Petersburg markets (it is the largest carrier at St. Petersburg). Its reputation as a quality, low-fare leisure airline is known in the New York area as well. ATA has operated charter flights from LaGuardia for years, currently has scheduled service from JFK International Airport and has flown transatlantic charter programs from JFK and Newark Airport since 1987. ATA's service proposal set forth in this Application clearly fits well with its present route system.

B. ATA 's request satisfy es the "public interest" nod "exceptiorm1 circumstances" requirements of the Act.

Under Section 206(c)(1 ) of the Act, the Secretary of Transportation may grant a new entrant's exemption application on a finding that the requested service would be in the "public interest" and that "exceptional circumstances" exist. ATA submits that exceptional circumstances clearly exist with respect to its request to serve the cities of Chicago, St. Petersburg and Sarasota from New York's LaGuardia Airport and that its service would be in the "public interest."

1. Chicago-Midway Market. Chicago's Midway Airport's proximity to downtown Chicago makes it a convenient airport for Chicago and surrounding area residents, including those in northern Indiana. This characteristic distinguishes Midway from Chicago O'Hare International Airport and establishes the Midway-LaGuardia market as separate and distinct from the O'Hare-LaGuardia market. There is presently no nonstop service and only one direct flight from New York's LaGuardia Airport to Midway. OAG, N. Amer. Ed., October 1, 1997. For the most recent twelve (12) quarters ending in the first quarter of 1997, there were 3,258 daily passengers in the Chicago O'Hare-LaGuardia market, but only 260 such passengers in the Midway-LaGuardia market. It is undeniable that a considerable volume of Chicago-area passengers who would find Midway more convenient are being forced to use the more distant and more congested O'Hare International Airport.

In the first quarter of 1997, the average one-way fare in the LaGuardia-O'Hare market was $217. Presently, United Airlines' unrestricted walk-up fare in this market is $509. ATA, on the other hand, proposes to offer Chicago-area residents daily, nonstop access to New York City from Midway with a fare menu beginning at $99 one way (including tax). Its unrestricted walkup fare would be identical to the fare for its present JFK Airport-Midway service - $312. While ATA's nonstop service and low-fare structure will attract a number of passengers over the more expensive service presently offered between O'Hare and LaGuardia, it is also likely that ATA's service will serve as a competitive spur increasing the size of the overall market. The public interest is served by authorizing ATA to provide the nonstop service at lower fares from a less congested, more-convenient airport.

The success that Midway Airlines enjoyed in 1990 in the Midway-LaGuardia market is another compelling indication that ATA's service would convenience a considerable number of passengers. Midway Airlines, a smaller carrier than ATA, carried 570 daily passengers in 1990 which represented 8.73% of all traffic between Chicago and the New York area airports. For comparison purposes, in the 12-month period ending March 31, 1997, the Department's data reveals that 2,693,950 passengers flew between all New York and Chicago airports. Of these, only 15,000 passengers used LaGuardia-Midway connecting or single-plane service. However, if ATA were only to achieve the same penetration level as Midway Airlines did in 1990 -- an 8.73% market share, ATA would carry 644 daily passengers at much-reduced fares.

2. St. Petersburg Market. There is presently no service between St. Petersburg and LaGuardia Airport. OAG, N. Amer. Ed. October 1, 1997. While there is service between Tampa International Airport and LaGuardia, the majority of flights offered require connections. There are only three daily nonstop flights between Tampa International and LaGuardia, a remarkable statistic considering that LaGuardia is Tampa's fourth largest origin and destination market with 1,072 daily passengers. By comparison, Chicago O'Hare, Tampa's third largest origin and destination market, has seven (7) daily nonstop round trips, and Ft. Lauderdale, Tampa's fifth largest origin and destination market, has 19 (10 jet, 9 turboprop) daily nonstop round trips. OAG, N. Amer. Ed. October 1, 1997.

St. Petersburg Airport is located west of the Tampa International Airport and provides better accessibility to the beaches and resorts along the west coast of Florida. ATA's market analysis indicates that 20-30% of Tampa Bay area passengers would find it more convenient to travel using St. Petersburg if there were competing nonstop service from St. Petersburg. This would translate into approximately 250 daily passengers who again would also benefit from ATA's low fares. Accordingly, ATA believes that nonstop service from St. Petersburg to LaGuardia would attract many Tampa International Airport travellers to the St. Petersburg Airport for travel to New York, as well as stimulate the overall market.

3. Sarasota Market. LaGuardia is Sarasota's fourth largest origin and destination market generating over 65,000 passengers per year, even though no direct service exists in this market. For the year ending the fourth quarter of 1996, over 63,000 annual passengers, or 175 passengers per day, utilized Delta and US Airways connecting service. As of September 1, 1997, four different carriers provide a total of 23 flights from Sarasota to LaGuardia and a total of 20 flights from LaGuardia to Sarasota. OAG, N. Amer. Ed. October 1, 1997. Each of these is a connecting flight. By comparison, there are six (6) nonstops between Sarasota and Atlanta, Sarasota's ninth largest origin and destination market. Moreover, the Sarasota-LaGuardia market is 70% as large as Sarasota's largest market, Newark, yet Newark has year-round nonstop flights and twice-daily nonstops in the winter season.

The Sarasota Manatee Airport Authority estimates that 20% of the local market is forced to use Tampa International Airport for travel to LaGuardia. Such percentage translates to 202 passengers per day. Adding these passengers to the 175 daily passengers who utilize the connecting services from Sarasota to LaGuardia reveals a potential market of 377 passengers per day which have no nonstop service to LaGuardia. No other carrier has indicated any intention to provide such service out of Sarasota.

The circumstances surrounding ATA's proposal are analogous to those of Reno Air, as discussed in Order 94-9-30, and Air South, as discussed in Order 96-5-33. In those Orders, the Department found that the relevant markets were not well served, the destination airports were some of the largest markets from the slot-controlled airports without nonstop service (and vice versa), and that there was sufficient traffic in the underserved markets to justify additional service. ATA's service proposals qualify as "exceptional circumstances" because there is no nonstop service from LaGuardia to Chicago Midway, St. Petersburg or Sarasota, even though the volume of traffic in those markets would surely support ATA's service.

C. The Slot "After Market" Is Not a Viable Option for ATA.

ATA inquired into the costs to purchase or lease slots at LaGuardia. However, the chances of obtaining slots at the times ATA requires to make its proposed services viable were non-existent. Further, the prices quoted for the slots were prohibitive.

The absence of nonstop service in the LaGuardia-Midway, LaGuardia-Sarasota and LaGuardia-St. Petersburg markets leaves no question that ATA's first nonstop service in each of these markets would be a dramatic improvement over the high fare, connecting and single-plane service which these passengers are now forced to endure. ATA, with its established low-fare track record, is ideally suited to provide low-fare nonstop service to LaGuardia from these three convenient airports. The service will not likely be provided -- or even considered -- by other carriers and would most certainly be in the public interest.

WHEREFORE, ATA respectfully requests that the Department grant to ATA on or before November 15, 1997, an exemption from Subparts K and S of Part 93 of the Federal Aviation Regulations to permit ATA to operate five (5) daily nonstop, round trip flights from New York's LaGuardia Airport and Midway, St. Petersburg and Sarasota Airports.

Respectfully submitted,

Brian T. Hunt

AMERICAN TRANS AIR, INC.

P.O. Box 51609

Indianapolis, Indiana 46251

317/240-7006

Counsel for

AMERICAN TRANS AIR, INC.

October 9, 1997