OST-97-2985 / Simmons Airlines d/b/a American Eagle / Exemption - High Density Rule - Chicago O'Hare / December 4, 1997

Application of :

under 49 USC 41714 for an exemption from the high density rule governing Chicago O'Hare slots (14 CFR Part 93)

In the captioned application, Simmons is seeking exemption slots under 49 USC 41714 to serve nonhub communities from Chicago O'Hare with regional jet aircraft. United -which with its franchised United Express operators holds far more slots at O'Hare than any other carrier group -- opposes Simmons' application because (1) Simmons is a corporate affiliate of American Airlines; (2) American did not maintain certain services it initiated with 100-seat jet aircraft from O'Hare in

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the early 1990s; and (3) United Express carriers intend to file a competing application. As we show below, none of these arguments provides a compelling basis to deny or defer favorable action on Simmons' request.

I. AMERICAN EAGLE v. UNITED EXPRESS

United contends that its franchised regional carriers at O'Hare -- Great Lakes Airlines d/b/a United Express, Air Wisconsin d/b/a United Express, and Trans States Airlines d/b/a United Express -- are "independent" for purposes of exemption slots, whereas American Eagle carriers are corporate affiliates of American Airlines and should be disqualified from slot exemption awards.

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United Express services at O'Hare are no more independent of United than American Eagle services at O'Hare are independent of American. If Trans States were seeking exemption slots to operate as Trans States, or Great Lakes were seeking slots to operate as Great Lakes, arguments about independent operations might be plausible. But these carriers have explicitly asked the Department for slots to operate as United Express under franchise agreements with United Air Lines. In these circumstances, there is no justification for treating them any differently than American Eagle.

United's reliance on 14 CFR 93.213(c) is misplaced. Under that provision, for purposes of Subpart S of the FAA's high density rule, an air carrier, commuter operator, or other person with "more than a 50-percent ownership or control of one or more other air carriers, commuter operators, or other persons...shall be considered to be a single air carrier, commuter operator, or person." There is nothing in the statutory language of 49 USC 41714 or its legislative history to suggest that Congress intended to apply the FAA's rule on "single air carrier" to ban the award of exemption slots to corporate affiliates. Moreover, the effect of Section 93.213(c) is to disqualify corporate affiliates from being "new entrants" or "limited incumbent carriers"; neither category is relevant to Simmons' application. Finally, if this provision

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is deemed relevant to slot exemption applications under 49 USC 41714, it would equally disqualify Trans States, since its franchise operations at O'Hare as a United Express carrier without question place it under the "control" of United Air Lines in all material respects.

II. AMERICAN'S OPERATIONS WITH 100-SEAT JETS

In the early 1990s, American initiated small community service from O'Hare with 100-seat Fokker jet aircraft under the amended commuter slot rule that allowed such operations. Unfortunately, not all of that service proved economically feasible, and certain operations were subsequently withdrawn. United makes much of this in its response, accusing American of not keeping its promises.

The fact that certain 100-seat jet services operated by American in the early 1990s -- a period of unprecedented economic distress in the domestic airline industry -- did not prove feasible has no bearing on Simmons' proposed operations to small communities with 50-seat regional jets in 1998. Indeed, we are surprised at United's rhetoric on this score, since United clearly abused the exemption slot process as recently as this past spring, when it collaborated with Great Lakes Airlines d/b/a United Express by withdrawing United Air Lines jet service between Chicago and Sioux Falls on the same day that United Express initiated turboprop service using

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III. COMPETING APPLICATIONS BY UNITED EXPRESS

United also contends that Simmons' application should be deferred "until United Express carriers have an opportunity to file competing applications for service to a virtually identical list of communities with 50 seat regional jet aircraft" (pp. 9-10). This is an telling statement from United, which contends earlier in the same pleading that its franchise carriers are independent, and yet United purports to know the contents of their applications to the Department which have not been submitted. If these carriers are independent in their United Express franchise operations, they would be able to speak for themselves, and not through United. /1

In any event, there is no reason for the Department to defer favorable action on Simmons' application pending the receipt of United Express applications at some future date. It is well established that Ashbacker principles do not apply to

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late-filed applications. Simmons' request has been pending for almost two months, and the United Express carriers have had ample time to respond with competing applications. The Department should grant Simmons' application -- which has received substantial civic support from the affected communities -- now, so that the proposed services can commence at the earliest possible date.

Respectfully submitted,

CARL B. NELSON, JR.

Associate General Counsel

American Airlines, Inc.

December 4, 1997