OST-97-2970 / America West / High Density Rule, Chicago O'Hare and New York LaGuardia / Reply of America West to Queens Borough / December 16, 1997

 

Application of

AMERICA WEST AIRLINES, INC.

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

Columbus - New York LaGuardia Airport

Phoenix - Chicago O'Hare Airport

 

REPLY TO THE MOTION TO FILE LATE AND

ANSWER OF THE QUEENS BOROUGH PRESIDENT

 

America West Airlines, Inc. ("America West") files this Reply in opposition to both the Motion of the Queens Borough President (the "Borough President") to file a Late Answer to the application of America West for an exemption from the High Density Rule for eight slots at LaGuardia Airport and to the answer. America West's application has been on file with the Department since October 3, 1997. Pursuant to the Department's procedural rules answers were filed by several incumbent carriers and America West filed a reply. By October 27, all the pleadings provided for by the rules were filed. /1

The Borough President has offered no credible explanation for the need to file an answer forty-five days late. The Borough President is extremely vague about when he in fact learned

1/ On November 4, 1997, United Air Lines requested permission to file an unauthorized reply to America West's reply to which America West was forced to file another reply.

 

Reply of America West to Queens Borough President

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of America West's application but admits that it has been five weeks since the Department issued its decision in Application of Frontier Airlines et al, Order 97-10-17, October 24, 1997, which discusses the Department's new decisional criteria and also directly addressed the identical environmental and safety issues raised by the Borough in objecting to the earlier slot applications made by ValuJet and AirTran Airways. It does not appear that it should have required five weeks for the Borough President to respond to the Department's analysis of the statute. Moreover, the Borough President offers no arguments that have not already been made by the Borough itself or by incumbent carriers in earlier filings in answer to America West's application. Thus, America West urges the Department to deny the Borough's motion. Under the circumstances, there is simply no reason why the Department needs to sanction the filing of an answer submitted more than 60 days after America West's Application was filed.

Should the Department decide to accept the Borough's filing America West submits this reply to respond to the arguments directed at its application.

I. THE BOROUGH IGNORED THE DEPARTMENT'S ENVIRONMENTAL ANALYSIS WHICH SHOWS THAT APPROVAL OF AMERICA WEST'S APPLICATION WILL NOT HAVE A NEGATIVE ENVIRONMENTAL IMPACT ON QUEENS

The Borough in its late filed answer has raised general concerns regarding flight safety, and increases in noise, vehicular traffic and pollution in the vicinity of the Airport. These concerns are not directed specifically at America West but serve as the premise for the Borough President's argument that the Department should not grant any additional exemptions under 49

 

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U.S.C. §41714 at LaGuardia or JFK Airports. The Department specifically addressed these public interest concerns both in the Frontier Order and in its "Environmental Assessment and Finding of No Significant Impact for Exemptions from 14 CFR Part 93 Subparts K and S for Operations at O'Hare Airport" (the "Assessment") issued concurrently with Frontier on October 24, 1997. This analysis was a follow-on study from the Department's A Report to the Congress: A Study of the High Density Rule. May 1995 ("the HDR Report").

Concerning the noise impact of new service, the Department, in the HDR Report, estimated that an additional 46 or 68 daily operations would result in a Day-Night Sound Level (DNL) increase of only between 0.4 and 0.8 decibels (dB) well below the 1.5 dB threshold for a significant increase in noise. In the Assessment the Department updated the Report based upon an allocation of 30 new slots. /2 Such an increase in operations the Department found would result in only a one to two percent change in the noise contour area, well below the 17 percent increase that the Department considers significant. Assessment at 14. Thus, based on the Department's analysis, which is not challenged by the Borough, the grant of 8 slots requested by America West would have virtually no impact on exposure of Queens residents to aircraft noise. /3 The Borough President was not very specific about concerns over pollution and congestion but asserts that any new service will aggravate existing problems. However, these

2/ The Department noted that the use of 30 slots was for modeling purposes only and did not reflect a target for slot expansion and note that the Report assessed much greater increases.

3/ As requested by the Department, America West would use Stage 3 equipment for all the flights using these slots.

 

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issues were carefully reviewed by the Department in Frontier. Based on the Department's analysis it is apparent that an increase in operations at LaGuardia by an amount which would more than accommodate America West's request would still have only a de minimis impact on emissions or traffic congestion. /4

The Borough also raises general concerns about flight delays and safety of operations. Both these issues were addressed by the Department in the HDR Report and in the Frontier Order. In the HDR Report the Department found that complete abolition of the High Density Rule would not compromise air traffic safety. Thus, the Report described the evolution of the Traffic Management System (TMS) since the early 1980s, and concluded that:

The HDR is not a relevant factor, since the traffic volume limitations imposed by the slot rule are secondary to the restraints on demand imposed by TMS. It is TMS -- not the high density rule -- that ensures the safe operation of the Air Traffic System.

HDR Report at 37. See also Frontier. Order 97-10-17 at 14.

It is also apparent from the Frontier Order and the HDR Report that the relatively small increase in slots required for America West even when added to slots awarded in the Frontier Order would not have a substantial impact on delays. See Frontier Order 97-10-17 at 14 and HDR Report. Thus, none of the general environmental arguments advanced by the Borough would justify the Borough President's request that no new slot exemptions be granted.

4/ In the HDR Report, the Department estimated landslide capacity at 90 slots per hour, substantially more than the 68 hourly slots available under the HDR.

 

Reply of America West to Queens

Borough President

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II. THE BOROUGH PRESIDENT HAS IGNORED THE

COMPETITIVE BENEFITS OF AMERICA WEST'S APPLICATION

The Borough President essentially creates a straw-man by analyzing America West's application in terms of service to Columbus. The focus of America West's application has always been to provide important new competitive options from LaGuardia to Phoenix and the West Coast. /5 In America West's original application and in its consolidated reply, the airline pointed out that it is the only major airline that is prohibited from providing direct service from LaGuardia to its primary hub of Phoenix. As the Borough notes, America West cannot serve Phoenix because Phoenix is beyond the 1500 mile service perimeter imposed by the Port Authority. Contrary to the implications of the Borough President's comments, America West understands that the Port Authority would not grant any exemption to the perimeter rule. Accordingly, America West would welcome the Borough's support in obtaining an exemption to allow direct service to Phoenix.

Given the current status of the perimeter rule, America West is at a serious competitive disadvantage. All the prederegulation major full service carriers currently offer numerous flights to their primary hubs and in many cases to secondary hubs through grandfathered slots.

5/ As America West has previously noted, the grant of these slots will also result in improved service to Columbus since America West will be able to offer a competitive level of service in the local market. However, nothing in the legislation history of Section 41714 or the Frontier Order suggests that the new competitive service made possible by the statutory exemption was intended to be limited to non-stop city pairs. The America West proposal would provide a substantial competitive boost in major markets that cannot be served non-stop and thus falls squarely within the criteria set forth in the Frontier Order.

 

Reply of America West to Queens

Borough President

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See HDR Report at Exhibit 5.3; America West Application at Exhibit 8. Even though America West cannot serve Phoenix non-stop, as the only major low-fare full service carrier, it could provide vigorous competition between LaGuardia and Phoenix and beyond to the West Coast through its Columbus hub. America West established the Columbus hub in large part to link America West's service from the East Coast to the West. However, as America West explained in its application and consolidated reply, the limited LaGuardia slots it was able to obtain from American Airlines do not enable the carrier to properly connect with its other Columbus-Phoenix flight. America West's unique situation was noted in the HDR Report which stated:

A review of the hub banks suggests that there is a good representation at each of the carriers' hubs at LaGuardia. The sole exemption appears to be America West's operation at Columbus. HDR Report at 84

(emphasis added).

In the Frontier Order, the Department confirmed that service to LaGuardia is a separate market from the other New York Airports. Order 97-10-17 at 10-11. The HDR Report also found that business travelers prefer LaGuardia. Therefore, service to Newark or JFK does not meet the need of most business travelers. Accordingly, given the unavailability of slots under the buy/sell rule, America West cannot provide its competitive low fare full service to both business and leisure travelers in the LaGuardia/Phoenix/West Coast markets.

The exemption authority created by 49 U.S.C. § 41714 provides that slots should be made available outside the buy/sell rule when it is in the public interest and there are exceptional circumstances. As discussed in America West's reply to United Air Lines unauthorized reply, Congress established this law as a general remedial statute to enhance competition at the slot

 

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constrained airport and left to the Department the task of how best to fulfill the Congressional objective. In Frontier the Department stated that it intended to use the exception authority as intended by Congress to promote competition and further stated that it would put a "premium upon the introduction of ....new competitive services, especially by applicants that have demonstrated potential to offer low-fare competition... where existing service does not produce meaningful price competition". Frontier Order 97-10-17 at 4. As America West has conclusively demonstrated in its prior filings, it is by far the largest low-fare full service new entrant airline and therefore, is the only full service airline which can, with the award of relatively few slots, bring substantial new low-fare competition in the LaGuardia - Phoenix and beyond markets. Indeed, it is this unique ability of America West to bring the benefits of competition to multiple markets from LaGuardia which demonstrates the exceptional circumstances supporting the slot request. None of the arguments made by the Borough President contradicts or undermines America West's application or the scope of the consumer benefits that would result from a grant of the requested slots.

CONCLUSION

The Queens Borough President in his late Answer, has essentially made the same generic arguments he made last June in opposition to the applications of ValuJet and AirTran Airways. In addition, the Borough requests the Department to impose a very narrow test for exceptional circumstances under the new entrant statute in considering America West's application. However, the Department carefully analyzed all of the Borough's concerns in the Frontier Order. The Department's findings in Frontier fully support the grant of eight slots to

 

Reply of America West to Queens

Borough President

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America West. The grant of this request would not have a measurable effect on noise, pollution, delay or vehicular traffic nor would it in any way compromise safety.

Moreover, the grant of slots constitutes a significant pro-competitive action bringing important low-fare benefits to the LaGuardia-Phoenix/West Coast markets by enabling America West to efficiently utilize its Columbus hub and thereby substantially stimulate low-fare options in these markets.

 

Respectfully submitted,

Joanne W. Young

David M. Kirstein

BAKER & HOSTETLER, LLP

Washington Square, Suite 1100

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036-5304

(202) 861-1532