OST-98-3550 / Vanguard Airlines / High Density Rule, New York JFK / Amendment No

OST-98-3550 / Vanguard Airlines / High Density Rule, New York JFK / Amendment No. 1 to Application / April 30, 1998

Application of

VANGUARD AIRLINES, INC. / Docket OST 98-3550

For an exemption from Subparts K and S of 14 CFR Part 93 (slot exemptions) Kansas City - New York (JFK) Pittsburgh, PA - New York (JFK)

AMENDMENT NO. I TO APPLICATION OF

VANGUARD AIRLINES, INC. FOR AN EXEMPTION

On February 23, 1998, Vanguard Airlines, Inc. ("Vanguard"), filed an Application For An Exemption from Subparts K and S of 14 CFR Part 93, the requirements of the "High Density Rule", to allow Vanguard to offer nonstop service between Kansas City, Missouri and-New York (JFK) and between Pittsburgh, Pennsylvania and New York (JFK) by granting Vanguard four slots during controlled hours, specifically between 3:00 p.m. and 7:59 p.m. Vanguard seeks to amend its application by limiting the request to three slots and withdrawing the proposal to serve Kansas City during slot-controlled hours.

AMENDED SERVICE PROPOSAL

Vanguard commenced service with two, and currently operates one round-trip flights between Kansas City-New York (JFK) and two round-trip flights between Pittsburgh-New York (JFK) outside of slot controlled hours. Vanguard has determined that without a much larger number of slots to serve the Kansas City-New York (JFK) market, Vanguard's ability to attract the volume of passengers required to make this market profitable is severely hampered. Thus, Vanguard has decided to withdraw its request for two JFK slots to serve Kansas City and is terminating nonstop Kansas City-New York (JFK) service as of May 12, 1998.

In the Pittsburgh-New York (JFK) market, however, Vanguard requires just three controlled JFK slots to enhance the profitability of its service proposal. Vanguard currently offers the only nonstop jet service between Pittsburgh and New York (JFK), but is unable to offer a mid-day departure and an early evening departure eastbound and an early evening departure westbound. In order to maximize its station efficiency at JFK where the operating costs exceed those at other airports in the Vanguard system, to connect with international carriers at JFK, and to construct useful connections beyond Pittsburgh, Vanguard requires a 3:55 p.m. arrival slot at JFK (to allow a mid-day Pittsburgh departure), a 7:05 p.m. arrival slot at JFK (to allow an evening Pittsburgh departure) and a 5:00 p.m. departure slot from JFK (to allow an evening arrival at Pittsburgh). (See Exhibit A). Thus, Vanguard requests three slots to accommodate the following schedule:

Arrival Slots	Departure Slots
3:55 P.M. (Pittsburgh)	5:00 P.M. (Pittsburgh)
7:05 P.M. (Pittsburgh)	8:00 P.M. (Pittsburgh) /1

This schedule will offer one stop connecting service to New York (JFK) from Minneapolis and Chicago (Midway) over Pittsburgh. (Exhibit B). A well-timed schedule is crucial to serving connecting traffic and will provide unique affordable one-stop service at much lower fares than currently exist in the marketplace. The addition of these two round trip flights will serve the needs of business and leisure travelers and is consistent with the economics of the marketplace.

DOT'S RECENT GRANT OF LAGUARDIA SLOTS SUPPORTS VANGUARD'S REQUESTED AMENDMENT

On April 21, 1998, DOT granted America Trans Air, Inc. (ATA) and Spirit Airlines, Inc. (Spirit) a total of nine LaGuardia slots while denying the remainder of ATA's and Spirits's applications as well as the applications of AccessAir Holdings,- Inc., America West Airlines, Inc., Colgan Air, Inc., and the joint application of Pan American World Airways, Inc. ("Pan Am") and Carnival Air Lines, Inc. Order 98-4-22. In that Order, DOT reiterated its guidelines for exceptional circumstances entitling the applicant to an exemption. DOT stated that "the applications we are approving here meet those guidelines because they involve significant markets that are not served by nonstop jet

1/ An 8:00 P.M. slot is outside the slot-controlled times at JFK. Thus, the proposed schedule only requires the granting of three slots.

schedules, where there is sound evidence that demand would support profitable operations, and where there is an opportunity to fill those service voids with low-fare competitive carriers." Order at 12. As demonstrated in its initial application, Vanguard's proposal satisfies these guidelines. This amendment only enhances the financial and operational viable of Vanguard's proposal by focusing on the market (Pittsburgh-New York(JFK)), which will benefit the most from the addition of just a few (three) controlled JFK slots.

Moreover, the strength of Vanguard's proposal remains despite the DOT's grant of nine additional LaGuardia slots (for a total of thirty (30) additional LaGuardia slots) and its denial of Pan Am/Carnival's request for JFK slots. DOT's determination "that the increased operations authorized by [Order 98-4-22] and Order 97-10-17 will not cause significant environmental harm, will not significantly increase congestion, and will not increase safety hazards at LaGuardia" (order at 16), is not a factor in the decision to grant three JFK controlled slots to Vanguard. On the basis of the record already developed on this issue, the addition of three JFK slots at the times indicated will not raise environmental, safety or congestion concerns.

Finally, DOT's decision to deny Pan Am/Carnival's application is market and applicant specific. First, Pan Am/Carnival's suspension of operations is reason alone to deny their applications. Second, a finding that additional jet frequencies in the Boston-JFK market does not add new benefits and thus fails to meet the exceptional

circumstances requirement, does not apply to the Pittsburgh-JFK market. While Pittsburgh-JFK receives a number of commuter flights using turboprop equipment, the introduction of service by Vanguard in late 1997 for the first time brought low fare all-jet service to the Pittsburgh-JFK market, resulting in important benefits to the traveling public. Vanguard's loads have been excellent and stimulation from its new low fare jet service, substantial. Vanguard has made an economic commitment to the market but, without three additional slots, can not offer the kind of efficient and convenient service pattern to which the traveling public is entitled. Unlike the Pan Am/Carnival proposal, Vanguard's JFK service does introduce new benefits and thus meets the exceptional circumstances requirement.

CONCLUSION

Under these circumstances, grant of this exemption not only is in the public interest but meets the exceptional circumstances requirement. Without an allocation of slots for New York (JFK) service, Vanguard will not be able to offer an affordable convenient New York alternative to the businessman and leisure traveler and to stimulate further growth in the Pittsburgh-New York (JFK) market.

For all these reasons, Vanguard respectfully requests the Department grant the exemption from the slot regulations requested, as amended, to increase nonstop Pittsburgh-New York (JFK) service by two daily round trip flights, requiring the allocation of two arrival and one departure slot during slot controlled hours.

Respectfully submitted,

Stephen Lachter

LAW OFFICES OF STEPHEN H. LACHTER

1150 Connecticut Avenue, N.W.

Suite 900

Washington, D.C. 20036

(202) 862-4321

COUNSEL FOR VANGUARD AIRLINES, INC.

April 30, 1998