Order 98-10-29 / High Density Rule - New York LaGuardia / October 27, 1998

Served: October 27, 1998

Issued by the Department of Transportation on the 27th day of October, 1998

Applications of

For exemptions from Subparts K and S of Part 93 of Title 14, Code of Federal Regulations pursuant to 49 U. S. C. § 41714(c)

After careful consideration of these applications for exemptions from 14 C.F.R. Part 93, Subparts K and S. for slots at New York's LaGuardia Airport, the Department has decided to grant two slot exemptions to Pro Air, Inc. for nonstop service in the Detroit City Airport-LaGuardia market and two slot exemptions to Spirit Airlines, Inc. for nonstop service in the Myrtle Beach-LaGuardia market. We find that granting these exemptions is in the public interest and meets the statutory "exceptional circumstances" test. Grant of these exemptions is conditioned on their being used solely for nonstop service in the city-pair markets designated in the carriers' applications.

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However, we will continue to adhere in this order to the limit of thirty slot exemptions at LaGuardia Airport This limit is based on the number of increased daily operations studied in the Environmental Assessment that was prepared in connection with our earlier action in October 1997 (see Order 98-4-22, page 26) We must therefore again deny several applications that could provide Significant transportation benefits. Specifically, we are denying the applications of AccessAir Holdings. Inc. and Chautauqua Airlines. We grant America West Airlines petition for reconsideration of Order 98-4-22 However, on reconsideration. we do not find a basis to reverse the actions taken in Order 98-4-22 and we therefore affirm those actions. /1

In reaching our decision in this order, we find that our actions here will enable expanded aviation and commercial opportunities for two new entrant air carriers and substantial transportation benefits for a large number of consumers. Grant of the four exemptions will not result in added operations at LaGuardia Airport beyond the shirts per day that were contemplated in the Environmental Assessment.

The High Density Rule, 14 C.F.R. Part 93, Subparts K and S. designates New York's JFK and LaGuardia Airports. Chicago's O'Hare Airport, and Ronald Reagan Washington Rational Airport as high density traffic airports and prescribes air traffic rules for operating aircraft, other than helicopters, to or from those airports. These regulations limit the hourly number of allocated Instrument Flight Rule ("IFR") operations (take-offs and landings) that may be reserved for specified classes of users. The authority to conduct a single operation (either a take-off or landing) at one of these airports is commonly referred to as a "slot".

On August 23, 1994, Congress enacted the Federal Aviation Administration Authorization Act of 1994, which authorized the Department of Transportation ("the Department") to grant exemptions from the High Density Rule for the provision of Essential Air Service (EAS) at eligible communities, for international air service, and for service by new entrant air carriers. /2 As applied to New York's LaGuardia and JFK Airports, and as relevant here, the Act provides for exemption authority as follows: /3

1/ At that time. America West was seeking eight slots at LaGuardia Airport: four to operate new nonstop service to Columbus, Ohio. and four to replace slots it was leasing to serve the Columbus-LaGuardia Airport market. While acknowledging that the carrier's proposal had merit. the Department denied the request. The Department found that "in the face of the high number of LaGuardia slot exemptions being requested and the very limited number we can grant. We are not able to grant America West's application for LaGuardia slot exemptions. "

2/ Codified as 49 U.S.C. 41714(a), § 41714(b) and § 41714(c), respectively.

3/ For these purposes. a "new entrant air carrier" may generally be defined as an air carrier or commuter operator that holds or operates (or held or operated. since December 16. 1985) fever than twelve slots at the airport in question (not including international EAS. or certain nighttime slots at Reagan Washington National or LaGuardia Airports). See 49 U.S.C. 41714(h).

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§ 41714(a) states with regard to basic essential air service that if an eligible community relies on serf ice to a high density airport the Department must ensure that an air carrier has sufficient operational authority at that airport to provide the required service it also states that the operational authority shall allow fights at reasonable times taking into account the needs of passengers with connecting flights.

§ 41714(b) authorizes the Department to grant exemptions, based on a public interest finding, to enable air carriers and foreign air carriers to provide foreign air transportation using Stage 3 aircraft. Additional provisions apply regarding slot withdrawals from air carriers for use by foreign air carriers.

§ 41714(c) authorizes the Department to grant exemptions to new entrant air carriers, based on a public interest finding and under circumstances determined by the Secretary to be exceptional.

Each of the applicants is seeking authority as a new entrant air carrier, The Federal Aviation Administration Authorization Act of 1994 also directed the Department to complete the examination of the slot regulation it had previously begun, 49 U.S.C. § 41714(e). The statute instructed the Department to conduct a rulemaking based on its examination of the slot regulations, 49 U.S. C. § 41714(f). When the Department issued its report on the slot examination it announced its decision that it would not be in the public interest to begin such a rulemaking. The report had concluded that eliminating or modifying the slot regulations would not produce net public benefits.

The Federal Aviation Administration Authorization Act of 1994 ("the Act") establishes, as criteria for the granting of an application for slot exemptions, that the request be in the public interest and, for a new entrant carrier, that exceptional circumstances be found. Since 1994, the Department has approved 12 new entrant applications, in whole or in part, and denied seven others. /4

4/ Orders 94-9-30, 954-33, 95-8-38, 96-5-33, 97-10-16, 97-10-17, 98-4-21, and 98-4-22. With regard to the latter two orders, in Order 98-4-2 1, the Department granted slot exemptions to America West Airlines (five slots for O'Hare Airport-Phoenix AZ nonstop service), Atlantic Coast Airlines, Inc. (16 slots for O'Hare Airport-Charleston, WV, Springfield, MO, and Wilkes-Barre, PA nonstop service), Trans States Airlines (16 slots for O'Hare Airport-Chattanooga, TN. Roanoke, VA and Tri-Cities, TNNA nonstop service), and Simmons Airlines, Inc. d/b/a American Eagle (16 slots for specified Essential Air Service (EAS) operations to replace slots used by Simmons to implement nonstop regional jet services in the O'Hare Airport-Duluth, MN, Fayetteville, AR, Montgomery, AL and Shreveport, LA markets); and in Order 98-4-22, the Department granted LaGuardia Airport slot exemptions to American Trans Air (five slots for LaGuardia-Chicago Midway nonstop service) and Spirit Airlines (four slots for LaGuardia-

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For the new entrant exemptions that we granted, we found each of them to be in the public interest and exceptional circumstances existed because the applicant's proposal would address a significant service void or because the applicant's entrance into a market should likely produce substantial competitive benefits. In the latter regard, in Orders 97-10-16 and 97-10-17 we expanded our definition of exceptional circumstances from that used in previous cases by recognizing the need for competitive service in a market. especially low-fare competitive service. We determined that awarding slot exemptions for such service could provide substantial public benefits and would meet the statutory exceptional circumstances test. In doing so, we noted that our reexamination of the exceptional circumstances test and our decision that the test could be met by proposals for competitive service, especially low-fare competitive service, was consistent with statements by members of Congress, the General Accounting Office, and numerous community groups that we should more vigorously use our statutory authority to promote airline competition. For example, the General Accounting Office's 1996 study, Airline Deregulation, Barriers to Entry Continue to Limit Competition in Several Key Domestic Market (the GAO Report) stated that the "control of slots by a few airlines greatly deters entry at key airports in Chicago, New York and Washington." We have made clear our support for increased competition and our willingness to invoke available tools to promote competition. For example, in our January 6, 1997, response to the GAO Report the Department stated that it "intends to be more receptive to considering competition as a factor in granting slot exemptions to new entrants under the exceptional circumstances criterion."

In this order, we again rely on the decisional guidelines that were explained in detail in Orders 97-10-16 and 97-10-17: first, we favor proposals that are based on jet aircraft that meet Stage 3 noise requirements;5 second, there should be a reasonable expectation that the proposed service would be operationally and financially viable /5 and third, we place a premium upon the introduction of (a) new nonstop services where none exist and (b) new competitive services, especially by applicants that have the demonstrated potential to offer low-fare competition, where there is single-carrier service and the market could support entry, or where existing services do not produce meaningful price competition.

In generally requiring the use of jet aircraft for all slot exemption operations (except for essential air service), the Department is recognizing the public benefit of deploying scarce resources in a manner that makes them available to the highest number of users. Favoring the use of Stage 3 aircraft is consistent with language in those sections of the Act pertaining to essential air service, international air service, and the special rules that are applicable to Ronald Reagan Washington National Airport, although the requirement was omitted from the provision applicable to new entrant air carriers. Therefore, our decision that the public interest favors these aircraft for all slot-exemption approvals is based on the overall emphasis on Stage 3 equipment in most of the provisions of the Act and in similar provisions of the Airport Noise and Capacity Act of 1990, which called for the elimination of Stage 2 aircraft by December 31, 1999.

Melbourne, FL nonstop service).

5/ 14 C.F.R. Part 36, Subpart C and Appendix C.

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We have previously placed all parties on notice, and we emphasize here again, that the number of available slot exemptions is very limited and that we may have to deny applications that otherwise meet the standards we have established for the -rant of such exemptions More specifically, to assure that any new operations we May authorize will not have a significant impact on traffic, flight delays, or noise, we are adhering in this order to the limit of thirty slot exemptions at LaGuardia Airport on which we based the related environmental assessment cited in Order 97-10-17

AccessAir Holdings, Inc.

On September 24, 1998, AccessAir filed an application for four slot exemptions to enable it to operate two daily round trips between LaGuardia and Des Moines, Iowa, via Moline/Quad Cities and Peoria, Illinois, using Boeing 737-200 equipment, a Stage 3 compliant aircraft. AccessAir is a new airline that the Department found fit and certificated, subject to conditions, including its certification by the Federal Aviation Administration (FAA). It anticipates being in position to commence operations in the near future.

The Department had previously denied a similar exemption application by AccessAir in Order 98-4-22. The carrier notes, however, that in that order the Department acknowledged that AccessAir was eligible for slot exemptions as a new entrant, that there were positive factors in the carrier's proposal, and that the Department's denial primarily reflected the limited availability of exemptions we were in a position to grant. AccessAir asserts that it will offer high-quality service at prices below those of the major carriers, for a very large and underserved service area, and that its proposed operations will have no adverse effect on LaGuardia Airport.

On October 7, 1998, the Metropolitan Airport Authority of Rock Island, Illinois, owner and operator of the Quad City International Airport, filed in support of AccessAir's request.

On October 19, 1998, the Office of the Queens Borough President, City of New York filed a motion asking the Department to accept an otherwise unauthorized answer. We will grant the motion. Queens opposes the application arguing, infra Alia, that AccessAir has not received its final certification from the Federal Aviation Administration, that it has not submitted evidence of traffic projections larger than those earlier found inadequate, and that the period for the Department of Transportation to grant additional exemptions has expired.

On May 11, 1998, America West filed a petition for reconsideration of the Department's denial in Order 98-4-22 of its application for eight slot exemptions to enable it to increase its service from two to four daily round-trip flights with Stage 3 jet aircraft between LaGuardia and Columbus, Ohio.

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America West asserts that the Department's earlier decision to impose a limit of nine additional operations a day at LaGuardia was arbitrary and should be reversed. Rather it argues that the Department should be guided by its finding in its May 1995 Report to Congress on the High Density Rule that an additional 46 to 68 daily operations would result in a minimal DNL increase, below the threshold for a federal action that would require a noise analysis. It also contends that there is a compelling need for a competitive stimulus at LaGuardia because of eighty percent of the slots at that airport are controlled by the four airlines that have recently announced alliances, United and Delta, and American and US Airways.

On May 22, 1998, Spirit Airlines, Inc. filed an answer supporting the petition for reconsideration.

On September 8, 1998, Chautauqua filed an application for six slot exemptions to enable it to operate three daily round trips between LaGuardia and Bloomington-Normal, Illinois (Central Illinois Regional Airport), using 50-seat Embraer 145 regional jet aircraft, a Stage 3 compliant aircraft. In support of its request, Chautauqua states that there is currently no nonstop service in LaGuardia-Bloomington market, and that it is well positioned to provide the proposed service. Chautauqua maintains that the Bloomington/Normal market has a diverse business base, and that its service area has a much bigger traffic base than is reflected by the Origin-Destination (O&D) survey published by the Department, The carrier forecasts that it would carry approximately 63,000 passengers in the first year of its service.

On March 5, 1998, Pro Air, Inc., (Pro Air) filed an application for eight slot exemptions to enable it to operate four daily round trips between LaGuardia and Detroit City Airport, Michigan, using B-737-400 equipment, a Stage-3 compliant aircraft. Pro Air states that it now serves five destinations from Detroit City Airport and that the addition of a destination as important as LaGuardia would significantly enhance its traffic base and ability to grow and survive as a low-fare, new-entrant airline. It currently serves New York via Newark International Airport, but it says that its service does not provide access to much of the highly populated areas of the New York City metropolitan area.

On March 20, 1998, the Detroit City Airport Study Committee (the Committee), a community alliance of Detroit residents living near the Detroit City Airport, filed an answer opposing the request. The Committee maintains that Pro Air's application fails to demonstrate the exceptional circumstances necessary for grant of an exemption to the High Density Rule, The Committee argues that the Detroit-LaGuardia market is currently well served by nonstop service, and it questions the financial and operational viability of Pro Air's proposed service. /6 The Macomb County Board of Commissioners

6/ On April 6, 1998, the Committee filed a motion for leave to file an otherwise unauthorized document. We will grant the motion. The Committee submitted various letters opposing Pro Air's Application.

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urged disapproval of the application on similar grounds.

On March 20, 1998, the Office of the Queens Borough President, City of New York ("Queens") filed an answer opposing the application. Queens says that the time period for the granting of slot exemptions has expired. Queens also states that Pro Air's application fails to meet the public interest and the exceptional circumstances standard for grant of a slot exemption since, among other things, the Department does not need to grant "new" slots because it can simply reallocate existing underutilized slots.

On April 28, 1998, Pro Air filed a motion for leave to file an otherwise unauthorized document. We will grant the motion. Pro Air disagrees with Queens' assertions that the time period for granting slot exemptions has expired, and that its application fails to meet the public interest and the exceptional circumstances standard for granting slot exemptions. Pro Air also disagrees with the Committee's arguments that its proposed operations will harm Detroit City Airport. Pro Air also maintains that its load factors are typical of new airlines and that its proposed Detroit- LaGuardia Airport operations are stronger than the other routes now operated by Pro Air. The carrier stated its proposed service would benefit the Detroit-LaGuardia consumer, and would satisfy the Department's stated goal to increase competition.

On May 18, 1998, the Committee filed a motion for leave to file an otherwise unauthorized document, We will grant the motion. The Committee again questions the operational and financial viability of Pro Air's proposed operations.

On July 23, 1998, Spirit Airlines, Inc. ("Spirit") filed a motion asking the Department to reallocate certain slot exemptions. Spirit asks that to the extent that new entrants are not using previously allocated slot exemptions, the Department consider granting it at least two slots so that it can inaugurate a second nonstop round trip in the LaGuardia-Myrtle Beach market.

Spirit was granted four slot exemptions to serve LaGuardia-Melbourne, Florida, in Order 98-4-22, but its request for four LaGuardia exemptions to serve Myrtle Beach was denied. It notes that the Department's denial was based solely on a lack of available exemptions we could grant, despite the favorable recognition in the order that Spirit's proposal had merit. Spirit currently provides one daily round trip in the Myrtle Beach-LaGuardia Airport market. If approved, Spirit says that it would be able to expand its Myrtle Beach-LaGuardia service to a more viable two round trip per day level.

The Department will grant Pro Air two exemptions to enable it to operate one LaGuardia-Detroit City Airport round trip per day; and we will grant Spirit two exemptions to enable it to operate one LaGuardia-Myrtle Beach round trip per day. Grant of these exemptions

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is conditioned on their being used solely for nonstop service in the city-pair market designated in each carrier's application. We find that Pro Air and Spirit qualify under the statutory standard for such exemptions as new entrant airlines (49 U.S.C section 4 1 714(h)). We find that grant of their applications is in the public interest and meets our guidelines for the exceptional circumstances criterion as we have outlined in this and previous orders. We find that the remaining requests also have merit, but are less compelling and cannot be -ranted in view of the limited number of slot exemptions we can award here

Each of the pending applications would produce important competitive benefits, America West has stated the case well for the Department to use its powers to the extent possible to foster the procompetitive objectives of Congress and the Administration. It noted in its petition that the Airline Deregulation Act's stated intention was "to foster and promote competition, and specifically to promote key public interest factors, including avoiding unreasonable industry concentration, excessive market domination and monopoly power, and encouraging the continued strengthening of small air carriers to ensure a more effective and competitive airline industry. /7 It is precisely for these goals that we have granted those slot exemptions that we have issued to date.

At the same time, we must be sensitive to the environmental concerns raised by contesting parties, and we have established limits for now -- a total of thirty new operations per day at LaGuardia -- under the environmental assessment described in our previous orders, including 98-4-22. Thus, we disagree with America West's argument that the Department's actions in Order 98-4-22 limiting the availability of slot exemptions at LaGuardia Airport was arbitrary and should be reversed.

With this background, we have reviewed all of the pending applications on a comparative basis. As noted above, we find that each of them would provide substantial transportation benefits. AccessAir and Chautauqua would initiate direct service between LaGuardia Airport and markets that today have no nonstop or single-plane service. The potential traffic in these markets, however, does not appear to be as large as that in the Detroit City Airport or Myrtle Beach markets that Pro Air and Spirit are proposing to serve. In America West's case, we reiterate the observations that we described in Order 98-4-22 where we denied its similar request. America West is currently operating LaGuardia-Columbus schedules, and the exemptions it seeks would enable it to expand those frequencies. We do not dispute the merits of America West's proposal. However, we have granted America West five exemptions to expand its service in the Chicago 01 Hare-Phoenix market (Order 98-4-2 1), which should enable the carrier to implement a significant portion of its aggregate plan as presented in its previous applications. In the face of the very limited number of exemptions we can grant, we find greater benefit in the awards we have decided to make to Spirit and Pro Air.

Although we are not granting AccessAir's application, we will address the comments raised in the Borough of Queens' answer in opposition to that request. First, Queens acknowledged that the thirty LaGuardia slot exemptions we had previously granted in

7/ Petition, at 9- 10.

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Orders 97-10-17 and 98-4-22 had been subjected to an environmental review and that, on that basis, the redesignation of the four slots out of that pool that had been returned by AirTran is permissible. Most of Queens' arguments question whether AccessAir's proposal meets the exceptional-circumstances and public interest standards required for slot exemptions While we do not adopt Queens' conclusions, it is unnecessary to resolve them since we are denying the application on the basis of comparative considerations.

However, we will comment on Queens' contention that the Department lost its statutory authority to award slots to new entrants because Congress intended to terminate that authority on November 29, 1995, the date that the Department was supposed to complete the rulemaking required by 49 U.S.C. 41714(f).

In determining whether the Department has the authority to award slot exemptions despite its noncompliance with statutory deadlines for the slot rulemaking, the relevant principle is that established by Brock v Pierce Count , 476 U S~253 (1986): if a statute does not specify a consequence for an agency's noncompliance with statutory deadlines, the federal courts will not ordinarily impose their own coercive sanction. Accord, United States v. James Daniel Good Real Property, 114 S. Ct. 492, 506 (1993), United States v. Montalvo-Murillo, 495 U.S. 711, 718 (1990); Brotherhood of Railway Carmen v. Peha, 64 F.3d 702 (D.C. Cir. 1995); Gottlieb v. Pena , 41 173d 730, 733-737 (D.C Cir. 1994), Linemaster Switch Corp). v. U.S. EPA, 938 F.2d 1299, 1302-1304 (D.C. Cir. 1991). The Supreme Court's decision in Brock v. Pierce County used the analysis that the Second Circuit used in St. Reizis Mohawk Tribe v. Brock , 769 F.2d 37 (2d Cit. 1985), cert. denied, 476 U~S. 1140. There the Second Circuit held that an agency's failure to comply with a statutory time limit did not end the agency's authority to act.

Therefore, under the principles followed by the Supreme Court, the Department's failure to begin and complete a rulemaking by the statutory deadline would not end the Department's authority to grant slot exemptions under 49 U. S.C. §§ 41714 (a), (b), and (c), even though the statute provides that any exemptions would end on the adoption of new rules. The statute, by its terms, does not specify that the Department's failure to meet the deadlines would end the Department's authority to award slot exemptions. As the Supreme Court stated in Montalvo-Mutillo, 495 U.S. at 718, "Congress' mere use of the word 'shall' was not enough to remove the Secretary's power to act."

Pro Air's Detroit City Airport-LaGuardia application meets our guidelines in all respects. Pro Air will use Stage 3 jets (Boeing 73 7-400) to initiate new, nonstop service in the largest of the markets that would receive service under the five pending proposals. We do not agree with the Committee's assertion that there are no exceptional circumstances under Pro Air's proposal. Pro Air, which now serves Detroit City-New York via Newark Airport, will provide the Detroit-LaGuardia market with its first low-fare competition. Only Northwest Airlines serves the Detroit-LaGuardia market, and its average fare is

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about $209. Pro Air states that it intends to introduce coach fares at $69, with no pre-purchase restrictions, standard one-way fares at $89 and first-class fares at $189.

The Committee also disputes the operational and financial qualifications of Pro Air, Pro Air has been operating since July 1997. It has grown cautiously and currently provides daily service between Detroit and six different cities -- Baltimore, Fort Myers, Indianapolis, Newark, Orlando, and Philadelphia. There is nothing in the record that would cause us to question Pro Air's continuing fitness.

Spirit Airlines' Myrtle Beach-LaGuardia Airport application also satisfies the Department's guidelines. It will offer low-fare, competitive service with Stage 3 aircraft, in a market of substantial size. In reaching our decision in Order 98-4-22, we also found merit in Spirit's request for slot exemptions. However, at that time we were unable to grant the request because of the limited number of slot exemptions available to the Department, and because we found other applications, including Spirit's Melbourne-LaGuardia proposal, stronger. Among the applications now pending, we find that Spirit's Myrtle Beach proposal warrants our approval.

New York is Myrtle Beach's largest market. For the 12 months ended March 31, 1997, when Air South was operating Myrtle Beach-JFK nonstop service, the overall Myrtle Beach-New York market generated 122,190 O&D passengers, or 335 per day. The market currently receives only a single nonstop round trip, operated by Spirit with LaGuardia slots during the pre-7:00 a. m. and post-10:00 p. m. shoulder periods. US Airways operates one-stop service at both Newark and LaGuardia, but no nonstop service (Official Airline Guide, November 1998). The two exemptions Spirit seeks here would enable it to add a second nonstop, low-fare round trip in the market. Spirit has stated that LaGuardia Airport is the preferred New York airport for Myrtle Beach travelers, an assertion supported by Spirit's observation that for the first quarter of 1997 the average Myrtle Beach-New York fares were $262 via LaGuardia and $192 via JFK. This suggests that many passengers are willing to pay a premium for the convenience of using LaGuardia. In the same context, these facts suggest that LaGuardia's market characteristics are sufficiently independent for us to regard it as a separate market from other New York air-ports. In these circumstances, we find that Spirit's proposal would benefit substantial numbers of consumers, and that grant of its application is in the public interest.

AccessAir's proposal would provide low-fare service between New York, via LaGuardia Airport, and Des Moines, Peoria and Moline/Quad Cities, cities that now have no nonstop or even single-plane service to New York. As explained in Order 98-4-22, the

9/ Calendar Year 1997, O&D Data Bank I-A.

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Department found that this proposal had competitive and operational strengths. However, as before, we find that other factors weigh against the application by comparison to other pending proposals As we explained earlier, we are only in a position to authorize at this time a total of four slot reallocations at LaGuardia. For that reason, we must consider all of the pending applications comparatively While we acknowledge that AccessAir's operations should attract price-sensitive traffic, its actual traffic is not likely to equal the levels we anticipate for either Pro Air's Detroit service or Spirit's Myrtle Beach service. /10 In addition, AccessAir has not yet completed all of the steps necessary for it to receive an air carrier operating certificate from the Federal Aviation Administration ("FAA") or an effective certificate of public convenience and necessity from the Department. /11 While AccessAir does meet critical elements of our guidelines on exceptional circumstances -- they would offer new nonstop services where none now exist, and they would offer low fares and promote price competition -- we will not select it above other operating carriers whose proposals appear to be stronger traffic-wise.

America West seeks eight slots at LaGuardia, four slots to operate new nonstop service to Columbus, and four to replace slots it is currently leasing to serve that market. We have earlier acknowledged that America West's proposal would bring substantial benefits to many consumers. In the past we have granted America West requests for slot exemptions at Chicago's O'Hare Airport, While those earlier slot exemptions does not lessen the merits of America West's LaGuardia request, they have enabled America West to implement a significant portion of its aggregate plan as presented in its slot exemption applications. However, as we have determined earlier, in the face of the high number of LaGuardia Airport slot exemptions being requested and the very limited number we can grant at this time, we are not able to grant America West's application for LaGuardia at this time.

Chautauqua proposes to commence three round trips connecting New York, via LaGuardia Airport, with Bloomington-Normal, Illinois (Central Illinois Regional Airport), which now has no nonstop or even single-plane service to New York." As with AccessAir's proposal, we find that this application has competitive and operational

9/ For the 12 months ended December 31, 1997, the overall Detroit City Airport-LaGuardia Airport market reached about 290,000 O&D passengers, or about 395 passengers per day in each direction. As we indicated earlier, for the 12 months ended March 31, 1997, the Myrtle Beach New York market reached about 123,000 O&D passengers, about 167 passengers per day in each direction. For the 12 months ended December 31, 1997, the Des Moines/Moline/Peoria-LaGuardia market reached about 47,350 O&D passengers, or about 65 passengers per day in each direction.

10/ AccessAir was found fit on July 1, 1998, subject to meeting certain conditions, including obtaining operating authority from the FAA.

11/ The record does not indicate Chautauqua's proposed fare levels.

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strengths. However, as noted, we are only in a position to authorize at this time a total of four slot reallocations at LaGuardia. For that reason, we must consider all of the pending applications comparatively While acknowledging that Chautauqua's proposal to start three daily round trips in the affected market may attract sufficient traffic to support these operations, its actual traffic is not likely to equal the levels we anticipate for either Pro Air's Detroit service or Spirit's Myrtle Beach service. Moreover. given the fact that Chautauqua's application recognizes the need for at least three round trips in the affected market to viably support its proposed operations, and the Department has only four slots to reallocate, we find that its proposal is not as strong as the applications of Pro Air and Spirit.

The reallocated flights operated as a result of the slot exemptions granted in this order represent only a small percentage of the total current operations at LaGuardia Airport and represent a de minimis increase in noise contours. The Department has prepared an Environmental Assessment premised on an increase of 30 slot exemptions and concluded that the exemptions would not have a significant effect on the human environment. The complete Environmental Assessment is available in Dockets OST-97-2230, -2442, and -2557.

As the FAA slot regulation makes clear "(s)lots do not represent a property right but represent an operating privilege subject to absolute FAA control (and) slots may be withdrawn at any time to fulfill the Department's operating needs. . " 14 C.F.R. § 93,223(a). This order should not be construed as conferring on these carriers any ability to sell, trade, transfer, or convey the operating authorities granted by the subject exemptions.

The Department is granting slot exemptions by this order on the ground that the services proposed by the applicants meet the statutory public interest and exceptional circumstances criteria. The Department reserves the right to modify or terminate such exemption authority if the Department determines that, due to changed circumstances, these criteria are no longer satisfied by an applicant's use of the authority.

This order is issued under the authority delegated in 49 CFR 1. 56(l).

1. The Department grants an exemption from 14 CFR Part 93, Subparts K and S, to Pro Air, Inc., to enable Pro Air to conduct two flight operations a day (departures or arrivals) at New York's LaGuardia Airport during the slot-controlled period 6:00 a, m. to 12:00 midnight at times to be determined in consultation between Pro Air and the Federal Aviation Administration. This authority may be used only to provide nonstop service between Detroit City Airport and LaGuardia Airport;

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2. The Department grants an exemption from 14 CFR Part 93, Subparts K and S, to Spirit Airlines, Inc., to enable Spirit Airlines to conduct two flight operations a day (arrivals or departures) at New York's LaGuardia Airport during the slot-controlled period 6:00 a.m. to 12:00 midnight at times to be determined in consultation between Spirit Airlines and the Federal Aviation Administration. This authority may be used only to provide nonstop service between Myrtle Beach, South Carolina and LaGuardia Airport,

3. The Department denies the applications of AccessAir Holdings, Inc., America West Airlines, Inc., and Chautauqua Airlines, Inc.;

4. The Department directs Pro Air, Inc. and Spirit Airlines, Inc. to contact the Airspace and Air Traffic Law Branch of the Office of the Chief Counsel in the Federal Aviation Administration, as soon as possible following the issuance of this order to determine the actual times for arriving and departing flights as authorized by this order and to establish the starting date for implementing the schedules.

5. The authority granted under these exemptions is subject to all of the other requirements delineated in 14 C.F.R. Part 93, Subparts K and S, including, but not limited to, the reporting provisions and use or lose requirements; and

6, We shall serve this order on all parties served with these applications.

By

CHARLES A. HUNNICUTT

Assistant Secretary for Aviation and International Affairs

(SEAL)

An electronic version of this order is available on the World Wide Web at

hup.11dins.dot.govI