OST-98-4647 / American Eagle / High Density Rule, Chicago O'Hare / Answer of United Air Lines / November 9, 1998

 

Application of

AMERICAN EAGLE AIRLINES, INC. / Docket OST-98-4647

under 49 U.S.C. 41714 for an exemption from the high density rule governing Chicago O'Hare slots (14 CFR ) Part 93 (Greenville/Spartanburg, South Carolina)

 

ANSWER OF UNITED AIR LINES, INC.

 

United Air Lines, Inc. ("United") submits the following answer in opposition to the above-captioned application of American Eagle Airlines, Inc. ("American"):

1. By its application, American seeks three exemption slots at Chicago O'Hare International Airport under 49 U.S.C. §41714. American says that it will use these three exemption slots plus "three additional slots of its own" to operate three daily round trips between O'Hare and Greenville/Spartanburg, South Carolina. American will use 50-seat regional jet equipment to operate these services.

2. American does not indicate under what provision of §41714 it seeks exemption slots to serve Greenville/Spartanburg. That city is not an EAS point but is, in fact, a small hub. An exemption under §41714(a) is, therefore, not appropriate. /1 There is no foreign air

1/ The Department's award of exemption slots to American in Orders 98-4-21 and 98-9-24 purported to rely on EAS service by requiring the 18 exemption slots to be used to support American service to three EAS points it was already serving: Bloomington, IL, Champaign, IL,

(continued...)

 

Answer of United

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transportation involved and §41714(b) is obviously not relevant. American is not a "new entrant" but is, in fact, the largest holder of commuter slots at O'Hare and the second largest slot holder overall. No exemption may be granted to American under §41714(c). Order 98-4-21 at 16. There is, thus, no legal basis under §41714 for the grant of the three slots American is seeking by exemption.

3. Indeed, the Department should properly dismiss American's application. As the largest holder of commuter slots at O'Hare, American is abusing the Department's slot exemption process by submitting yet another exemption application. American has amply demonstrated in another context its predisposition to abuse of these procedures.

In Order 98-4-21. the Department awarded American 16 O'Hare slots by exemption to be used for service to O'Hare from four small/medium-sized communities. The Department stated its expectation that American would offer three daily regional jet roundtrips to each of the communities for which it was awarded slot exemptions. In making that award, the

1/ (...continued) and LaCrosse, WI. American was then allowed to use 18 of the unrestricted commuter O'Hare slots formerly used for service to these EAS points to serve four new points: Duluth, Fayetteville, Montgomery and Shreveport. Both United and American objected to this "slot swap" procedure as inconsistent with the Department s exemption powers. The Department, nevertheless, issued an order affirming its "slot swap' procedure. Order 98-9-24. That order did not, however, resolve the legal issues raised by United to the "slot swap" procedure and United continues to object to those procedures as inconsistent with §41714(a) for the reasons set forth in its pleadings in Docket OST-97-2985, which are adopted here by reference. American is not, in any event, requesting that the three slots it seeks for Greenville/Spartanburg service be made available pursuant to a further "slot swap."

 

Answer of United

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Department encouraged American "to assist" in the implementation of "the full three-roundtrip service patterns they have proposed." Order 98-4-21 at 19.

Rather than engage in the sort of self-help that the Department had foreseen to round out the service patterns to the exempted communities, American returned to the Department w ith a plea for more slot exemptions in order to accomplish that purpose. Even though American is the largest holder of commuter slots at O'Hare, the Department awarded it two more exemption slots. for a total of 18, in order to facilitate the operation of the three-daily flight patterns which American had proposed for its exemption cities and which the Department expected would be operated. Orders 98-9-24 at 19 and 98-9-24 at 4.

In its latest application, American demonstrates that it was more than able to use its existing slots as a fonm of "self help" to fund the full service levels to the four exemption points. Thus, American now seeks three exemption slots for a fifth point - Greenville/ Spartanburg - and offers to make three additional slots available from its own slot base to offer three daily roundtrips between Chicago and Greenville/Spartanburg.

American is willing to resort to "self help" at Greenville/Spartanburg despite the fact that it failed to do so previously and has already defaulted on its proposal for regional jet service to two of the four points for which it previously received exemption slots. Although American was given two additional slots to support its proposal of three daily services to each of the four exemption points, it operates only two daily services to Shreveport and Montgomery.

American should not be given any additional slot exemptions until it has fulfilled its existing service commitments. American is seeking expedited action to obtain the additional

 

Answer of United

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slots necessary to serve Greenville/Spartanburg, offering a January 1999 startup. If American. in fact. has three slots available to support new regional jet service in January, it should first be required to use those slots to offer the three daily flights it proposed to operate from Chicago to Shreveport and Montgomery.

American's action amply demonstrates that the Department was fully warranted in rejecting pleas from American's wholly-owned commuter subsidiaries for slot exemptions. For example, in Order 97-10-16, the Department denied a request of Simmons Airlines (which was later merged into American Eagle) for exemption slots at O'Hare. The Department's reasoning in that case is equally applicable here:

the exemption powers conferred upon the Department under the Act contemplated a limited pool of additional capacity and was not intended to benefit an airline group with large slot holdings such as American and its corporate affiliates. Id. at 10. See also 14 CFR §93.213(c).

The Department should not only dismiss American's latest application as inconsistent with its exemption powers under §41714. It should also require American to return the two exemption slots it was awarded under false pretenses by Order 98-9-24. If American is now able to snake three slots available for additional exempted services to a fifth point, it is equally able to use those same slots to support services to the four points it has already been authorized to serve under its previous exemption and to provide those points with the levels of services it promised. The Department cannot and should not reward American with still more exemption slots in response to its latest application.

 

Answer of United

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4. According to American, the Department has only three O'Hare exemption slots available for allocation to small/medium-sized community service under its current environmental assessment. Atlantic Coast Airlines ("ACA") has an application on file for those same slots to provide service between Savannah. Georgia/Hilton Head, South Carolina and O'Hare. Docket OST-98-3982. That application has been on file for nearly five months. Although the Department deferred action on that application pending clarification of a possible legislative modification in the slot exemption statutes, that modification was not enacted, and there is no longer any legislative impediment to the grant of ACA's application. Order 98-9-24 at 7. /2

At the time ACA filed its exemption application for slots to serve Savannah' there were reportedly five unallocated O'Hare exemption slots out of the 60 available under the Department's environmental assessment. American was awarded two of those slots based on the false pretenses described above. Because the ACA application for Savannah was filed before that of American for Greenville/Spartanburg, the Department should process ACA's application first. As noted previously. in processing the ACA application, the Department should operate on the assumption that there are still five O'Hare slots available, voiding American's award of two

2/ A group known as the Business Travel Coalition ("BTC") has filed a letter dated September 2, 1998, in support of American's application. That letter reiterates the arguments recited in American's own application. BTC cites the success of other recently introduced regional jet commuter service to Chicago' such as the Trans States service between Chattanooga and O'Hare, as examples of the benefits attainable from such service. BTC has not, so far as we are aware, commented on ACA's Chicago-Savannah proposal. All of the arguments cited by BTC in favor of American's GSP-ORD application, however, apply with equal weight to ACA's application for slots to serve SAV-ORD.

 

Answer of United

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additional slots in Order 98-9-24, if necessary. Even if the Department were to decide not to dismiss American's application for more slots to serve Greenville/Spartanburg, it should at the very least defer action until it has first acted on ACA's earlier filed application.

The Department has previously deferred later-filed slot exemption requests such as that of American's, where their contemporaneous consideration would delay action on a long pending application, such as ACA's for Savannah, for which procedures have been completed. Em, Order 97-10-16. American's delay in filing a request should not be allowed to interfere

with action on the earlier filed application of ACA which is ripe for decision. American's reasons for delaying the submission of its latest application are transparent. American did not want to reveal its plans for seeking the three remaining exemption slots to serve

Greenville/Spartanburg until it had gained Departmental approval of the additional slots it sought to serve the four original exemption points. Clearly American did not want the Department to

know the extent to which it was prepared to dip into its slot base in an effort to obtain additional exemption slots. The Department should not allow American to abuse its process in this manner where that would have the effect of prejudicing ACA in its effort to obtain the slots it needs to serve Savannah. /3

3/ A third carrier, Aspen Mountain Air, has also filed an application for the remaining O'Hare exemption slots. (Docket OST-98-3671). However, as the Department recently noted, that carrier has been forced to reduce its fleet of the type of aircraft it proposed to use for its O'Hare exemption service and its ability to implement its proposed service is "doubtful." Order 98-9-24 at 7.

 

Answer of United

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5. In conclusion, and for the reasons set forth above, United urges the Department to dismiss the application of American for three additional O'Hare exemption slots and to do so with prejudice. American is not eligible for an exemption under any of the provisions of §41714. Moreover. American has abused the Department's processes by obtaining previous slot exemptions under false pretenses. American is the largest holder of commuter slots at O'Hare and, to the extent it wants to start commuter services to Greenville/Spartanburg. it should do so with slots frown its existing commuter slot base.

 

Respectfully submitted,

Jeffrey Manley

KIRKLAND & ELLIS

655 Fifteenth Street, NW

Washington DC 20005

(202) 879-5161

Counsel for UNITED AIR LINES, INC.

DATED: November 9, 1998