OST-98-4647 / American Eagle / High Density Rule / Answer of Savannah/Hilton Head / December 2, 1998

Application of

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)

On November 19, 1998, American Eagle Airlines, Inc. replied to the answer submitted by Atlantic Coast Airlines d/b/a United Express and United Air Lines, Inc. to American Eagle's application for three Chicago O'Hare exemption slots to be used to operate nonstop service between O'Hare and Greenville/Spartanburg, South Carolina. American Eagle asked the Department to promptly grant American Eagle's application.

The public interest will best be served by awarding the remaining unassigned O'Hare exemption slots to permit service at the largest market without nonstop service -- Savannah, Georgia/Hilton Head, South Carolina.

On March 11, 1998, the community of Savannah, Georgia/Hilton Head, South Carolina ("Savannah/Hilton Head") along with other municipalities and businesses from the states of Georgia and South Carolina /1 ("Parties") requested that the Department of Transportation

1/ The parties Include the Governors of Georgia and South Carolina, Chambers of Commerce, the Savannah/Hilton Head Area Convention and Visitors Bureau, and civic officials, hotels, resorts, and businesses

("Department") grant an exemption from the requirements of Subparts K and S of Part 93 of the Federal Aviation Regulations to award the necessary slots so that they may obtain direct nonstop service to Chicago's O'Hare Airport. The parties requested slots at O'Hare to allow four Savannah/Hilton Head-O'Hare round-trip flights.

After the Parties filed the March 11 petition, Atlantic Coast Airlines d/b/a United Express ("ACA") filed an application for slots under the provisions of Subparts K and S of the Part 93 of the Federal Aviation Regulations (14 C.F.R. Part 93, Subparts K and S) ("High Density Rule") to authorize ACA to conduct five operations (three round-trip flights) at O'Hare utilizing 50-seat regional jet aircraft to and from Savannah/Hilton Head. ACA has constructed a three daily roundtrip flight schedule using the requested exemption authority and combined it with an operation in a non-controlled hour.

The Savannah/Hilton Head market is significantly larger than the Greenville/Spartanburg market (according to ACA, 68% larger than Greenville/Spartanburg) and continues to grow. In terms of size of existing markets, continued growth, and traffic demand, there is no question that Savannah/Hilton Head is clearly the market that should be awarded the first available O'Hare slots.

American Eagle's suggestion that Savannah/Hilton Head enjoys far better connections to Chicago is irrelevant to the issue before the Department. Savannah/Hilton Head is not simply requesting slots to reach the Chicago market. While such service is important, the parties want to reach the rest of the country and world served by connecting flights at O'Hare. Savannah/Hilton Head agrees with American Eagle's comment that it is already connected to United's network

from throughout the South Carolina and Georgia areas. (Copies of letters of support were submitted with the petition.)

through Dulles. As shown in ACA's filings, that service is successful. As American Eagle understands, that service does not provide the same connections that are available at O'Hare. What that service does do, however, is provide a base of cost allocation and market reach that would allow the O'Hare service to prosper and grow.

The Savannah/Hilton Head parties would prefer an environment in which all markets could secure access to the nation's largest airports. Unfortunately, that result is not possible at the high density airports. American Eagle's claim that it should be awarded the remaining available slots at O'Hare because it "is at a significant slot disadvantage" is disingenuous at best. American has a significant number of slots at O'Hare -- both commuter and air carrier. According to its Exhibit 10, American Eagle has 299 O'Hare commuter slots. It has so many commuter slots that some are used for jet service to larger markets.

The public interest is not about promoting the continued growth of the nation's largest carriers. Instead, it is in the public interest to improve service for travelers, communities, and to promote economic growth. Departmental actions on awarding slots should be based on these factors.

It is time for the Department to act on the Savannah/Hilton Head petition that was filed eight months ago. The opportunity for this service is in place and the benefits will be significant. If the Department doesn't act soon, the service may be delayed beyond the spring start date. Beginning service by the spring would allow the parties to maximize business opportunities for the busy spring/summer season. Therefore, the Department should award the available slots to Savannah/Hilton Head and ACA without additional delay.

Respectfully submitted,

Edward P. Faberman

UNGARETTI & HARRIS

1747 Pennsylvania Avenue, NW

Suite 900

Washington, DC 200006-4604

Tel: (202) 778-4460

Fax: (202) 331-1486

SUBMITTED: December 2, 1998