OST-99-5532 / Baton Rouge / High Density Rule - Chicago O'Hare / Surreply of Atlantic Coast Airlines / May 13, 1999

Application of

for an Exemption from 14 C.F.R. Part 93, Subparts K and S, under 49 U.S.C. § 41714 to allow nonstop service to Chicago O'Hare International Airport

In the reply of Baton Rouge, the applicant, for the first time, submitted a detailed traffic forecast in a belated effort to demonstrate operational and financial viability of Baton Rouge-O'Hare service required by the Department.

Considerations of fundamental fairness and procedural due process require ACA to have an opportunity to respond to the late-filed forecast of Baton Rouge that properly should have been contained in its initial application. The receipt of this surreply will be conducive to the building of a complete record and will not appreciably prolong the DOT's consideration of this matter, if at all.

Baton Rouge has for the first time in its reply to the answer of ACA put forth a detailed traffic forecast. Although the inclusion of this traffic information is framed as a response to ACA's position that the Baton Rouge market is smaller than either the Charleston-O' Hare or Mobile-O'Hare markets, the Baton Rouge traffic analysis should have been part of its affirmative case. However, even by delaying the submission of this critical data to the reply round of pleadings, Baton Rouge could not so manipulate the data to prove the Baton Rouge-O'Hare market is larger than either Charleston or Mobile. Baton Rouge Reply Exhibit 4 ranks Charleston first and Mobile, fifth, among Chicago's largest markets without nonstop or roundtrip single plane service. Baton Rouge ranks twelfth, almost one half the size of the O'Hare-Mobile market.

The only way Baton Rouge can elevate itself to a higher position (just barely ahead of Mobile) is by including traffic generated by Alexandria, Lake Charles and Lafayette, which are up to 140 miles from Baton Rouge to make up its so-called catchment area. The furthest of these cities, Alexandria, is three hours driving time from Baton Rouge. With New Orleans only 91 miles from Baton Rouge and linked by a modern interstate highway (approximately one hour driving time to the airport), the DOT could properly conclude that Baton Rouge is within the New Orleans nonstop catchment area. With Chicago service being readily available from New Orleans six times daily, an award to Eaton Rouge or Eagle would not constitute the best and highest use of the scarce slot exemption resource when larger Chicago O&D markets such as Charleston-and Mobile will go unserved.

Eaton Rouge has forecast 76,161 annual passengers traveling on American Eagle. As noted, this forecast assumes catchment area traffic of over 24,000 annual passengers. ACA did not use any catchment area traffic to project its forecast traffic in either the Charleston Joint Application (See Exhibit 5) or the Mobile Joint Application (See Exhibit 5). To this degree, Eaton Rouge's forecast is far less conservative and more prone to being proven incorrect than ACA's traffic projections and financial forecasts.

This point is not simply idle speculation, but is decisively significant because the DOT has already witnessed American Eagle terminating O'Hare service at Shreveport and Montgomery presumably because traffic did not respond to its service. /1 Since Shreveport actually generated 11 additional passengers by day each way than did Baton Rouge in 1998, the DOT must be skeptical of the claim of Eaton Rouge that Eagle can successfully serve the Louisiana capital. The late, colorful governor of Louisiana, Huey Long, gained much fame by promising a chicken in every pot. The question

1/ Eagle has yet to offer any explanation for its pull out for the O'Hare-Shreveport and O'Hare-Montgomery markets. Was it because the operations were not profitable? If so, is a short nine or ten months of operation as conducted by Eagle sufficient to prove the value of the routes? Does Eagle have an obligation to the communities in view of their strong support for Eagle's slot applications in 1998. At the very least, the DOT should insist on receiving an explanation from Eagle before even considering whether it should be awarded slot exemptions to serve even smaller Chicago O&D markets.

presented by the Baton Rouge and Eagle applications is whether Baton Rouge and Eagle will have their chicken dinner or simply lay an egg.

No matter how Baton Rouge tries to make the economic case for its service, it cannot demonstrate the needs of Baton Rouge for O'Hare access are more compelling than either Charleston with 271% greater PDEWs than Baton Rouge (78%, if one concedes the appropriateness of the Baton Rouge catchment area, which ACA does not concede), or Mobile with 83% more PDEW's than Baton Rouge.

Very truly yours,

BAGILEO, SILVERBERG & GOLDMAN, L.L.P.

Attorneys for AT COAST AIRLINES

Robert P. Silverberg

Dated: May 13, 1999