OST-99-5533 / Huntsville-Madison County / High Density Rule - Chicago O'Hare / Surreply of Mobile Airport Authority / May 13, 1999

Application of

HUNTSVILLE-MADISON COUNTY AIRPORT AUTHORITY / Docket OST-99-5533

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

SURREPLY OF MOBILE AIRPORT AUTHORITY

AND ATLANTIC COAST AIRLINES AND

MOTION FOR LEAVE TO FILE

The Mobile Airport Authority ("Mobile") and Atlantic Coast Airlines ("ACA") (collectively, the "Joint Applicants") hereby seek leave to file the following surreply to the reply of the Huntsville -Madison County Airport Authority ("Huntsville"). In Huntsville's reply it argued that Huntsville is a better candidate for an award of exemption slots than is Mobile. ACA has proposed to offer regional jet service between Mobile and Chicago's O'Hare International Airport. American Eagle Airlines, Inc. ("Eagle") has indicated its intention to terminate service between Montgomery, Alabama and O'Hare and institute Huntsville-O'Hare service utilizing the four exemption slots previously granted by the DOT to facilitate Montgomery-O'Hare service. See Order 98-4-21.

Considerations of fundamental fairness require Mobile and ACA to have the opportunity to reply to the arguments of Huntsville. The receipt of this surreply will be conducive to the building of a complete record and will not appreciably prolong the D071 S consideration of this matter, if at all.

* * *

At the outset, the Joint Applicants regret the fact that the High Density Airport Rule precludes all communities that-- can support nonstop O'Hare service form obtaining it from interested air carriers. However, until there is a change in the regulations of the Federal Aviation Administration, this will simply not be possible. O'Hare slots are fixed in number. Presently, the DOT's policy of granting relief from the High Density Airport Rule (by issuance of exemption slots) is the only outlet for communities like Mobile and Huntsville to obtain needed nonstop O'Hare service. However, because there are only nine exemption slots available for_ distribution at the present time, the DOT is not in a position to facilitate the service needs of every deserving community. Choices must he made and the DOT has adopted a means by which slots are awarded to those who can make the best and highest use of the scarce resource in furtherance of the public interest. The DOT has done this by determining which community has "demonstrated . . . the greatest demand" which is a "critical consideration" and which "weighs heavily" in the favor of such community/ carrier applicants. Order 99-3-12, p.2. Based on these decisional criteria, the Joint Applicants submit that an award of four exemption slots to Mobile will produce more transportation benefits, consistent with DOT precedent, than would approval of the Huntsville application, as deserving as the community may be.

The public benefits that will flow from an award of O'Hare exemption slots to Mobile/ACA is that not only will ACA provide Mobile nonstop flights to O'Hare (Chicago is the second largest Mobile market -without nonstop service), ACA will also institute nonstop service to Washington's Dulles International Airport (Washington is Mobile's third largest market without nonstop service). This double benefit will go a long way to redress the imbalance in Mobile's limited access to the domestic air network, which currently is principally through Atlanta. The ACA proposal to offer nonstop regional jet service to both Chicago and Washington makes the transportation benefits of the Joint Application superior to other parties seeking exemption slots.

Huntsville has argued that it will generate more local and connecting passengers than will Mobile. Huntsville Reply, p.3. However, this statement is not consistent with historic traffic patterns. As previously noted, Mobile is a stronger generator of Chicago traffic than is Huntsville as demonstrated in the Answer of ACA to the Huntsville application at page 6:

City	PDEW	City Ranking from ORD	ORD Ranking from City
Mobile	43.9	7	2
Huntsville	31.7	12	8

In addition to the above analysis, Mobile and ACA have compared passenger traffic for the four year period from 1994 through 1998 and during this time period, Mobile has consistently generated more annual Chicago O&D passengers and more revenue than has Huntsville. Exhibit 1. Mobile generates more Chicago traffic, in part, because of the growth in its population base. Compared to Huntsville, Mobile's MSA non-agricultural employment is higher and growing at a faster rate. Exhibit 2.

Apart from the strong and growing economic base of Mobile that will amply support ACA's Mobile-O'Hare regional jet service, Mobile should be given primary consideration because Huntsville has qualitatively and quantitatively more access to the nation's air route network than Mobile. Indeed, Huntsville has 85 percent more departures per capita and 77 percent more annual seats than does Mobile. Exhibit 3. Huntsville also enjoys service from six established air carriers operating to six hub airports, with Huntsville's largest carrier, Delta, having only a 52 percent share of the market. Mobile, as noted in its Joint Application, must rely on only three carriers (two jet carriers and one turbo-prop carrier) the largest being Delta, which has a commanding 83 percent share of the market. These carriers serve only four hub airports, compared to Huntsville's direct access to six hub airports. Exhibit 4. Clearly, Mobile is underserved for a community of its size and greatly needs nonstop service to Chicago.

Granting the Joint Application of Mobile and ACA will add a new carrier to the Mobile market which would not be the case with Huntsville since American already serves the city., Moreover, approval of the Joint Application will give Mobile needed access to a new hub market at which United, ACA's code share partner, offers superior connecting opportunities. Just as important, ACA will also provide Mobile with twice daily nonstop service to Washington, D.C. (through ACA's Dulles hub) Mobile will, therefore, gain critically needed nonstop access to both Chicago O'Hare and Washington, D.C. if ACA or Mobile are awarded O'Hare slots.

In short, the Joint Application of Mobile and ACA deserves primary consideration by the Department among the competing applications for O'Hare slot exemptions.

Very truly yours,

MOBILE AIRPORT AUTHORITY

G. Bay Haas

BAGILEO, SILVERBERG & GOLDMAN

Attorneys for ATLANTIC COAST AIRLINES

Robert P. Silverberg

Dated: May 13, 1999