OST-99-6547 / OST-97-2870 / OST-97-2932 / Spirit Airlines / High Density Rule - New York LaGuardia / Reply of Spirit Airlines / December 15, 1999

Application of

for an exemption pursuant to 49 U.S.C. § 41714

Ft. Lauderdale/Ft. Myers/Orlando/Tampa/West Palm Beach/Detroit - New York (LaGuardia Airport)

SPIRIT AIRLINES, INC.

On November 23, 1999, Spirit Airlines, Inc. ("Spirit") applied to the Department of Transportation ("DOT" or "Department") for a total of 14 new slots at New York's LaGuardia Airport ("LGA") so that Spirit might introduce scheduled service between LGA, on the one hand, and Ft. Lauderdale, Orlando, Tampa, Ft. Myers, West Palm Beach and Detroit, on the other hand. Spirit also asked for an amendment to its existing LGA slot exemptions that would enable Spirit to commingle its slots and allocate them among its exemption markets to accommodate minor changes in seasonal demand.

Five parties filed answers to the Spirit Application. The Greater Orlando Aviation Authority, the Broward County Aviation Department, the Lee County Port Authority, and the Palm Beach Convention and Visitors Bureau each filed answers in strong support of the Spirit Application. The Office of the Queens Borough President filed an answer in opposition to the Spirit Application, as it has in response to all carrier requests for slot exemptions at LGA. Pursuant to 14 C.F.R. § 302.407, Spirit is filing this Reply in order to

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correct the numerous factual and legal misrepresentations contained in the answer of the Borough of Queens.

The Borough of Queens says little that is new. It argues that Spirit has failed to satisfy the statutory standards for exemption authority, and complains that Spirit's service will have a negative impact on existing airline operations at LGA and upon the surrounding community. Specifically, the Borough of Queens claims that the communities which Spirit proposes to serve are not in need of additional air service and that the' service proposed by Spirit would bring only "nebulous" public benefits. Answer of Borough of Queens at 9, 11.

The contention that Spirit's proposed services would offer limited public benefits is contradicted by DOT's prior findings with regard to these communities, the comments of the communities themselves, and objective fact. When DOT approved the JetBlue application, it expressly found that the New York market as a whole was plagued by high fares, and that there was a need for service in each of the New York-Florida markets proposed to be served by Spirit and JetBlue. See Order 99-9-11 at 9-11. DOT made a similar finding about the need for service in the New York-Detroit market when it approved the request for an exemption for Pro Air to provide scheduled air service between Detroit's City Airport and LGA. See Order 98-10-29 at 9-10. DOT's findings are as valid today as they were when they were first made.

Buttressing DOT's findings about the need for the services proposed are the comments of the communities at issue and data about the markets themselves. For example, the Greater Orlando Aviation Authority notes that "[d]espite the high volume of O&D traffic between Orlando and the three New York City area airports, only two airlines

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at each of the airports control between 86% and 98% of the market share . . . ." Answer of Orlando dated December 8,1999, at 3. Citing this heavily concentrated market, Orlando goes on to observe that "[a]lthough there are roughly 1200 daily passengers in the LGA-Orlando market, there is no low fare carrier." Id.

The other Florida interests which responded to the Spirit Application have cited a similar need for Spirit's service. The Lee County Port Authority observed:

Letter from Robert M. Ball to DOT Secretary Slater dated December 7, 1999. The Palm Beach Convention and Visitors Bureau has cited similar benefits Spirit has brought to their community.

See Letter of Richard R. Haller, Director Airport Marketing dated December 1, 1999 (Exhibit 1 of Submission of Spirit dated December 8, 1999).

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Although the Borough attempts to argue otherwise, there can be no serious dispute that there is a need for additional competition in the New York-Detroit market. At present, Northwest is the only airline providing nonstop service between Detroit's Wayne Metro Airport and LGA. The service proposed by Spirit would challenge the Northwest monopoly, and offer a low-fare alternative in a market where none exists. If this is not a "public benefit," it is not clear what is.

If there is any room left for discussion of the benefits to be offered by Spirit's proposed services, the Department need only look at the use Spirit has made of its LGA-Melbourne and LGA-Myrtle Beach exemption authority. Since Spirit introduced service at Melbourne, average fares in the market have declined 63%, and O&D traffic has increased 964%. At Myrtle Beach, Spirit's service has brought a 67% fare reduction, and a greater than 500% traffic increase. See Application of Spirit, at 5. The Borough of Queens' claim that there is a "lack of public benefits that would accrue from any new service" (Answer, at 10) should be put to rest.

The Borough of Queens also argues that the Department should not approve Spirit's Application because its Stage-3 compliant MD-80-series aircraft is not the quietest Stage-3 aircraft in the market. The Borough also says that the service "during LaGuardia's peak travel hours" would have an adverse impact upon the area surrounding LGA. See Answer of Queens, at 15. As to the first contention, Spirit wishes to observe that the statute does not differentiate between various models of Stage-3 compliant aircraft. The Department should reject the invitation to depart from its settled practice and impose a new (and more burdensome) requirement upon new-entrant carriers. As to the claim that Spirit's proposed service would increase noise "during peak travel hours," Spirit wishes to reiterate its long-

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standing offer to confer with the FAA and design its schedules so as to mitigate any potential impact on the surrounding community. /1

The Borough of Queens also questions whether Spirit's services would be "operationally and financially viable." See Answer of Queens, at 15. As Spirit indicated above, the Department already has found that the markets at issue can sustain additional service. Moreover, Spirit's existing (and successful) services to each of the points at issue, paired with its exemplary track record with regard to the use of its LGA exemption slots, are ample evidence that the services proposed would be operationally and financially viable.

The Answer of the Borough of Queens is utterly unpersuasive. It ignores the enormous public benefits to be offered by Spirit, and Spirit's satisfaction of each and every one of the Department's existing exemption criteria.

WHEREFORE, the Department should promptly grant the relief requested by Spirit.

Respectfully submitted,

Anita Mosner

GKMG CONSULTING SERVICES, INC.

1054 Thirty-First Street, N.W.

Washington, D.C. 20036

(202) 342-5201

Representatives of SPIRIT AIRLINES, INC.

Date: December 15, 1999

1/ Spirit is puzzled by the Borough of Queens' claim that it is concerned about adverse noise impacts upon the area surrounding LGA in the face of its apparent preference that Spirit operate outside slot-controlled hours, which are the late morning and early evening, where the disturbance to the surrounding community from Spirit's service would be far greater.

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