Order 2000-2-33 / OST-99-6468 / Astral Aviation d/b/a Skyway Airlines / High Density Rule - Washington Reagan National / Order Granting Exemption / February 29, 2000

Posted 2/29/2000 3:30 pm

WASHINGTON, D.C.

Issued by the Department of Transportation on the 29th day of February, 2000

Served: February, 29, 2000

Application of

For an exemption from 14 CFR Part 93, under 49 U.S.C. §41714

By this order the Department is granting the application of Astral Aviation, Inc. d/b/a Skyway Airlines (Skyway) for an exemption to permit it to reassign certain slots at Ronald Reagan Washington National Airport (Reagan National or DCA) to alternative times.

On November 8, 1999, Skyway filed an application for an exemption to slide four 9:00 p.m. (2100) Reagan National slots that it had recently acquired to more desirable times. Skyway proposes to move, or "slide", one of the slots to 9:35 a.m. (0935), one of the slots to 9:55 a.m. (0955), one of the slots to 4:00 p.m. (1600), and the final slot to 4:25 p.m. (1625) for nonstop service to and from Grand Rapids, MI, commencing March 1, 2000.

In support of its application, the carrier states that it complies with all of the conditions specified in 49 U.S.C. §41714(d), which authorizes the Department to grant exemptions to air carriers operating 6r holding slots at Reagan National if such conditions are met. Skyway asserts that its request meets the exceptional circumstances test required by statute and defined by Department guidelines and precedent, in that it will enable new nonstop service, with Fairchild 328JET equipment, a Stage 3 aircraft, in a currently unserved market, benefiting a large number of consumers. Skyway contends that its proposed services will result in time savings for Grand Rapids

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Washington passengers ranging from over two hours and 40 minutes to almost five hours. The carrier asserts that the Grand Rapids-Washington market is large and growing with 55,360 O&D passengers for the year ended March 31, 1999. It projects that its proposed services would be financially and operationally viable with an average load factor of nearly 70 percent. It also states that, because there will be no net increase in the number of slots authorized for DCA under the High Density Rule, there will similarly be no increase in noise impacting the area surrounding the airport. In addition, Skyway asserts that grant of its request will not increase operations in any one hour by more than two flight operations.

Skyway contends that grant of its application would be consistent with precedent established in Order 94-9-49 and more recently by Order 99-11-4, where the Department granted Midwest Express Airlines similar requests to slide slots to more useable times for service between Reagan National and Omaha, Nebraska, and Milwaukee, WI, respectively. In those two orders the Department cited Congress's intent that the pertinent exemption authority apply only to meet the specific needs of carriers holding a limited number of slots at Reagan National and to enhance competition. Skyway now holds only four commuter slots at Reagan National. Because of its small size and modest DCA slot holdings, the carrier contends that grant of its application would improve competition at Reagan National.

On November 24, the Air Carrier Association of America (ACAA) filed an answer opposing the application. ACAA argues that granting Skyway's request to slide commuter slots would effectively preclude a new entrant air carrier from moving slots to the same two-hour period. ACAA contends that the Department's recent grant of the Midwest Express DCA "slot slide" request in combination with Skyway's instant application would effectively eliminate four hours of DCA operations from new entry. ACAA asserts that grant of Skyway's request would, in effect, give further benefits to one carrier. Rather, ACAA argues that the Department must seek to distribute DCA benefits more evenly. /1

ACAA objects to any action that favors incumbent DCA slot operators over new entrants such as permitting incumbent carriers to slide slots. ACAA alleges that there are new entrants that would be willing to operate at 2100 given the opportunity. ACAA argues that these have-not carriers should be given the opportunity to acquire temporary slots and then permitted to slide slots to more commercially desirable times as do the established, incumbent carriers. ACAA argues that considering that Reagan National has had no new entry in a decade the Department should not take actions that inhibit new entrant carriers from gaining DCA access.

1/ Skyway is a wholly-owned subsidiary of Midwest Express. Common ownership of slotholders is addressed in 14 CFR Part 93 subpart S and 14 CFR 93.213-Definitions.

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On November 23 the Metropolitan Washington Airports Authority (MWAA) also filed an answer. MWAA states that it has no objection to the application as filed, but reiterates the statutory requirement that grant of the application must not result in an increase in the total number of slots between 7:00 a.m. and 9:59 p.m. MWAA also contends that the provisions of 49 U.S.C. 41714(d) requiring that the number of operations in any one hour period may not increase by more than two operations refers to a scheduling hour, not simply any 60-minute period. MWAA argues that in any DCA scheduling hour there are a total of 48 air carrier and commuter slots. For any given scheduling hour, MWAA argues that the statute permits the Department to grant exemptions for up two slot slides, but in no case may the Department permit more than 50 authorized slots in any given scheduling hour. MWAA contends that the Department must also take into account previous slot slide exemptions awards in determining if the 50-slot hourly limit has been reached.

On November 24, Michigan Department of Transportation (Michigan DOT) filed an answer in support of the Skyway application. The Michigan DOT argues that the new services permitted by granting Skyway's request would provide numerous benefits to the State of Michigan and the Grand Rapids area.

On December 2, Skyway filed a consolidated reply. Skyway argues that neither ACAA nor MWAA has objected to its application on its merits. Rather, Skyway contends that the two respondents have raised procedural issues. According to Skyway, ACAA's objections can only be addressed through legislative action to revise the statute rather than administrative action. Skyway asserts that ACAA's concerns deal with improving DCA slot access for new entrant carriers. However, Skyway argues that the purpose of 49 U.S.C. 41714(d) is simply to improve the efficacy of existing DCA slots and facilitate the operating flexibility of DCA slot operators under very specific, limited conditions. Finally, Skyway notes that no ACAA member has filed for authority under 49 U.S.C. 41714(d) and therefore even if ACAA's "preemption" argument is accepted, ACAA cannot demonstrate harm resulting from grant of Skyway's request.

Skyway takes no position regarding MWAA's interpretation of the statute, but says that grant of its application would not violate MWAA's concern that no more than a net of two slots may be moved to a given scheduling hour, either by individual action or on a cumulative basis.

On December 7, ACAA filed a response to Skyway's reply, together with a motion for leave to file. /2 ACAA reiterated its arguments that the Department should adopt procedures that open DCA slot access to all interested parties on a fair and open basis.

2/ We will grant the motion.

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We have decided to grant Skyway's application.

Under 49 U.S. C. 41714(d) the Department may, under circumstances that it finds to be exceptional, grant exemptions to an air carrier that holds or operates slots at Reagan National to enable it to slide the operating times of slots to different periods. Such exemptions are very limited and must meet explicit conditions. Under present practice the Department must find that grant of the authority would not (1) result in an increase in the total number of slots per day at Reagan National; (2) result in an increase in the total number of slots at Reagan National from 7:00 a.m. to 9:59 p.m.; (3) increase the number of operations at Reagan National in any one-hour period by more than two operations; (4) result in the withdrawal or reduction of slots operated by an air carrier; or (5) result in a net increase in noise impact on surrounding communities resulting from changes in timing of the exempted operations.

Skyway's proposed slides will not result in a net increase in the total number of operations at Reagan National during any day. Rather, it will result in a decrease of four operations in the 9:00 p.m. period and net increases of two operations each in the 9:00 a.m. and 4:00 p.m. periods. No other carrier's slot holdings will 6e affected. And, because Skyway will be merely changing the timing of the four operations, there will be no net increase in noise impact on the communities surrounding the airport. Thus, the proposal meets all of the statutory requirements described above, including the concern that MWAA raised, i.e., that grant of the application would not result in an increase of more than two slots in any given scheduled hour, either individually or cumulatively, at Reagan National./3

3/ MWAA again correctly notes that the 9:00 p.m. slots that may be moved to other times pursuant to this order will not become newly available for use in the 9:00 p.m. period. Also, no additional slots have been previously moved under §41714(d) authority into either the 9:00 a.m.-9:59 a.m. hour or the 4:00 p.m.-4:59 p.m. hour.

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We do not agree with ACAA's assertion that other carriers did not have an opportunity to acquire the slots that Skyway obtained, nor do we agree that the slots should be recalled by the FAA and distributed through a lottery. We have addressed these arguments previously in Order 99-11-4 where we found that a DCA lottery would not be practical at this time.

Indeed, our authority to promote new entry at DCA through slot allocations is extremely limited at this time. The provisions of 49 U.S.C. 41714(d) specifically permit DCA slot slides only under very prescribed circumstances. Thus, in response to an earlier request for DCA slot exemptions made by AirTran Airways, Inc., we noted in Order 98-1-7 at 2, "...the relief AirTran is seeking, i.e., the authority to use wholly new slots at Washington National is outside the Department's power under 49 U.S.C. §41714 to grant."

As the FAA slot regulation makes clear "slot(s) do not represent a property right but represent an operating privilege subject to absolute FAA control (and) slots may be withdrawn at any time to fulfill the Department's operating needs..." 14 CFR 93.223(a). We also stipulate that operation of the Reagan National slots at 0900 and 1600 authorized by this order must be used only to provide nonstop service between Grand Rapids and Reagan National Airport. Since the slots are allocated on a temporary basis to Skyway, they are not transferable

The Department is authorizing the movement of certain slot operations by this order on the ground that the services proposed by the applicant meet the statutory public interest and exceptional circumstances criteria. The Department reserves the right to modify or terminate such authority if the Department determines that, due to changed circumstances, these criteria are no longer satisfied by an applicant's use of the authority.

This Order is issued under authority delegated in 49 CFR 1.56a(f)(1).

1. The Department grants an exemption from 14 CFR Part 93, subparts K and S to Astral Aviation, Inc., d/b/a Skyway Airlines to the extent that Skyway will be allowed to move the operation of Slot Nos. 0082, and 0 114 at Ronald Reagan Washington National Airport from the 2100 hour to the 0900-0959 period and Slot Nos. 0146, and 0147 at Ronald Reagan Washington National Airport from the 2100 hour to the 16001659 period, respectively;

2. This exemption is granted only to the extent that Skyway is allowed to move the operation of Slot Nos. 0082, 0114, 0146, and 0147 for the purpose of providing nonstop service between Grand Rapids, Michigan and Ronald Reagan Washington

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National Airport. Should Skyway operate these slots to provide service to a point other than Grand Rapids, this exemption will expire and the operation of these slots will revert back to the 2100 hour. These slots are temporarily allocated to Skyway subject to recall by the FAA and are not transferable;

3. This exemption is granted only to the extent that Skyway is allowed to move the operation of Slot Nos. 0082, 0114, 0146, and 0147 and therefore, Skyway continues to be subject to all of the other requirements delineated in 14 CFR Part 93, Subparts K and S including, but not limited to, the reporting provisions and use or lose requirements;

4. We direct Skyway to contact the Federal Aviation Administration's Slot Administration Office to determine the startup date for the exemption granted here. The Federal Aviation Administration will assign slot numbers for the slot exemptions listed in ordering paragraph 1;

5. This exemption will become effective on March 1, 2000; and

6. We grant all motions to file otherwise unauthorized documents.

By:

(SEAL)