OST-00-7134 / Legend Airlines / High Density Rule - Chicago O'Hare and New York LaGuardia / Answer of America West / April 11, 2000

Application of

for an exemption from Subparts K and S of 14 CFR part 93 pursuant to 49 U.S.C. §§ 41716, 41717

(LaGuardia and O'Hare)

ANSWER OF AMERICA WEST AIRLINES, INC.

America West Airlines, Inc. ("America West") respectfully requests leave to file an answer in response to the exemption application filed March 24, 2000 by Legend Airlines, Inc. ("Legend") based on the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century ("Air 21") for twenty (20) exemption slots at LaGuardia Airport ("LGA") for service to Dallas Love Field ("DAL") and twenty-four (24) exemption slots at O'Hare International Airport ("ORD") for service to DAL. America West submits that Legend's application was prematurely filed, given that Air 21 had not yet been signed into law, and that it is reasonable for respondents to await passage of the law before answering. On April 5, 2000, the day Air 21 became law, America West filed its own application for eleven (11) O'Hare exemption slots for service to Columbus and Las

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Vegas. Since the Department will be forced to perform a comparative public interest analysis, all applicants should have an opportunity to respond to other requests. Given the Department has 45 days to act on Legend's application from the date of enactment, acceptance of the following answer will not prejudice any party to this proceeding.

America West does not oppose Legend's application for LGA slots, provided America West's earlier-filed application for LGA slots is granted before or at the same time as Legend's request. However, with respect to ORD slots, and especially given the strength of America West's own application for ORD slots, the limited number of new entrant/limited incumbent exemption slots available, the limited competitive benefits likely to be realized from Legend's proposed ORD service, and uncertainty as to Legend's ability to commence its proposed service prior to the statutory narrowing of slot-controlled times at ORD on July 1, 2001, America West opposes Legend's application for eighty-percent (80%) of the available ORD slot exemptions.

In passing Air 21, Congress did not intend to grant nearly all of the 30 newly available ORD exemption slots to Legend. Air 21 substantially revises 49 U.S.C § 41714, phases out the HDR slot rules at ORD in two stages on July 1, 2001 and July 1, 2002, and immediately makes available a total of 30 additional ORD slots for new entrants and limited incumbents. See 49 U.S.C. §§ 41715(a)(1), 41717(b) and (c). The

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law limits new entrants and limited incumbents to a total of 20 slots and slot exemptions at ORD, LGA and JFK airports. See 49 U.S.C. §§ 41714(h), (k). Accordingly, wholly aside from the issue of comparative consumer and network benefits, Legend has applied for four more slots than permitted under the law. Moreover, Legend's request for 24 of the available 30 slots is not justified by Legend's service proposal, particularly in light of the wide range of cities available for Legend to initiate service to, and its ability to operate at least some, if not all, of its Chicago flights at Midway Airport rather than at ORD.

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"materially lower" in markets it serves. Id. Unfortunately, as the Department noted, before Air 21 made an additional 30 slots available at ORD, slot controls severely constrained America West's ability to influence price in the market. Id. Nevertheless, the Department properly found that additional America West service at ORD would "make significant price competition available for a substantial number of travelers." Id. As discussed in its application, America West recently was forced to cancel its daytime flights in the Las Vegas market due to the lack of commercially usable ORD slots which has stymied its ability to compete aggressively in this market. Similarly as discussed in America West's application, it has not been able to meet one of its key objectives to compete with United and American in the Columbus ORD market and offer travelers between East coast cities and Chicago O'Hare more low fare connecting service through Columbus. In sum, America West's plan to initiate operations between ORD and Columbus and add a round trip in the ORD/LAS market will enable it to operate more efficiently at both ORD and Columbus and provide multiple low-fare connecting options for all classes of travelers to both the East and West Coasts, as well as serve local markets that need competitive service.

In contrast, Legend is a narrowly focused point-to-point carrier intent on serving the local Dallas business traveler to various other cities. Legend only last week began its first service - - with five round trips to Los Angeles, four to Washington, DC, and one night flight to Las Vegas. Legend's original certificate application listed a number of regions and specifically mentioned service to Boston and Seattle. Legend's exemption application provides no explanation as why it must initially operate a shuttle service to

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the slot constrained O'Hare as opposed to serving other cities or Implementing service to Chicago with flights to Midway. Legend does not propose to offer any network benefits let alone the type of network benefits that make America West's ORD application compelling. There is no reason why Legend cannot initially expand its special service in other markets when it can compete with American Airlines initially. Presumably business travelers in those other markets would benefit from this point-to-point service, as would Chicago ORD travelers.

Importantly, Legend does not propose to start this service before September 2000. America West will begin service 45 days from the date of award. Given Legend's track record, even its ability to launch this service in September may be overly optimistic. Indeed, few new entrants have been able to meet aggressive expansion dates. This is significant because given the phase-out of O'Hare slot restrictions, the public interest supports awarding slots to carriers that can immediately promote competition.

Under § 41717(a), effective July 1, 200 1, the slot restrictions at ORD imposed by subparts K and S of part 93 of title 14, Code of Federal Regulations, do not apply with respect to aircraft operating before 2:45 p.m. and after 8:14 p.m. Thus, as of this date, the slot-controlled period at ORD, currently 6:45 a-m. through 9:15 p.m., will be narrowed to 2:45 p.m. through 8:14 p.m. After July 1. _'(K) 1, If Legend were to start service at ORD by that date, its proposed schedule of ORD operations would require only 10 slots rather than the 24 requested. Similarly, as of that date, 8 of the I I slots requested by America West in its application will be at times A hen slots are no longer required. Presumably, on July 1, 2000 all the slot exemptions being used for service up to 2:45 p.m. could be

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redistributed to increase afternoon flights. In any event at present, unlike Legend, America West is ready to begin operating its ORD flights almost immediately after grant of its requested slot exemptions. Even if the Department waited the full 45 days from April 5 to make an award, American West would use these daytime slots for at least a year before the initial phase-out. Legend, at best, would use them for nine months.

Under Air 21's interim slot rules for LGA, the Department is able to approve the applications of both American West and Legend. The interim rules provide in part:

Air 21 at § 23 1 (c) (emphasis added). As noted in America West's earlier filings for LGA slots, the use of the compulsory language "shall grant" requires the Department to grant these slot exemptions to eligible carriers. Accordingly, Air 21 requires allocation Of Lip 10 20 exemption slots to each new entrant at LGA requesting such slots, including both America West and Legend. Should the Department conclude that Air 21 does not require the grant of these slots, America West's application should be given priority. America West currently provides competitive service and network benefits to a large number of cities and all

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classes of passengers with its hub-and-spoke system and full-service, competitive fare business model. America West must have the requested slots to maintain the only competitive service in the LGA-Columbus market. In contrast, Legend has not demonstrated the viability of its proposed service, and given its narrow, premium service and point-to-point business model, any benefits from its proposed service would accrue only to first-class and business-class passengers traveling point to point. Given the nature of its service, Legend could also operate some or all of these flights to Newark.

Continuation of America West's LGA service will preserve competitive service and substantial network benefits for a wide range of coach class and leisure passengers as well as first class and business travelers. In contrast, Legend's proposed use of the 20 LGA slots it requests would not offer significant network benefits or create new competitive options for passengers other than the first class and business travelers targeted by Legend. Accordingly, America West maintains its application for LGA exemption slots should have priority over Legend's application to the extent there may be a conflict between the two applications.

For the many reasons stated above, America West urges the Department to deny Legend's application for 24 ORD exemption slots, but takes no position on Legend's application for LGA exemption slots, provided America West's earlier-filed application for such slots is not prejudiced, and provided that if Legend's application is approved with respect to LGA, America West's request is granted before or at the same time

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Respectfully submitted,

Joanne W. Young

David M. Kirstein

BAKER & HOSTETLER LLP

Washington Square, Suite 1100

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036-5304

(202) 861-1532

Counsel for America West Airlines, Inc.

April 11, 2000