BEFORE THE
U.S. DEPARTMENT OF TRANSPORTATION
FEDERAL AVIATION ADMINISTRATION
WASHINGTON, D.C.
__________________________________________
In the matter of the petition of
AIRTRAN AIRWAYS, INC. for exemption from 14 C.F.R. Section 93.123
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Docket No.
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PETITION OF AIRTRAN AIRWAYS, INC. FOR EXEMPTION
Communities with respect to this document should be addressed to:
Richard P. Magurno
Senior Vice President & General Counsel
AirTran Airways
9955 AirTran Boulevard
Orlando, FL 32827
Kevin P. Healy
Vice President-Planning
AirTran Airways, Inc.
9955 AirTran Boulevard
Orlando, FL 32827
February 20, 2003
Edward P. Faberman
Ungaretti & Harris
1500 K Street NW, Suite 250
Washington, DC 20005-1714
Tel: 202-639-7501
Fax: 202-639-7505
Counsel for AirTran Airways

BEFORE THE
U.S. DEPARTMENT OF TRANSPORTATION
FEDERAL AVIATION ADMINISTRATION
WASHINGTON, D.C.
__________________________________________
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In the matter of the petition of )
AIRTRAN AIRWAYS, INC. for exemption from 14 C.F.R. Section 93.123
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__________________________________________)
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Docket No.
PETITION OF AIRTRAN AIRWAYS, INC. FOR EXEMPTION
Pursuant to 14 C.F.R. §11.61, AirTran Airways, Inc. (“AirTran”) files this petition for an exemption to operate the slots at Ronald Reagan Washington National Airport (“DCA”) currently utilized by America West Airlines, Inc. which has announced that it is eliminating hub operations at Columbus, Ohio, including service between Columbus and DCA.
America West has operated the DCA service with slots provided to it through an exemption. America West submitted an exemption request on December 8, 1989, to the
Department of Transportation (“DOT”) asking that it be allowed to operate DCA slots previously utilized by Braniff Airlines, Inc. (“Braniff”). On January 12, 1990, the Federal Aviation
Administration granted America West Airlines, Inc., an exemption (Docket No. 2610) from 14
C.F.R. §93.123 to operate four flights at DCA.
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The DCA slots awarded to America West were first operated by Braniff Airlines, Inc., beginning in 1984 under the authority of FAA Exemption No. 3927. The Braniff exemption contained several conditions, including a provision that the exemption would be rescinded if
Braniff ceased scheduled operations at DCA. When Braniff terminated scheduled operations at
DCA in November 1989, all rights to operate under the exemption were rescinded by the FAA by a letter, dated November 18, 1989. No other exemption authorizing air carrier operations (as defined in FAR Section 93.123) at DCA has been issued. The exemption was in effect on the date of enactment of Public Law 99-591, the statute authorizing the transfer of the operation of
DCA and Dulles International Airports to the Metropolitan Washington Airports Authority.
Section 6009(e)(1) of that law provides that the Administrator may not increase the number of instrument operations authorized for air carriers at DCA above the number authorized on the date of enactment, October 30, 1986.
In the January 1990 exemption awarded to America West (Exemption 5133), the FAA noted, “because the Braniff flights were authorized on that date, an exemption continuing or reauthorizing up to four operations per day at DCA may be granted consistent with the statute notwithstanding the limits specified in FAR Section 93.129(a).”
On December 10, 2001, the FAA amended Exemption No. 5133 by extending its
December 31, 2001 expiration date to December 31, 2003. The FAA attached the following conditions to the exemption:
1.
A maximum of three daily operations may be conducted with the exemption slots.
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2.
Operations authorized by this grant of exemption may be conducted in accordance with the following slots only:
Slot No.
1648
1194
1531
Hour
0800
1500
1600
3.
These slots may be used by America West or transferred to another carrier conducting service as an America West Express air carrier.
4.
This exemption will be rescinded if America west and any air carrier conducting operations as an America West Express air carrier discontinues scheduled operations at DCA with these slots.
The Exemption Slots Should be Withdrawn and Reallocated
In Exemption 5133, DOT emphasized the importance of new entry at DCA.
The Department supports the promotion of competition in all aspects of the airline industry, and is interested in public and industry comments on the need for, and potential means of, promoting new entry at capacity-restricted airports in furtherance of competition. New competitive service by additional carriers at such airports provides benefits to consumers in the form of lower fares, additional service in existing markets, and new service to markets previously not served.
* * * * * *
….promoting competition in the airline industry and consistent with the policies of Section 102 of the Federal Aviation Act…
On Monday, February 10, 2003, America West announced that it is eliminating hub operations in Columbus, Ohio. In its release, America West stated, “While it no longer will be a hub, Columbus will remain an integral part of America West's network as a field station, or destination city. Between early April and mid-June, America West will gradually downsize the hub to a planned four mainline flights per day to Phoenix and Las Vegas.” Therefore, America
West has acknowledged that by July of this year, it will no longer operate the DCA slots. As a
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result, the slots used for the Columbus-DCA service will be rescinded are available for allocation to another new entrant.
The Department has Recognized the Benefits of Low Fare Air Service
AirTran does not currently operate at DCA. In accordance with Order 2000-7182
(Docket OST-2000-7182), AirTran was awarded four slots at DCA. AirTran will utilize these slots to operate daily service between DCA and either Fort Lauderdale, Fort Meyers, or West
Palm Beach, Florida. The slots were awarded under AIR-21
1
. AirTran will initiate service with the four DCA slots by May 6, 2003.Although, all of AirTran’s flights will be operated with Stage
3 aircraft Boeing 717, which is among the most environmentally efficient aircraft flying today,
AirTran cannot operate these slots to its primary airports, Atlanta and Orlando.
The consumer benefits of low fare competition have been well documented by the DOT and the General Accounting Office. In its January 2001 Domestic competition series report on the Dominated Hub fares, the DOT referred to the benefits of low fare competition as
“enormous” and cited AirTran’s entry in the Atlanta-Buffalo market as well as it’s impact on pricing in Greensboro as an example of how consumers benefit from low-fare service:
The negative effects of high hub fares reach beyond hub cities. Spoke communities whose service is predominantly to network hubs by hub dominant carriers may also be subjected to high prices. Buffalo, New York provides a good example of this, and also the benefits of low-fare competitive alternatives. People at Buffalo, and their elected representatives, worked hard to attract low-fare service and they have succeeded. The benefits, in terms of increased service and lower prices, are enormous. For example, average fares declined by 36%, from
$185 to $119, in the Atlanta-Buffalo market after AirTran’s entry, and the number
1 “AIR-21”; Wendell H. Ford Aviation Investment and Reform Act for the 21 st Century.
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of passengers in the market increased by 65%.
“Dominated Hub Fares,” Office of the
Assistant Secretary for Aviation and
International Affairs, U.S. Department of
Transportation, January, 2001
In the DOT “Third Quarter 2001 Passenger Airfare Information” August 2002, the DOT included a report on the Low-Fare Evolution. The DOT noted, low-fare service is spreading into smaller and longer-haul markets, and a few low-fare carriers are also now competing more aggressively for business passengers who are willing to pay a premium for last-minute travel.
The report adds:
AirTran Airways has positioned itself as an affordable business alternative rather than solely as a purveyor of rock bottom fares has expanded into smaller business centers such as Milwaukee, Wichita and Akron. AirTran also serves a number of large business centers such as a New York, Dallas, Philadelphia, and Washington, DC. All destinations receive nonstop service to AirTran’s Atlanta hub.
AirTran does, however, seem to be maintaining its ability to provide price discipline in
Atlanta markets. Delta’s average fare in markets without AirTran competition in the second quarter of 1997 was 20% higher than in markets with AirTran competition. In
2001, the fares spread the second quarter 2001 was $177, compared to $196 in markets without AirTran competition. And in spite of its fare increases, AirTran continues to offer an extremely competitive travel alternative for passengers. AirTran’s short-haul average fare of $119 is still 49% lower than Delta’s in the same group of markets.
Various studies have placed the consumer benefit of the competition AirTran brings in
Atlanta at more than $700 million per year. Despite the DOT’s clear statement concerning the benefits that AirTran provides to consumers, businesses, and communities, the most notable airport that has not benefited from the low fare competition provided by AirTran’s service in
Atlanta is DCA.
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Slots at DCA are controlled by a few carriers that continue to block competition at the airport. Marketing alliances between the major carriers further compounds the slot consolidation problem. United and US Airways were the most recent carriers to receive approval for an alliance that combines frequent traveler award programs and allows the carrier to codeshare, these two carriers account for nearly 50% of all slots at DCA. If the proposed marketing/codeshare alliance between Delta, Continental and Northwest is approved, 75% of the prime time slots at DCA would be controlled by these two alliances.
As a result, fares are significantly higher from DCA than from Dulles. Based on DOT statistics for second quarter 2002, the average fare to Washington’s top business destinations from DCA was $149 versus $107 at Dulles, a premium of nearly 40%.
This differential is equally apparent in the government contract fares: For example the government contract fare from Dulles to Atlanta – where the AirTran presence influences pricing
– is $110; from DCA, the fare is $190, 164% higher.
In addition to the demonstrated benefits of low-fare service AirTran provides to the communities and passengers it serves, AirTran is the launch customers for the new Boeing 717.
This aircraft features increased passenger comforts including 100% recycled cabin air. More importantly to the local community, it is among the most environmentally sound aircraft flying today with 24% better fuel economy and the lowest all around noise level of any airplane in service today, including regional jets and Airbus. This is especially important for the
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communities surrounding DCA – with 117 seats per aircraft, more passengers can benefit from lower fares with less noise impact than with comparable service by Regional Jets or Airbus
A320’s.
Conclusion
Throughout the past decade, multiple DOT studies and reports have noted that the key to success of deregulation is competition, particularly when provided by low-cost new entrants. At the same time, those studies have noted the significant barriers to entry that limit the growth of competition.
The DOT has taken steps to add low fare competition at LaGuardia, O’Hare, and JFK.
AIR-21 allowed limited new entry at DCA. If AirTran can add to the limited service it has been able to add at DCA through AIR-21, it will bring the same type of fare savings to markets that it is currently blocked from serving.
AirTran Airways is the clear choice for the available America West slots. The
Department has an opportunity to strengthen competitive service throughout the east coast by allowing AirTran to add DCA to its low fare markets. By allowing AirTran to initiate service at
DCA to Atlanta, where it has been blocked from adding service, AirTran will bring its low fare model (as highlighted in DOT’s “special section” in the third quarter 2001 Domestic Airline
Fares Consumer Report) to thousands of passengers and multiple markets. Today, those communities have no low-fare alternatives.
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Wherefore , AirTran Airways respectfully requests that DOT act expeditiously to immediately grant to AirTran exemption slots that were previously granted to America West for its DCA Columbus service.
Respectfully submitted,
Edward P. Faberman
Ungaretti & Harris
1500 K Street NW, Suite 250
Washington, DC 20005-1714
Tel: 202-639-7501
Fax: 202-639-7505
Counsel for AirTran Airways
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CERTIFICATE OF SERVICE
I hereby certify that I served a copy of the Petition of AirTran Airways, Inc. for Exemption on
February 20, 2003 to each of the persons listed below.
________________________
Sonia S. Pak
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Honorable Mark R. Warner
Governor
Commonwealth of Virginia
State Capitol, 3 rd
Floor
Richmond, VA 23219
Joel Stephen Burton
O’Melveny & Myers
555 Thirteenth Street, NW
Washington, DC 20004-1109
Jburton@omm.com
Christopher Brown
Airport Manager
Ronald Reagan Washington National
Airport
Washington, DC 20001
Lorelei Peter
Office of the Chief Counsel
Federal Aviation Administration
800 Independence Avenue, SW
Washington, DC 20591
Lorelei.peter@faa.gov
James A Wilding
President & CEO
Metropolitan Washington Airports
Authority
One Aviation Circle, Suite 300
Washington, DC 20001 wildingj@mwaa.com
Jonathan B. Hill
Dow, Lohnes & Albertson
1200 New Hampshire Avenue, NW
Suite 800
Washington, DC 20036 jhill@dlalaw.com
SERVICE LIST
Edward S. Faggen
General Counsel, MWAA
1 Aviation Circle
Washington, DC 20001-6000 faggene@mwaa.com
Robert M. Ball
Executive Director
Lee County Port Authority
Southwest Florida International Airport
16000 Chamberlin Parkway, Suite 8671
Fort Myers, FL 33913
Bill Sherry
Director of Aviation
Broward County Aviation Department
320 Terminal Drive
Fort Lauderdale, FL 33315
Robert P. Silverberg, Esq.
Silverberg, Goldman & Bikoff, L.L.P.
1101 – 30 th Street, N.W.
Suite 120 Washington, D.C. 20007
(Counsel for Midwest Express Airlines,
Inc.) rsilverberg@sgbdc.com
Marshall S. Sinick
Spuire, Sanders & Dempsey L.L.P.
1201 Pennsylvania Avenue, N.W.
P.0. Box 407
Washington, D.C. 20040
(Counsel for American Trans Air) msinick@ssd.com
Carl B. Nelson, Jr.
Associate General Counsel
American Airlines, Inc.
1101 17 th Street, NW
Washington, DC 20036
Carl.nelson@aa.com
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Bruce Rabinovitz
Wilmer, Cutler & Pickering
2449 M Street, NW
Washington, DC 20037-1420 brabinovitz@wilmer.com
Robert E. Cohn
Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, D.C. 20036
(Counsel for Delta Airlines)
Robert_cohn@shawpittman.com
Joanne W. Young
Baker & Hostetler, L.L.P.
Washington Square, Suite 1100
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
(Counsel for America West Airlines) jyoung@bakerlaw.com
Jeffery A. Manley
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
(Counsel for United Airlines) jmanley@wilmer.com
Megan Rae Rosia
Associate General Counsel
Northwest Airlines, Inc.
901 15 th
Street, N.W.
Suite 310
Washington, D.C. 20005
Megan.Rosia@nwa.com
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