1 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

___________ _______________________________ ) Application of ) ) SOUTHWEST AIRLINES CO. ) ) For exemptions from 14 C.F.R. Part 93, Subparts ) Docket DOT
- OST
- 2012
- 0029 K and S, pursuant to 49 U.S.C. § 41718(g)(2) ) (BEYOND

- PERIMETER SLOT EXEMPTIONS) ) ) For service between Ronald Reagan ) Washingt on National Airport (DCA) and ) Austin

- Bergst rom International Airport (AUS) )

___ _________ ______________________________ )

COMMENTS OF THE SOUTHWEST AIRLINES PILOTS ’ ASSO C I ATION

Communications with respect to this document should be addressed to:
Therese Merrick General Counsel Southwest Airlines Pilots’ Association 1450 Empire Central, Suite 737 Dallas, TX 75247 (214) 722

- 4212 tmerrick@swapa.org2 I. INTRODUCTION Southwest Airlines Pilots’ Association (“SWAPA”) is the exclusive bargaining representative for more than 6,000 Southwest Airli nes pilots. Due to the Spring 2011 Southwest Airlines Co. (“Southwest”) acquisition of AirTran Airways, Inc. (“AirTran”) and a recent seniority integration plan negotiated between Southwest, AirTran, SWAPA, and the Airline Pilots Association (“ALPA”) (the current bargaining representative of AirTran pilots), by 2015 SWAPA will also represent AirTran’s nearly 1,700 pilots. Once all AirTran pilots have transitioned over to Southwest, SWAPA will be the sole bargaining representative for nearly 8,000 pilots at the nation’s largest domestic carrier. Having reviewed all of the applications for the eight slot exemptions currently available, SWAPA strongly supports the application of Southwest Airlines for the slot exemptions to serve passengers between Ronald Re agan Washington National Airport (“DCA”) and Austin Bergstrom Airport (“AUS "), with continuing single

- plane service to San Diego International Airport (“SAN ”).
II. ANALYSIS OF CRITERIA FOR NEW DCA SLOT EXEMPTIONS
Pursuant to the FAA Modernization and Reform Act of 2012 and Order 2012

- 2

- 21, the Department of Transportation (“DOT” or “Department”) has invited applications from new entrant and limited incumbent carriers for eight new slot exemptions between DCA and
ai rports beyond the 1,250 mile DCA perimeter. The exemptions will be awarded based on an applicant’s ability to: (A) P rovide air transportation with domestic network benefits beyond the 1,250 mile perimeter; (B) I ncrease competition in multiple markets;3

(C) N ot reduce travel options for communities served by small hub airports and medium hub airports within the 1,250 mile perimeter; (D) N ot result in meaningfully increased travel delays; (E) E nhance options for nonstop travel to and from the beyond

- perimeter airports t hat will be served; (F) H ave a positive impact on the overall level of competition in the markets that will be served; or (G) P roduce public benefits, including lower fares, higher capacity, and a variety of service options. Having conducted an independent analysis of the criteria, SWAPA asserts that if Southwest is awarded two of the available beyond

- perimeter slots, all seven of the Department criteria will be met and the flying public will benefit from new DCA

– AUS non

- stop service.
A. Southwest will provid e air transportation with domestic network benefits beyond the 1,250 mile perimeter
. Austin

- Bergstrom is 1,315 miles from DCA , and therefore qualifies as “beyond the perimeter ”

. If awarded the slot exemptions, Southwest’s service between DCA and AUS will be the only non

- stop service between the Nation’s Capital and Texas’s capital. The continued, single

- plane service to SAN , also beyond perimeter, will provide single plane service to passengers between DCA and S AN and expand connecting service to passengers

. Southwest will
also have the future ability to adjust respective flight times in Oakland (“OAK”) , Las Vegas (“LAS”) , San Jose (“SJC”) , Los Angeles (“LAX”) , El Paso (“ELP”) , Lubbock (“LBB”) , and Harlingen (“HR L”) to allow additional connections from AUS.
B. Southwest will increase competition in multiple markets
. Currently, there is no nonstop service between DCA and AUS available making this a prime4

market for new service and increased competition

. A mongst the contending markets lacking nonstop DCA service , AUS demands the highest fare and serves the second most O&D
passengers . (Exhibits 2 and 3 ) Similarly, service between DCA and SAN is deficient . Nonstop service between DCA and SAN will be available for the first time in the summer of 2012 through US Airways. Southwest’s ability to bring one

- stop, same plane service to DCA

– SAN passengers will provide greater options and competition thanks to th e “Southwest Effect” 1

. This will be accomplished without having to dedicate another slot to SAN service

. Southwest’s service will also result in low fare competiti on in Dallas (“ DAL ”) and Houston (“ HOU ”) , two of the largest domestic markets

. Southwest has a commanding cost advantage at this stage length , and this cost advantage will
translate into lower fares than any other applicant can offer. (Exhibit 5 )
C. Southwest will not reduce travel options for communities served by small and medium hub airports within the perimeter
. The new service proposed by Southwest is a net additive for Southwest; therefore no
within

- perimeter airport will lose service to support the proposed beyond

- perimeter service. Additionally, t he service will add low fare connecting o pportunities to DAL and HOU, which currently lack nonstop DCA service.
D. Southwest’s use of the exemptions will not result in increased travel delays
. Southwest’s new service will not meaningfully increase travel delays at any of the airports
involved

. Furthermore, as noted in Southwest’s application, Southwest is the industry leader in

1 The “Southwest Effect” was coined in 1993 by the U.S. DOT to describe the considerable boost in air travel that invariably resulted from Southwest’s entry into new markets. Market stimulation results from Southwest’s competitive, low

- cost service, particularly in markets where so

- called “Legacy” airlines previously enjoyed monopoly or near

- monopoly status on certain routes.5

on - time performance. (See Southwest Application)
E. Southwest will enhance options for nonstop travel to and from the beyond
- perimeter airports that will be served.
If awa rded the two slots requested in its application, Southwest will offer the only nonstop
service between DCA and AUS, Texas’s state capital

. As previously stated , amongst DCA markets currently lacking nonstop service , AUS has the highest fare s and second most O&D passengers

. ( Exhibit s 2 and 3 )
F. Southwest’s use of the exemptions will have a positive impact on the overall level of competition in the markets that will be served. Southwest will offer the only nonstop service between DCA and AUS, and equally important, will offer competitive continuing service to DAL, HOU, and SAN. In the near future , this may extend to OAK, LAS, SJC, LAX, ELP, LBB, and HRL based upon adjustments to the
Southwest schedul e . Southwest will stimulate traffic and lower fa res by a wide margin over its competitors as exemplified in Southwest’s forecast

. (See Southwest A pplication) Southwest maintains the
lowest unit costs , and this will translate into the largest gap for stimulation. ( E xhibit 5)
Southwest will effectively c ompete with new US Airways service between DCA and SAN without using a second slot for the same beyond

- perimeter city. Slots are scar c e and therefore should
be distributed in a manner that benefit s the most airports and passengers.
G. Southwest’s use of the exemptions will result in public benefits, including lower fares, higher capacity, and a variety of service options. Based on all applications submitted to the DOT, Southwest will be operating the largest
aircraft in terms of seating configuration. (Exhib it 1 ) Southwest has the greatest potential to
lower fares because of its well established low unit costs. (Exhibit 5 ) Southwest has applied for6

these slot exemptions to serve the market with the highest fares and one of the largest passenger base s lacking nonstop service to DCA

. This will lead to the greatest potential for
stimulation.
III. COMPARISON OF VARIOUS AIRLINE APPLICATIONS FOR AVAILABLE EXEMPTIONS
A. J etBlue’s Proposed Service to San Juan and AUS
If JetBlue is awarded the DCA slot exemptions, it intends to serve San Juan Luis Munoz International Airport (“ SJU ”) and AUS. J etBlue lacks both the history and presence that Southwest has maintained in AUS for 35 years. (Exhibit 4) J etBlue has limited local brand loyalty
in AUS

. For example, Southwest has a greater share of passengers w ho start their journey in
AUS versus its share of total O&D passengers. (Exhibit 4) Furthermore , the SJU

– DCA market has a smaller passenger base than AUS

– DCA and already offers lower fares than AUS

– DCA

. (Exhibits 2 and 3 ) Finally, J etBlue plans to use a small E190 (a regional jet) to serve the AUS

– DCA market, an aircraft with nearly 50% less capacity tha n Southwest ’s B737

- 800

. (Exhibit 1) This would be a poor use of the scarce DCA slot exemp tions.
B. Sun Country’s Proposed Service to LAS Currently, Sun Country has a very limited presence at LAS . Nonstop service between DCA and LAS is already available on US Airways

. Each application for the a vailable beyond

- perimeter
slot exemption s presents benefit beyond the immediate markets served , with the exception of Sun Country’s application

. Sun Country’s proposal to service the DCA

– LAS market would only
benefit those two cities and not a single market beyond

. Sun Country proposes flying a smaller , higher cost aircraft on a route that will limit stimulation potential. (Exhibits 1 and 5) This is simply not a viable option for the Department if it wishes to meet the seven criteria it has set7

forth.
C. Virgin America ’s Proposed Service to SFO
It would be counter

- productive for the Department to award three of these scarce beyond

perimeter slot exemption s to a single city pair . United has already converted one slot exemption to serve the DCA

– SFO market. Virgin America now requests two exemptio ns to serve the same city pair

. Virgin America proposes to serve this market with the sec ond smallest aircraft of all applications for the available slot exemptions. (Exhibit 1) When interest expense is included in ownership cost , Virgin America barely qualif ies as a
low cost carrier. SWAPA question s whether Virgin America will be able to stimulate the market significantly without losing money. While Virgin America has stimulated domestic markets , it
has done so at a great financial expense. (Ex hibit 5)
D. Frontier ’s Proposed Service to Colorado Springs and SAN Frontier has no long

- term plan for DCA or Colorado Springs (“ COS ”) service. COS is a recent and unproven focus city for Frontier

. The COS market is the smalle st of all markets applicants
seek to serve . (Exhibit 2 ) Furthermore, COS is l ess than two hours from Denver (“ DEN ”)

. Highly competitive nonstop service between DCA and DEN is already available on both Frontier and
United. SWAPA do es not believe Frontier will stimulate the same volume of new passengers as
other proposals ; instead it will simply recapture passenger traffic that is driving to DEN today. Frontier offers many of the same connecting opportunities over DEN that it is proposing over
COS. Given DEN ’ s proximity , this will not improve travel time or routing efficiency in these
markets.
E. Alaska ’s Proposed Service to Portland and SAN8

Alaska cannot match South west’s cost advantage , and therefore an award of slot exemptions to Alaska will not generate the “Southwest Effect” low fares that Southwest has
become famous for over the last 40 years. (Exhibit 5 ) If awarded two of the available slot exemptions, Southwest will offer low fare, single

- plane service between DCA and SAN, and will effectively compete with US Airways ’ non - stop service to SAN. Alaska cannot produce the same public benefit.
F. Air Canada ’s Proposed Service to Vancouver
Limited slot resources should first be used to benefit the American public and American airline employees. SWAPA does not discount that Air Canada’s proposal will improve travel for some US passengers , but a majority of the benefit s will go to Canadian and other foreign customers beyond Vancouver. Without full transparency , SWAPA’s analysis shows that DCA to Vancouver (“ YVR ”) is the second smallest market proposed from any applicant

. Air Canada is also proposing to fly the route with a small plane and lacks the history of stimulation required to grow the market. Small planes in small markets cannot begin to benefit the flyi ng public as compared to Southwest’s proposed service. (Exhibit 2)
IV . CONCLUSION As a representative for Southwest employees, SWAPA is acutely aware of Southwest’s lack of access to major airports such as DCA and LGA where grandfathered rights

-- in some cases dating back before deregulation

-- dictate all the places where the largest U.S. domestic carrier is prohibited from providing its legendary low

- fare service. The rare availability of DCA beyond

perimeter slot exemptions provides the Department with a compelling opportunity to enable Southwest to expand its limited DCA service with a new low

- fare, large aircraft , nonstop flight9

to AUS , a market currently without nonstop service. By awarding two of the available DCA slot exemptions to Southwest, utilization of a scarce resource can be maximized to produce the greatest public benefits. For the reasons stated above, SWAPA fully supports the Southwest application and urges the Department to award two of the eight available DCA slot exemptions to Southwest Airlines so that it may begin non

- stop service between Austin

- Bergstrom International Airport
and Washington National Airport with continuing single

- plane service to San Diego

. Respectfully submitted,

_______________________ Therese Merrick

### CERTIFICATE OF SERVI CE

I hereby certify that on March 2 7 , 2012, a copy of the foregoing was served via e

- mail on the following persons:

a nita. mosner@hklaw.com (Air Canada) megan.lawrence@alaskaair.com (Alaska Airlines) msinick@ssd.com (Alaska Airlines) robert.cohn@hoganlovells.com (Frontier Airlines) patrick.rizzi@hoganlovells.com (Frontier Airlines r obert

. land@jetblue.com (JetBlue Airways) jhill@dowlohnes.com (JetBlue Airways) perkmann@dowlohnes.com (JetBlue Airways) leslie.abbott@wnco.com (Southwest Airlines) bob.kneisley@wnco.com (Southwest Airlines) John.Fredericksen@suncountry.com (Sun Country Airlines) barbara.russell@virginamerica.com (Virgin Ameri ca) john.varley@virginamerica.com (Virgin America) jegillick@zsrlaw.com (Virgin America) jimsmith@ci.austin.tx.us (A ustin Airport) john.potter@mwaa.com ( Washington National Airport) susan.kurland@dot.gov (DOT) todd.homan@dot.gov (DOT) brian. ctr.meehan@faa.gov (FAA) info@airlineinfo.com

___________________ Therese Merrick

# Exhibit #1: Southwest Offers Most Seats Per

Slot Pair

127,750 122,640 114,610 109,500
94,170 87,600 86,870
73,000

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000

Southwest

737-800 Frontier A320 Alaska 737-800 JetBlue A320 Sun Country 737-700 Air Canada

A319 Virgin A319 JetBlue E190 Seats Offered Per Slot Pair

Based on one daily round trip flight and seating configurations stated in filings.

# Exhibit #2: AUS is the 2 nd 

# Largest DCA Market 

# Amongst Proposals Without Nonstop Service

Based on DOT Origin & Destination Survey YE2011Q3. YVR data is from Airconomy TotalDemand reconciled against T100 YE 2011

- 10

- 02. 181K
163K

137K

100K 91K

56K

35K 33K

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000

LAS SFO SAN PDX AUS SJU YVR COS

N/S BEGINS May 15th N/S BEGINS

June 8th CURRENT N/S

# Exhibit #3: AUS Passengers Suffer from the Highest Fare and Fare Per Coupon Mile At DCA Amongst Proposed Markets

Based on DOT Origin & Destination Survey YE2011Q3. Excludes est. taxes and fees , zero fare passengers, and 999 reporting er ror s. $258 $254 $247 $242 $234 $229 $207

$0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00

AUS PDX SAN COS LAS SFO SJU Average Net Fare ($)

18.09¢

15.01¢

10.65¢ 10.60¢ 10.27¢ 9.94¢ 8.80¢

0.00¢ 2.00¢ 4.00¢ 6.00¢ 8.00¢ 10.00¢ 12.00¢ 14.00¢ 16.00¢ 18.00¢ 20.00¢

AUS COS LAS SJU SAN PDX SFO Average Coupon Yield (¢)

# Exhibit #4: Southwest has a Longer H istory, Greater M arket Presence, and Greater B rand P reference at AUS vs. jetBlue

Based on OAG historic schedule data starting in 1982 and Innovata LLC schedule files. 2012 is through June 30 th

. 0 10 20 30 40 50 60

0 2 4 6 8 10 12 14 16 18 20

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 WN Destinations

B6 Destinations WN Daily Departures B6 Daily Departures

1.16%

(0.21%) -0.40% -0.20% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40%

Southwest JetBlue

Based on US DOT Origin & Destination Survey YE2011Q3. 

## Southwest & jetBlue share of true originating AUS O&D passengers vs.



# share of all AUS O&D passengers.

# Exhibit #5: Southwest’s Significant Cost Advantage Translates into Ability to Offer



# Lower Fares

0.00¢ 2.00¢ 4.00¢ 6.00¢ 8.00¢ 10.00¢ 12.00¢ 14.00¢ 16.00¢ VX A319 SY 737-700 B6 E190 B6 A320 AS 737-800 F9 A320 Est. WN 737-800 

## Unit Cost Comparison @ 1,315( sm ) miles

Based on 2011Q3 Form 41 data stage length adjusted by cost category/driver. Segment cost includes direct, indirect, and owner shi p(including interest expense). Fuel is assumed to be $3.35 per gallon and load factor was assumed to 80%. Frontier costs have been adjusted for certain rep ort ing discrepancies. Seating configuration was assumed to be same as proposal.