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

_____________________________________ ) Application of ) ) S OUTHWEST A IRLINES C O

. ) ) For “inside perimeter” slot exemptions ) Docket DOT
- OST
- 2000
- 7182 u nder 49 U.S.C. § 41718(b) ) ) S ervice between Oklahoma City (OKC) ) and Ronald Reagan Washington National ) Airport (DCA) )

_____________________________________ )

RE SPONSE OF SOUTHWEST AIRLINES CO.

Communication with respect to this document should be addressed to:

Ron Ricks Robert W. Kneisley Executive Vice President

-- Associate General Counsel C hief Legal and Regulatory Officer Leslie C. Abbott Madeleine Johnson Senior Attorney Vice President General Counsel SOUTHWEST AIRLINES CO. SOUTHWEST AIRLINES CO. 1901 L Street, NW 2702 Love Field Drive Suite 640 Dallas, TX 75235

- 1611 Washington, DC 20036 bob.kneisley@wnco.com (202) 263

- 6284

March 20 , 20121 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

_____________________________________ ) Application of ) ) S OUTHWEST AIRLINES C O

. ) ) For “inside perimeter” slot exemptions ) Docket DOT
- OST
- 2000
- 7182 u nder 4 9 U.S.C. § 41718(b) ) ) S ervice between Oklahoma City (OKC) ) and Ronald Reagan Washington National ) Airport (DCA) )

_____________________________________ )

RE SPONSE OF SOUTHWEST AIRLINES CO.

Pursuant to the Department’s February 17, 2012 Notice establishing this proceeding , Southwest hereby files this Re sponse to the Applications filed by Frontier and US Airways on March 5, 2012 for two inside

- perimeter slot exemptions previously held by Delta Air Lines

. 1 Summary
A review of the three competing Applications filed in this proceeding makes clear beyond question that Southwest’s proposal is materially superior to th e proposals of both Frontier and US Airways. When scored against the Department’s carrier selection
criteria as well as considered side

- by

- side for substance and public benefits there is no

1 Common names of airlines are used herein.2

doubt whatsoever that Southwest’s proposal is by far the stron gest and most beneficial to the public for the purposes of this case. To begin with, o nly Southwest ’s proposal satisfies the maximum number of
A IR

- 21 carrier selection criteria : (1) Southwest is a limited incumbent at DCA; (2) it proposes nonstop servi ce to OKC, a community without existing nonstop service to DCA; (3) OKC is a small community, as it is classified as a small hub by the FAA; and (4) Southwest’s proposal will produce by far the greatest level of competitive benefits, including low fares, among the three competing applicants. In fact, n either US Airways
nor Frontier even attempted to quantify the alleged public benefits from their proposals , nor disclosed to the Department what their fare levels would be

.
Satisfied By:

AIR

- 21 Criteria Southwest US Airways Frontier

1. Is the applicant a new entrant or limited incumbent? YES NO YES
2. Does the applicant propose nonstop service to a community without existing nonstop service to DCA? YES YES NO

3. Does the applicant propose nonstop DCA service to a small community? YES YES YES

4. Does the applicant propose competitive nonstop service on a monopoly nonstop route to DCA? NO 2 NO YES

5. Will the applicant’s proposed service produce the maximum competitive benefits, including low fares? YES NO NO

US Airways , by far the largest DCA carrier, is obviously not a new entrant or
limited incumbent. It proposes a continuation of small aircraft RJ service to JAN with high fares similar to Delta’s failed service . If US Airways believes that it is important to

2 This factor is mutually exclusive with factor 2 above.3

serve DCA

- JAN i t can easily transfer two of the 460 DCA slots it currently holds

. The
record makes clear that JAN was a weak performing market for Delta, and the results

w ould not be materially different for US Airways. Frontier proposes service to SDF, a market that is already well

- served from DCA today by US Airways’ three daily nonstops. Moreover, the current DCA

- SDF service is provided not by US Airways itself but by Frontier’s sister companies on US Airways’ behalf. US Airways is in fact Republic Airways Holdings largest customer. Under the
circumstance s it is highly suspect that Frontier would price its fares aggressive ly ag ainst US Airways given that they w ould control the nonstop DCA

- SDF market together. Given this apparent conflict, it is perhaps not surprising that Frontier has offered no fare proposal in this case. Therefore, any claimed consumer benefits or fare savin gs in this market would likely be minimal at best

. By contrast, Southwest has provided detailed economic analysis and forecasts to the Department and the partie s in order to produce a re a l i s t i c estimate of the expected public benefits of its proposed DCA

- OKC

- DAL service. These analyses demonstrat e that Southwest’s proposal will generate over $8 million in annual consumer savings while stimulating the markets by an additional 5 5,000 annual passengers. 3 With its 137

- seat B737

- 700 aircraft, Southwest foreca sts that it will carry over 72, 000 passengers in the first normalized year, of which over 43,000 will be local DCA

- OKC O&D
passengers. 4 Neither US Airways nor Frontier provided analysis or forecasts of any operating statistics relevant to the DOT’s evaluation. There are no market analyses, no forecasts of traffic or market share, no fare proposals, no estimates of traffic stimulation

3 See Exhibits WN

- 117 and WN

- 121. 4 See Exhibit WN

- 117.4

(if any) and no consumer benefit estimates. The large public benefits and consumer savings explained and documented in Southwest’s proposal stand in stark contrast to
the lack of any meaningful benefits projected by Frontier and US Airways (Exhibit WN

R

- 100).
I. US Airways Does Not Need or Deserve Slot Exemptions To Serve a Market T hat Failed t o Support Delta’s Nonstop Service US Airways operates 460 slots at DCA , 54% of the airport total. This is more than four times the number of slots held by the number two carrier, Delta (Exhibit WN

R

- 101). For decades US Airways has been a major holder of DCA slots which it has used to build a connecting hub with Washington’s scarce aviation resource. It tightened
its dominant control over access to DCA with the 84 slots it obtained in the recent slot swap transaction with Delta. By comparison, Southwest has only 25 slots (all operated by its wholly

- owned subsidiary AirTran Airways) , or 2.9% of the airport total. All low

- cost carriers combined hold just 87 slots, or 10.2% of the DCA total (Exhibit WN

- R

- 101). It is easy to see how fractured the competition is at DCA, and how difficult it will be for any new entrant or limited incumbent to mount an effective competitive response to US Airways, restrain DCA fares, and produce meaningful consumer benefits. This proceeding offers the DOT its first opportunity since the US Air ways/Delta slot swap to begin to re

- balance the competitive landscape at DCA.
The Southwest /AirTran service at DCA reaches just four markets with 83 weekly departures, compared to US Airways’ 1,414 weekly departures to 67 destinations (Exhibit WN

- R

- 102) . If US Airways really wants to replace Delta in the DCA

- JAN RJ
market it can easily do so by using two slots in its enormous existing slot portfolio. The5

two slots in question represent less than one

- half of 1% of US Airways’ current DCA holdings (Exhib it WN

- R

- 103). US Airways could easily move two slots from any of its high frequency RJ markets, like PHL, RDU or BDL for example, or from any other of its
67 DCA markets (Exhibit WN

- R

- 104). Further, scarce slot exemptions should not be squandered on a proposal that is likely to p r o d u c e the same r e s u l t s that drove Delta to terminate its DCA

- JAN service.
The JAN

- DCA market did not respond well to Delta’s nonstop RJ service which began in 2005. Normally a first nonstop service increases total market demand, but in the
case of DCA

- JAN it actually declined by 26% , even though total seat departures in the market increased over that period (Exhibit WN

- R

- 105) . Since Delta’s first year of operating the route, total DCA

- JAN O&D traffic declined by 35%, and this was true for both the volume of passengers taking Delta’s nonstop flights and for the traffic using connecting services (Exhibit WN

- R

- 106). As a consequence, Delta’s load factor declined from 68% in CY 2005 to 46% for the year ended Q3, 2011, or by 2 2 percentage points (Exhibit WN

- R

- 107A ). In its Application US Airways attempts to excuse Delta’s departure by speculating that Delta needed to move assets to its expanded LGA operation. In reality, Delta abandoned the market because it failed to support nonstop service to DCA , and there is no indication that anything would be materially different under a similar service to JAN by US Airways with small aircraft and high fares

. One of the main reasons for this failure is that Delta’s DCA

- JAN fares were 8 7% higher than the fares the year before Delta’s nonstop service began , as its nonstop fare averaged $262 for YE Q3, 2011 (Exhibit WN

- R

- 10 7 ). While US Airways’ Application6

makes no mention of the fares it would charge in the market, Campbell

- Hill has

cons ervatively estimated its average fare using the carrier’s actual fare data from all of its other domestic monopoly routes. On this basis t he estimated US Airways average
fare for the DCA

- JAN market would be $232. Southwest’s average fare for a market of
th e same distance would be approximately $150, or 35% less (Exhibit WN

- R

- 10 8 ). It is obvious why US Airways makes no mention of its planned fares, nor does it attempt to claim any consumer benefits. Given the history of the DCA

- JAN market under Delta ’s small aircraft and high fares, it is not surprising to find that nonstop service is not well patronized. For the latest 12 month period 57% of all O&D passengers between JAN and DCA took connecting flights (Exhibit WN

- R

- 1 09 ), even though the load facto rs on the nonstop averaged only 46% during the same period (Exhibit WN

- R

- 107A ). Oklahoma City , on the other hand, has no nonstop service to or from DCA. Southwest has served OKC for 32 years , and is proposing to serve DCA

- OKC with
mainline B737

- 700 air craft having 137 seats . Today Southwest serves nine nonstop markets from OKC providing 146 weekly departures (Exhibit WN

- R

- 104). Even though both Jackson and Oklahoma City are served by “small hub” airports, Oklahoma City is
more than twice the size of J ackson as measured by total O&D passengers (Exhibit
WN

- R

- 11 0 ). The superiority of Southwest’s proposal over US Airways’ is also illustrated by the fact that Southwest would charge sharply lower fares. The estimated average fare that US Airways would char ge in DCA

- JAN produces a yield of 27.0 cents per RPM. Southwest’s yield for its DCA

- OKC proposal will average 14.1 cents per RPM, or 48% less (Exhibit WN

- R

- 11 1 ).7

II. US Airways Wastes An Enormous Amount Of Scarce Capacity at DCA , and Awarding Slot Exemptions for JAN Service Would Create Additional Waste As by far the dominant carrier at DCA, US Airways has been able to utilize the airport’s scarce capacity to erect barriers to entry and monopolize markets. Its obvious strategy has been to provide high fare service in smaller monopoly markets (like Jackson), or higher frequency service with small planes in large markets to gain a service advantage over competitors with relatively few slots. This inefficient use of limited airpo rt assets clearly is designed to protect US Airways’ high fare structure and
seal off competitive challenge s, especially a formidable low

- cost carrier like Southwest.
The unfortunate cons equence s of this strategy to the public are high fares and limited

c apacity for air service at DCA, one of the nation’s most important airports. An examination of US Airways’ schedules demonstrates th e inefficiency of its DCA operations . Exhibit WN

- R

- 11 2 shows the current US Airways route map for DCA.
Of the 67 routes operated, only four are 100% with mainline aircraft. Two of these routes are long

- haul exemption markets (PHX and LAS), one is a long

- haul over water market (BDA), and the other is DCA

- T PA . The remaining 63 DCA markets are served by commuter/RJ aircraft (Exhibit WN

- R

- 11 2 ). The consequence of this waste and inefficient use of DCA’s scarce operating capacity is profound, and the trend has worsened as US Airways’ control over DCA access has increased. In CY 2000, 38% of US Airways’ DCA operations were w ith
commuter/RJ aircraft. Today that share is 73%, and it increased by four percentage points just in the past year as a result of the US/DL slot swap transaction. US Airways’ average aircraft size declined from 91 seats per departure in 2005 to only 78 seats in 2012 (Exhibit WN

- R

- 11 3 ). Moreover, its average aircraft size at DCA dropped 5% just8

in the last year due to US Airway’s decision to use RJ’s for all of the 84 slots it obtained last year from Delta , averaging just 53 seats (Exhibit WN

- R

- 11 4 ). US Airways’ increasing use of smaller aircraft has prevented DCA from being
able to maximize public use and benefits by accommodating the greatest number of air travelers who want to use Washington’s close

- in and highly preferred airport. An award of prec ious slot exemptions to US Airways in this proceeding would only worsen th is
unfortunate situation. The Department should take this rare opportunity to award the slot exemptions in a manner that will inject new competition and efficiency at DCA,
rather th an to increase US Airways’ already dominant share of service. This important goal will only be accomplished by awarding the slot exemptions to Southwest for its proposed DCA

- OKC service.
III. Frontier’s Proposal Would Do Little To Strengthen Competition O r Inject Consumer Benefits i n t he DCA Market Frontier proposes a fourth nonstop to Louisville, while Southwest proposes the first and only nonstop to Oklahoma City with continuing one

- stop service to Dallas’
close

- in Love Field. Giving effect to both proposals, the DCA

- OKC market would still be greatly under

- served relative to DCA

- SDF. In fact, the population per DCA departure would be nearly three times greater in the OKC market than the SDF market, signifying the high degree of relative service inadequacy for DCA

- OKC (Exhibit WN

- R

- 201). Louisville is very well served today , but even with three daily US Airways round trips ( operated by Republic Holdings companies ) , DCA is only the 12th largest SDF market for O&D passengers (Exhibit WN

- R

- 202). 5

5 Frontier claims that the “Washington Metro Region” is SDF’s largest destination, but it does this only by combining IAD, DCA and BWI traffic (See Frontier Exhibit 3). The DOT recently concluded from its own empirical analyses that DCA, IAD and BWI are not the same economic market. As the DOT concluded,9

Frontier’s Exhibit 2 attempts to show that much smaller routes than SDF have
obtained DCA slot exemptions in the past. However, none of the three routes cited by Frontier had other nonstop services prior to the exemption awards (Exhibit WN

- R

- 203) ,

n or did the daily traffic exceed 18 passengers per day . SDF , by contrast, already has three daily nonstop round trips and generates 84 passengers per day per day to and from DCA. With this local traffic level, SDF does not need deserve fourth nonstop , especially when compared to OKC which has no nonstop DCA service

. The DCA

- OKC market is much more similar to Frontier’s three cited market examples than is DCA

- SDF. The Oklahoma City route has no nonstop service today
and its local O&D traffic

– without the benefit of nonstop service

- is 46 passengers per day each way (Exhibit WN

- R

- 203). Moreover, Southwest’s one daily nonstop flight in
DCA

- O KC will generate 109 passengers per day each way, 30% more than DCA

- SDF with three nonstop s (Exhibits WN

- R

- 204 an d 205)

. This illustrates dramatically that Southwest’s proposal will benefit more passengers, and generate more consumer
benefits , than Frontier’s.
In fact , Frontier’s Application makes no attempt to forecast the traffic it would carry, the amount of tr affic stimulation (if any), or any consumer benefits to be derived from its proposal. W hile Frontier repeatedly claims that it will offer “ low fares, ” it does not tell the Department or the parties in this contested proceeding what those fares will

“for a large portion of passengers, especially time

- sensitive passengers . . . [the] Washin gton area airports are not effective substitutes for each other.” See DOT/FAA Notice dated May 4, 2010, in Docket FAA

- 2010

- 0109.10

be

. T hus, Frontier has completely failed to demonstrate how its proposal could “produce the maximum competitive benefits including low fares.” 6

IV. The Deep Interlocking Relationships Between Republic Holdings and US Airways Will Li kely Discourage Vigorous Competition By Frontier in the DCA
- SDF Market Frontier and US Airways are not exactly independent competitors. Republic Airways Holdings commuter carriers fly major contract services for US Airways and, to a smaller degree, for Frontier. In fact, there are two DCA routes where the only nonstop competitors are Frontier and US Airways, and Republic subsidiaries operate all services
for both carriers in both markets (Exhibit WN

- R

- 204). Under Frontier’s proposal, SDF would be a third DCA market where both nonstop carriers are member of the Republic Holdings family. 7 Moreover, Republic commuters at DCA operate more flights for
Frontier than Frontier operates for itself (Exhibit WN

- R

- 2 11 ). When US Airways was in serious financial difficulty in 2006 it sold 113 commuter slots at DCA to Republic, and granted Republic contracts to operate those slots for US Airways. 8 As shown in Exhibit WN

- R

- 2 0 9 the re are significant interlocking affiliations between the Republic Airways companies and US Airways. Republic Holdings gains financially from US Airways’ three current DCA

- SDF round trips , 9 and it would gain again if the D epartment were to award the slot exemptions at issue to Frontier.

6 Notice of the Department in this proceeding served February 17, 2012 at p

. 2.

7 Republic Holdings subsidiaries inclu de Frontier Airlines, Republic Airlines, Chautauqua Airlines, Shuttle America and Lynx Aviation. See http://www.rjet.com/whoweare.html

.
8 A ccording to the Aviation Daily , March 9, 2012 at p

. 4 , US Airways has repurchased some of those slots from Republic

.
9 Chautauqua operates two DCA

- SDF nonstop round trips for US Airways and Republic Airlines operates the third (Exhibit WN

- R

- 207).11

The interrelationships between Republic Holdings and US Airways are deep and important to this case. Republic Holdings commuter companies have contracts with four major carriers , but US Airways is by far the largest, account ing for 43% of all Republic contract daily departures

– 392 out of 904 (Exhibit WN

- R

- 2 10 ). This is more than all of Frontier’s daily departures system

- wide, including those operated by Republic commuter carriers (Exhibit WN

- R

- 2 11 ). US Airways is therefore by far Republic Holdings’ largest and most important customer. Republic’s operation for US Airways is twice the size of its next largest customer ( Exhibit WN

- R

- 210 ). Given the extreme importance of US Airways’ business to Republic Holdings, it is doubtful that Frontier will risk aggressive pricing in the DCA

- SDF market at the expense of its largest customer

. One final point regarding Frontier: In every contested DOT route proceeding,
Frontier touts its “Stretch” and “S elect” seating. What it never discloses is that these seats cost more than its regular coach seats. ”Stretch” seats cost a minimum of $15 extra and in some cases the additional charge is much more. Similarly, “Select” seating
is also no bargain. The ad d

- on begins with seats having as little as 31 inch seat

- pitch (Exhibit WN

- R

- 21 2 ). The revenue that Frontier collects from these fees is not included in the DOT’s O&D Survey , and thus Frontier’s actual yields and fares in DOT reports
are understated accord ingly

. CONCLUSION

For the reasons given above and in our prior pleadings , we urge the Department to grant the two slot exemptions at issue in this proceeding to Southwest Airlines to
enable it to initiate first

- ever nonstop service from OKC to DCA , with single plane service beyond OKC to Dallas Love Field

. Grant of Southwest’s Application will not only12

fulfill the maximum number of AIR

- 21 deci s ional criteria, it will have by far the greatest impact on competition for the benefit of the public and DCA. US Airways can easily serve JAN without slot exemptions by shifting a single slot pair from its huge cache of 460 DCA slots. SDF is already well

- served from DCA with three daily nonstop flights , and does not merit a fourth nonstop especially considering t hat OKC has none

. The record makes clear that far and away th e best use of the scarce exemptions available in this proceeding is to award them to Southwest for its DCA

- OKC

- DAL proposal.
Respectfully submitted ,

__________________________ Robert W. Kneisely

March 20 , 2012C ERTIFICATE OF SERVIC E

I hereby certify that on March 20 , 2012 , a copy of the foregoing was served via e

mail on the following persons:

robert.cohn@hoganlovells.com (Frontier Airlines) patrick.rizzi@hoganlovells.com (Frontier Airlines ) howard_kass@usairways.com (US Airways) benjamin.slocum@us airways.com (US Airways) tmerrick@swapa.org (SWAPA) susan.kurland@dot.gov todd.homan@dot.gov brian.ctr.meehan@faa.gov Mark Kranenburg Director of Airports Will Rogers World Airport mark.kranenburg@okc.gov
John E. Potter President and Chief Executive Officer Metropolitan Washington Airports Authority john.potter@mwaa.com
info@airlineinfo.com

__________________________ Leslie C. AbbottForecast Annual Consumer Savings Benefits (Millions) Docket OST
- 2000
- 7182 Exhibit WN
- R
- 100

Source: Applications of Southwest, Frontier and US Airways.



## Southwest’s DCA
- OKC
- DAL Service Will Generate $8.2 Million in Annual Consumer Savings While the Proposals of Frontier and US Airways Show None

Neither US Nor F9 Have Provided Any Analysis of Consumer Benefits in Their Proposals

## US Airways Operates 54 % of All DCA Slots Today

Source: FAA Slot Reports, Current and Future, dated 2

- 13

- 2012 and OAG schedules June 2012. Legacy/Foreign Flag Carriers Low Cost Carriers DCA Slots


### Total DCA Slots = 853

Percent of Airport Total 53.9% 12.8% 11.4% 8.9% 2.1% 0.7% 4.0% 2.9% 2.3% 0.7% 0.2% 

### 54% Docket OST
- 2000
- 7182 Exhibit WN
- R
- 101Mainline/Large Aircraft RJ/Commuter Aircraft 

## With 25 Slots Southwest Serves Only Four Destinations, While US Airways Serves 67 Destinations with its 460 Slots Docket OST
- 2000
- 7182 Exhibit WN
- R
- 102

Source : OAG Schedules for the week of June 11 th through the 17 th , 2012. Weekly Departures Ave. Seats per Departure Current DCA Slots 83 120 25 

### Southwest/AirTran’s DCA Network US Airways’ DCA Network

Weekly Departures Ave . Seats per Departure Current DCA Slots 1,414 78 460

## US Airways Can Easily Fund Its DCA
- JAN 

# Flight from Its Current Cache of 460 Slots

1/Assuming US operates the E

- 170. Source: FAA Slot Reports, Current and Future, dated 2

- 13

- 2012 and OAG schedules June 2012. Docket OST
- 2000
- 7182 Exhibit WN
- R
- 103



### Slots



### June 2012 DCA Departures

June 2012 Seat
- Departures 1 Current


### 460



### 202

15,789 Proposed

DCA
- JAN Service



### 2



### 1

69 Proposed DCA
- JAN

Service as % of Total US Slots/Operations


### 0.4%



### 0.5%

0.4%

## US Airways Could Serve DCA
- JAN Today Without Slot Exemptions

By Using Slots From Any of its High
- Frequency RJ Markets

CLT PHL RDU 

### BDL CMH IND PIT 

### PVD Market Daily US

Departures

Source : OAG Schedules June 11, 2012. 

### 10 8 7 

### 6 6 6 5 5 US Average

Aircraft Size

112 65 50 80 60 

### 70 60 78 Docket OST
- 2000
- 7182 Exhibit WN
- R
- 104



### US Airways RJ Markets With 5 or More Daily Departures from DCAAnnual O&D Passengers Docket OST
- 2000
- 7182 Exhibit WN
- R
- 105

Note; Fared passengers only. Source : US DOT O&D Survey, via Diio,LLC

. - 26%



## The Jackson Market Did Not Support Nonstop Service: Annual DCA
- JAN O&D Passengers Fell 26% Since Nonstop Service Began

Note: DCA
- JAN Passengers Dropped 26% Despite a 22% Increase in Seat
- Departures Since Delta Began Nonstop Service Full Year Before Nonstop Current

# Annual DCA
- JAN O&D Passengers Are 35% Lower Now

Than in Delta’s First Year of Nonstop Service

Annual O&D Passengers Docket OST
- 2000
- 7182 Exhibit WN
- R
- 106

All O&D Passengers Nonstop O&D Passengers

Note: Fared passengers only. Source: US DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC.Average DCA
JAN Fare Docket OST
- 2000
- 7182 Exhibit WN
- R
- 107

+87% 

## Delta Increased Fares 87% Since Starting DCA
- JAN Service

Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees

. Source: US DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Market Fare Before Delta Nonstop Current DL Fare Paid By Local PassengersLoad Factor Docket OST
- 2000
- 7182 Exhibit WN
- R
- 107A

Source: US DOT, T

- 100 data, via Diio,LLC

. - 21.6 pts



## DCA
- JAN Load Factors Fell More Than 21 Percentage Points Since Delta’s First Year of Nonstop Service

First Year With Nonstop Service CurrentAverage DCA
JAN Fare Docket OST
- 2000
- 7182 Exhibit WN
- R
- 108 

## In the Likely Event that US Airways Sets Prices Similar to Its Other Monopoly Markets DCA
- JAN Fares Will Remain Extremely High

1/ From US DOT, O&D Survey, YE Q3 2011, via Diio, LLC . plus in estimated checked baggage and rebooking/change fees calculated from Form 41 data for YE Q3 2011. 2/ Uses equation from Appendix 1 of this filing plus $13.97 in estimated checked baggage and rebooking/change fees. 3 / Uses equation from Appendix 2 of this filing plus $0.38 in estimated checked baggage and rebooking/change fees. 1 2 3 1 - 35.3%

(All Carriers)

## More JAN Passengers Take Connecting Flights to/from DCA Than Take the Nonstop Docket OST
- 2000
- 7182 Exhibit WN
- R
- 109

Note: Fared passengers only. Source: US DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC.

# Oklahoma City is More Than Twice The Size of Jackson

A. Population

+146%

Note: Both OKC and JAN are classified as “small hubs” by the FAA. Source : 2010 US Census. Population Docket OST
- 2000
- 7182 Exhibit WN
- R
- 110 Page 1 of 2

## Oklahoma City is More Than Twice The Size of Jackson

B. O&D Passengers

+175%

Note: Both OKC and JAN are classified as “small hubs” by the FAA. Source : US DOT O&D Survey, YE Q3 2011.

Total O&D Passengers Docket OST
- 2000
- 7182 Exhibit WN
- R
- 110 Page 2 of 2

## DCA
- JAN’s Average Yield Is More Than Twice Southwest’s Proposed DCA
- OKC Yield

Yield (Cents) Docket OST
- 2000
- 7182 Exhibit WN
- R
- 111

1/ Estimated from US yield curve in monopoly markets (Appendix 1) plus $13.97 per passenger in estimated checked baggage and rebooking/change fees. 2/ WN Yield Curve from Appendix 2 plus $0.38 per passenger in estimated checked baggage and rebooking/change fees

. Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees

. Source: US DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. 2 1

## US Airways Serves Only 4 Nonstop DCA Markets Exclusively with Mainline Aircraft Docket OST
- 2000
- 7182 Exhibit WN
- R
- 112

1/ In 11 markets US Airways operates mainline aircraft as well as commuter/RJ equipment. Source : OAG Schedules for the week of June 11 th through the 17 th , 2012. US Mainline Routes US Regional Routes Weekly Departures Average Seats per Dep. No. of Markets Served 1 Commuter/RJ 1,036 60 63 Total 1,414 78 67 Mainline 378 129 4

## US Airways Squanders Enormous DCA Operating Capacity

US June Seats per Departure

Source : OAG Schedules for mid

- June weeks, 2000

- 2012 US’ Average DCA Aircraft Size Has Dropped 14 % Since 2005 and 5% in the Last Year

US RJ or Commuter Percent Of Departures 33% 38% 40% 61% 64% 66% 69% 73% Docket OST

- 2000
- 7182 Exhibit WN
- R
- 113

Southwest B737
- 700 Capacity

## All 13 DCA Routes US Airways Added from its Delta Slot Swap

Are Served With RJ’s Averaging 53 Seats per Departure

Birmingham (BHM) Fayetteville (FAY) Islip (ISP) Little Rock (LIT) Jacksonville (OAJ) Pensacola (PNS) Tallahassee (TLH) Ft. Walton Beach (VPS) Memphis (MEM) Omaha (OMA) Ottawa (YOW) Bangor (BGR) Savannah (SAV) Hartford (BDL) Destination Start Date

Source : OAG Schedules for the week of June 11 th through 17 th , 2012 

### March 2012 March 2012 March 2012 March 2012 March 2012 March 2012 March 2012 March 2012 March 2012 March 2012 March 2012 March 2012 March 2012 March 2012 Aircraft

CRJ CRJ CRJ E70 CRJ CRJ CRJ CRJ CRJ E70 CRJ CRJ CRJ E70 Frequency

3 1 2 2 1 2 1 1 3 1 3 2 1 1 Total Seats

150 50 100 138 50 100 50 50 150 69 150 100 50 69 Aircraft Size

50 50 50 69 50 50 50 50 50 69 50 50 50 69
Average Aircraft Size on New Routes: 53.2 seats Docket OST

- 2000
- 7182 Exhibit WN
- R
- 114

## Oklahoma City Is Significantly Underserved Compared to Louisville,



# and Will Still Be Underserved Even With Southwest’s Proposal

+270%

Source : U.S. 2010 Census; OAG Schedules for June 11, 2012 and proposals of Southwest and Frontier. Population per Daily DCA Departure Docket OST
- 2000
- 7182 Exhibit WN
- R
- 201

2010 Population: 1,327,457 1,433,792 Daily Departures including WN and F9 Proposals: 1 4

## Despite Already Having Three Daily Nonstops ,

DCA is Only the 12 th 

## Largest O&D Market to/from SDF

Note: PDEW means passengers per day each way

. Source: U.S. DOT, T

- 100 Data and O&D Passenger Survey Data, via Diio, LLC. 

### BWI MCO 

### LAS MDW TPA LGA DEN ORD DFW PHL PHX DCA ATL LAX EWR 

### Fared O&D

Passengers 

### SDF Market 125,563

111,275 

### 102,740 101,334 95,732 94,138 86,032 85,005 78,730 64,660 63,473 61,635 61,577 60,681 48,326 PDEW

172 152 

### 141 139 131 129 118 116 108 89 87 84 84 83 66 Rank
1 2 

### 3 4 5 6 7 8 9 10 11 12 13 14 15 Docket OST
- 2000
- 7182 Exhibit WN
- R
- 202

## OKC Is Very Similar to Markets With Recent

Slot Exemption Awards Referenced by Frontier; SDF Is Not

Note: Markets included in this exhibit are from Frontier’s Application, Exhibit 2. Source: US DOT, T

- 100 Data and O&D Passenger Survey Data, via Diio, LLC. Docket OST
- 2000
- 7182 Exhibit WN
- R
- 203



### MYR CAK LAN OKC

SDF Fewer than One

Daily Roundtrip Before Proposal DCA 

### Market

YES

YES YES YES

NO, 3 Daily Seats per Day

Each Way Before Proposal

9 0 0 0

161 Fared O&D

Passengers Per 

### Day Each Way Before Proposal

18 3 16 46

84 Period

YE Q3 2004 YE Q4 2008 YE Q1 2011 YE Q3 2011

YE Q3 2011

## Southwest’s One Daily Nonstop in DCA
- OKC Will Generate 109 Passengers Per Day Each Way, 30% More than DCA
- SDF’s Three Daily Nonstops Docket OST
- 2000
- 7182 Exhibit WN
- R
- 204

Source/Basis 1 Base DCA
- OKC Passengers 33,664 YE Q3 2011 from O&D Survey via Diio, LLC.

2 Fare Stimulation from Southwest Proposal 85.1% From Fare Stimulation Model. See WN
- 202.
3 Service Stimulation from Southwest Proposal 28.2% From Campbell
- Hill Aviation Group QSI Model . See WN
- 202.

4 Total DCA
- OKC Stimulation 137.3% (1+Line 2) x (1+Line 3)
- 1.

5 DCA
- OKC Passengers After Stimulation 79,884 Line 1 x Line 4.
6 Passengers Per Day Each Way 109 Line 5 / (365 Days in a year x 2 Directions) After Southwest Proposal

Source : Exhibit WN

- 202 Note: PDEW means passengers per day each way..

SDF’s Three Nonstops Generate Only 84 PDEW, compared to 109 for OKCFared Passengers

per Day Each Way Docket OST
- 2000
- 7182 Exhibit WN
- R
- 205 

## Southwest’s Proposal for DCA
- OKC Will Generate More Local Passengers than DCA
- SDF Despite the Fact that DCA
- SDF Currently Has Three Daily Nonstops

1/ See Exhibit WN

- R

- 204. Source: US DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC; Exhibit WN

- 202. Current Nonstop Service 3 Daily by US Airways None 1 Daily B737
- 700 1

## In Two DCA Routes A Republic Airways Holdings Carrier



# Operates Service for Both Frontier and US Airways

– Under Frontier’s Proposal SDF Would Be a Third

Frontier US Airways Marketing Carrier Operating Carrier

* Subsidiary of Republic Airways Holdings, Inc. Source : OAG Schedules for the June 11, 2012 

### Republic* Republic* Aircraft

E70/E75 E70 Frequency

2 1 Total Seats

149 69 Aircraft Size

69/80 69 Docket OST
- 2000
- 7182 Exhibit WN
- R
- 206



### Omaha

Frontier



### US Airways Republic* 

### Republic* E90



### E90 2 

### 2 198



### 198 99 

### 99 Kansas City

## Republic Airways Holdings’ Subsidiaries 

# Operate the 3
- Daily Roundtrip Flights Between DCA and SDF for US Airways

US Airways US Airways Marketing Carrier Operating Carrier

* Subsidiary of Republic Airways Holdings, Inc. Source : OAG Schedules for the June 11, 2012 

### Chautauqua* Republic* Aircraft

ERJ E70 Frequency

2 1 3 Total Seats

100 69 169 Aircraft Size

50 69 Total Docket OST
- 2000
- 7182 Exhibit WN
- R
- 207

## More Than 50% of Frontier’s Service at DCA is

Operated by its Sister Company Republic Airlines Docket OST
- 2000
- 7182 Exhibit WN
- R
- 208

Source : OAG Schedules for the week of June 11 th through the 17 th , 2012. F9 Mainline Routes F9 Regional Routes Operated by Republic Airlines Weekly Departures Weekly Seats Average Seats per Dep. No. of Markets Served Commuter/RJ 33 3,267 99 3 Total 60 7,497 125 6 Mainline 27 4,230 157 3

## Republic

– Frontier

– US Airways: It’s All in the Family

1/ In 2006 US Airways sold 113 commuter slots to Republic, and Republic licensed the slots back to US Airways in return for a co ntract to operate them for US Airways. According to the Aviation Daily , March 9, 2012 at page 4, US Airways re

- purchased a number of these slots from Republic in a December 2011 transaction. Docket OST
- 2000
- 7182 Exhibit WN
- R
- 209

Frontier Republic Airlines Lynx Aviation

#1 Customer: US AIRWAYS Chautauqua Shuttle

America REPUBLIC AIRWAYS HOLDINGS, INC.

Two Major Slot Transactions 1/ 100% Ownership

## US Airways Is Republic Airways Holdings’ Largest Business Partner

Note: Republic Airways Holdings’ subsidiaries are Republic , Chautauqua, Shuttle America, Frontier, and Lynx. Source : OAG Schedules for the week of June 11 th through the 17 th , 2012. Docket OST
- 2000
- 7182 Exhibit WN
- R
- 210

June 2012 Daily Departures By Republic Airways Holdings’ Carriers

Share of Republic Contract Flying 43% 23% 21% 13% 

### 43%

Republic Customer

# Republic Airways Holdings’ Subsidiaries Operate More

Flights for US Airways Than the Total Flights Operated by Frontier

+10% Daily Departures Docket OST
- 2000
- 7182 Exhibit WN
- R
- 211

1/ Operated by a Republic Airways Holdings carrier. Note: Republic Airways Holdings’ subsidiaries are Republic , Chautauqua, Shuttle America, Frontier, and Lynx. Source : OAG Schedules for the week of June 11 th through the 17 th , 2012. F9 Regional 1

F9 Mainline 392 355

## Frontier Charges Extra Fees For Its Stretch and Select Seats

Source : www.frontierairlines.com/flight

- info/seating

- options. 

### • Charges vary by what class of ticket the customer purchases (Classic Plus, Classic, or 

### Economy)

• For Economy passengers, STRETCH Seating fees start at $15 per segment

• Frontier charges additional fees for 31” seat pitch SELECT Seating . Southwest’s 32” to 33” seat pitch is free.

• STRETCH Seating must be booked in packages online that includes bag and other fees, or via the check
- in kiosk at the airport.

• Frontier’s fees are not included in U.S. DOT, Origin
- Destination Passenger Survey data and thus do not appear in the fares / yields shown in that data. Docket OST
- 2000
- 7182 Exhibit WN
- R
- 212



### Product Frontier STRETCH Frontier SELECT 

### Southwest Pitch 36” 31” 32”
- 33” Price

From $15 From $5 Free

## US Airways’ Yield Curve in its Monopoly Markets

Nonstop Miles YE Q3 2011 Nonstop Market Yield

Note: Fared passengers only. Excludes all taxes, government charges and checked baggage and rebooking/change fees.
Source: US DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Docket OST
- 2000
- 7182 Appendix 1

## Southwest's System Yield Curve

Nonstop Miles YE Q3 2011 Nonstop Market Yield

Note: Fared passengers only. Excludes all taxes, government charges and checked baggage and rebooking/change fees.
Note : Fare curve includes markets with nonstop service and over 600 one

- way departures for YE Q3 2011. Source: US DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Docket OST
- 2000
- 7182 Appendix 2