BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

_____________________________________

)

Applications of )

)

SOUTHWEST AIRLINES CO. )

JETBLUE AIRWAYS CORP. )

AMERICAN AIRLINES, INC. )

PEOPLE EXPRESS AIRLINES, INC. ) Docket DOT-OST-2000-7182

)

For exemptions from 14 C.F.R. Part 93, )

Subparts K and S, pursuant to 49 U.S.C. )

§ 41718(b) )

)

For service at Ronald Reagan )

Washington National Airport (within- )

perimeter slot exemptions) )

_____________________________________ )

ANSWER 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

 Chief Legal and Regulatory Officer Leslie C. Abbott

Mark Shaw Senior Attorney

 Vice President General Counsel & SOUTHWEST AIRLINES CO.

 Corporate Secretary 919 18th Street, NW

SOUTHWEST AIRLINES CO. Suite 600

2702 Love Field Drive Washington, DC 20006

Dallas, TX 75235-1611 bob.kneisley@wnco.com

 (202) 263-6284

April 1, 2014
1

BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

_____________________________________

)

Applications of )

)

SOUTHWEST AIRLINES CO. )

AMERICAN AIRLINES, INC. )

JETBLUE AIRWAYS CORP. )

PEOPLE EXPRESS AIRLINES, INC. ) Docket DOT-OST-2000-7182

)

For exemptions from 14 C.F.R. Part 93, )

Subparts K and S, pursuant to 49 U.S.C. )

§ 41718(b) )

)

For service at Ronald Reagan )

Washington National Airport (within- )

perimeter slot exemptions) )

_____________________________________ )

ANSWER OF 

SOUTHWEST AIRLINES CO. 

On March 5, 2014, the Department of Transportation (“DOT” or “Department”) 

established a slot exemption proceeding pursuant to 49 U.S.C. § 41718(b) requesting

applications from carriers for two AIR-21 slot exemptions previously held by Republic 

Airline. 1 These slot exemptions authorize service to a medium hub or smaller airport 

within the 1,250-mile perimeter established for civil operations at Ronald Reagan 

Washington National Airport (“DCA”) under Title 49 U.S.C. § 49109. Southwest is 

currently using the slot exemptions to serve the DCA-MCI route on a pendente lite basis 

until such time as the exemptions are permanently reallocated. 2 Southwest’s 

competitive service has garnered widespread public support as illustrated by the 27 

 

1 Common names of airlines are used.

2 Order Confirming Grant of Temporary Slot Exemption Authority, Order 2014-1-6, Docket DOT-OST-

 2000-7182 (Jan. 27, 2014).
2

congressional and community letters and the 7,025 signature petition calling for the 

continuation of Southwest’s DCA-MCI service filed in the docket today.

Southwest Airlines, JetBlue Airways, and American Airlines filed responsive 

applications.

3

 Southwest proposes to make permanent its large-jet, low-fare 

competitive service to Kansas City, Missouri (“MCI”), and would further leverage the 

scarce slot exemptions by providing one-stop, same-plane service between DCA and 

Oakland International Airport (“OAK”) via MCI. When considered side-by-side,

Southwest’s proposal provides by far the greatest consumer benefits of any Application 

in this case on all key metrics: the size of the market to be served, size of aircraft to be 

used, seats to be offered, and the number of passengers to be carried, both in the local 

DCA market and in connecting/beyond cities .

Summary Statistics

Southwest JetBlue American

MCI JAX ISP

Aircraft Type B737-700 

(143 Seats)

E-190 

( 100 Seats)

CRJ-200 

(50 Seats)

Market Totals

Current O&D Market Size 189,420 146,729 29,685

Applicant Projections

Annual Seats 104,390 73,000 36,500

Estimated Annual Onboard Passengers 88,732 58,400 29,565

Projected Load Factor 85% 80% 81%

Local Washington DC O&D Passengers 88,732 58,400 18,330

Total DCA Local Passenger Pool 1.8 Million 270,000 29,685

Southwest’s proposed continuation of its service to Kansas City would: (1) 

provide strong low-fare competition on a monopoly DCA route; (2) offer the only largejet service in the market and significantly increase the available capacity on this 

 

3

As explained below, People Express does not hold either a DOT or FAA certificate is therefore ineligible 

for award of the slot exemptions at issue in this proceeding. 
3

otherwise under-served route; and (3) provide one-stop, same-plane service between 

DCA and OAK, the largest domestic airport without direct service to DCA. In addition:

Southwest’s 143-seat B737-700 mainline aircraft will provide 43% more seats 

than JetBlue’s regional jet (RJ) service and 186% more seats than American’s 

RJ service. 

Southwest’s DCA-MCI actual load factor for the week prior to the filing of the 

application was 85%, higher than the projected load factors of both JetBlue and 

American, both of which would fly significantly smaller aircraft. Southwest’s load 

factor for the most recent week available (beginning March 22) was 90%.

Southwest would carry 52% more passengers than JetBlue and 200% more 

passengers than American. 

The Kansas City O&D market size is the largest of any market proposed in the 

case. It is 29% larger than Jacksonville and 538% larger than Islip.

Without Southwest service, Kansas City is significantly under-served compared 

to Jacksonville. DCA-JAX has twice the current seat capacity of DCA-MCI 

without Southwest service. 

Unlike American’s proposal where 53% of its ISP-DCA traffic would connect to or 

from points beyond DCA, Southwest’s MCI-DCA traffic would be entirely local to 

DCA. American’s plan to devote more than half the capacity of its DCA flights to 

connecting passengers who have no need to travel through DCA is a gross 

waste of slots that should not be rewarded with additional slot exemptions.

JETBLUE AIRWAYS

I. Southwest Would Serve a Larger Market with Larger Aircraft than JetBlue, 

Benefiting Far More Local DCA Passengers

The limited number of slot exemptions that are available for service from DCA 

should be used to provide the greatest benefits to the largest number of consumers 

possible, consistent with the AIR-21 guidelines. Southwest’s MCI proposal would do 

that by providing competitive service on a monopoly route to a considerably larger
4

market than JetBlue’s proposed service to Jacksonville. The DCA-MCI local O&D 

market is 29% larger than the local DCA-JAX market (Exhibit WN-R-101), and MCI 

serves a metropolitan population base that is 60% larger than the Jacksonville 

population (Exhibit WN-R-102). 

In addition, with 75 daily flights to 26 nonstop destinations,4 Southwest’s service 

at Kansas City is far more extensive than JetBlue’s at Jacksonville. 5 As a 

consequence, Southwest’s proposed nonstop from DCA to MCI with continuing (sameplane) service to OAK would serve a total Washington O&D market of 1.8 million 

passengers, while JetBlue’s proposal would serve a market of only 270,000 passengers

(Exhibit WN-R-103).

6

 

Furthermore, Southwest’s proposal would provide superior public benefits and far 

more efficient use of the slot exemptions by operating 143-seat B737-700 mainline 

aircraft, with 43% more seats per departure than JetBlue’s proposed 100-seat RJ 

service (Exhibit WN-R-104). As a result, Southwest would offer 31,000 more annual 

seats than JetBlue (Exhibit WN-R-104) and would carry over 30,000 more annual DCA 

local O&D passengers (Exhibit WN-R-105). 

II. Without Southwest’s Service, DCA-MCI Is Far More Under-Served than 

DCA-JAX, a Market that Already Has Five Daily Nonstop Round Trips

There is a far greater need for Southwest’s DCA-MCI service than there is for 

JetBlue’s service, which would be in addition to American’s existing five daily round trips

in the DCA-JAX market. In fact, by any reasonable measure the DCA-MCI market is far 

more under-served than the DCA-JAX market (Exhibit WN-R-10). The DCA-JAX 

 

4

Summer schedule 2014.

5

 JetBlue offers only six daily roundtrips at JAX to three nonstop destinations. Summer schedule 2014. 

6

Both numbers include potential connecting markets beyond MCI and JAX respectively.
5

market currently has 90% more daily seat departures per day than DCA-MCI without 

Southwest’s service (Exhibit WN-R-107), even though it is a significantly smaller O&D 

market (Exhibit WN-R-101). 7 The DCA-JAX nonstop market already consumes 10 

DCA slots compared to six for DCA-MCI (excluding Southwest). The JAX market

simply does not justify two additional scarce slot exemptions for yet another small 

aircraft service. Moreover, the DCA-JAX load factor is only 74%, a further indication 

that despite the use of small aircraft, there is significant unused capacity in the market. 

By comparison, the DCA-MCI load factor for all carriers is 80% and Southwest’s load 

factor for the most recent week available is 90%.8 

III. Southwest, not JetBlue, Would Produce the Most Consumer Savings With 

the Two Slot Exemptions at Issue in this Proceeding

Since Southwest began its DCA-MCI pendente lite service on February 1, 2014,

its load factor has increased rapidly to above 85%, notwithstanding the fact that 

Southwest had no time for advance marketing or reservations period prior to its quick 

start-up (Exhibit WN-3). In the week prior to filing of the application9(the week that 

began on March 15, 2014) Southwest’s average DCA-MCI local fare was $147 (Exhibit 

WN-2). If Southwest is forced to discontinue its current service then US 

Airways/American will gain another monopoly DCA market, and it can be expected that 

the average market fare will increase byapproximately 21% (Exhibit WN-2 and WN-R108).10

 The fare savings to Southwest’s passengers alone if it is able to continue 

 

7

 In fact the current DCA-JAX market without JetBlue has more seats than DCA-MCI even including 

 Southwest’s current DCA-MCI service.

8

Source: U.S. DOT, T-100 Data, via Diio LLC, YE Nov 2013. Southwest data from the week of March 

 15, 2014. See Exhibit WN-3 from Southwest’s Application. The week that just became available 

 (week of March 22, 2014) had an even higher load factor of 90%.

9

Southwest’s average fare in the latest week available (week of March 22, 2014) was $145.

10 The difference between the current DCA-MCI market fare with Southwest service ($171) and the 

 estimated US/AA DCA monopoly fare of $207 is 21%..
6

service in this market would be $5.3 million per year. Importantly, this is 18% greater –

or $900,000 annually -- than the $4.4 million for JetBlue’s projected passengers (Exhibit 

WN-R-109). Clearly Southwest’s proposed use of the slot exemptions at issue in this 

proceeding would generate significantly greater consumer benefits than JetBlue’s 

proposal.

IV. The So-Called “MIT Study” Touted by JetBlue Is Fatally Flawed and Should 

be Disregarded

JetBlue touts the conclusions of a 2013 MIT white paper 11 that supposedly 

suggests that “...no other carrier presently has the ability to lower fares like JetBlue.”12 

However, this paper is not only irrelevant to the current proceeding but also is based on

a seriously flawed analysis that should be disregarded. Following are three of the 

study’s most glaring analytical errors:

o The MIT model is based on the overall airport average fare – not 

individual market fares. Certain airports have more leisure markets than 

other airports and in many cases, lower fares are a function of the types of 

markets, rather than the presence of a low cost carrier.

13

 A correct model 

would use market fares as the dependent variable and would control for 

leisure markets. This would increase the sample size to at least 5,000 

O&D markets compared to 445 “observations” used in the MIT model,

increasing the model’s reliability. 

o The model omits baggage and cancellation/rebooking fees as 

integral components of the cost of point-to-point air travel. Since all 

U.S. airlines except Southwest charge these increasingly significant fees, 

they must be included in any analysis to facilitate an apples-to-apples 

comparison. However, the MIT analysis omits them altogether, calling into 

 

11 Michael D. Wittman and William S. Swelbar, MIT International Center for Air Transportation, Evolving 

Trends of U.S. Domestic Airfares: The Impacts of Competition, Consolidation, and Low-Cost Carriers, 

August, 2013. See also Exhibit B6-2014-103, this docket. 

12 JetBlue Application at p. 14.

13 The MIT study controlled only for leisure airports. It did not control for the effects of leisure markets. 

For example, a leisure market from JFK (such as JFK-MCO) where JetBlue has a large presence was not 

controlled for and the effect of lower fares was all attributed to JetBlue in the MIT model, and not to the 

fact that it is a leisure market per se.
7

question any conclusions that JetBlue might draw from the model output

(See Exhibit WN-R-110).14 

o The model analyzes airports rather than cities, ignoring the disciplining

impact of low fares at one airport (e.g., Chicago Midway) on fares at 

adjacent airports (e.g., Chicago O’Hare). This major flaw eliminates

billions of dollars of annual consumer fare savings from cross-airport 

competition provided by Southwest in numerous large markets served by 

multiple airports (e.g., Dallas-DFW and DAL; Houston-IAH and HOU; and 

Chicago-ORD and MDW). 

Re-running the MIT model with certain corrections that could be made,15 the 

Campbell-Hill Aviation Group determined that Southwest saves passengers over $6.0 

billion per year in lower fares, while JetBlue saves consumers $1.7 billion. Fare savings 

produced by Southwest are 3.5 times as much as JetBlue, and 1.4 times the fare 

savings created by all other LCC’s combined16 (Exhibit WN-R-111). An objective

analysis shows that Southwest, not JetBlue, produces the most downward pressure on 

fares and the greatest fare response by legacy carriers. In fact, JetBlue’s projected 

DCA-JAX yield is actually 12% higher than Southwest’s current DCA-MCI yield (Exhibit 

WN-R-112).

Contrary to the implied assertions of JetBlue and the authors of the MIT model, 

there is ample evidence that the “Southwest Effect” continues to save U.S. consumers 

billions, not millions, annually. See, e.g., Exhibits WN-R-113 through R-116 illustrating 

recent examples of the Southwest Effect at Newark, LaGuardia, GreenvilleSpartanburg, and Charleston, SC. In each case, Southwest’s entry into these markets 

caused significant fare reductions, which in turn stimulated dramatic increases in traffic. 

 

14 JetBlue includes bag and change fees when it is beneficial for comparison purposes in its application 

(see, e.g., JetBlue’s Application at page 8 and Exhibit B6-2014-102). 

15 Campbell-Hill does not endorse the MIT model but made the corrections to illustrate the model’s 

deficiencies. 

16 The total for all other LCCs includes JetBlue. 
8

AMERICAN AIRLINES

V. American, by Far the Largest Slot Holder at DCA, Proposes Inefficient 

Small Aircraft Service that Could Easily be Provided with its Existing 

Portfolio of Over 500 Slots

American seeks the slot exemptions at issue in this proceeding to enable it to 

maintain its existing nonstop RJ service to Islip, Long Island. Despite its claims, 

American does not need these two slot exemptions to provide this service and could 

easily do so today by using just two of its over 500 DCA slots. Even after the recent 

divestitures required in its settlement with the U.S. government, American still controls 

58% of all DCA slots. This portfolio dwarfs the next largest carrier (Delta) and is almost 

six times the number of slots held by Southwest (Exhibit WN-R-201).17 

Moreover, the combined American/US Airways continues to waste an enormous 

number of the slots in its portfolio by: (1) using small aircraft for 73% of its operations 

and (2) carrying connecting passengers through DCA, rather than devoting all its 

capacity to serve the local O&D market. In fact, AA/US’s average aircraft size at DCA 

has declined to the lowest of any domestic carrier hub (Exhibits WN-R-202 and WN-R203). American’s average aircraft size at DCA is now a dismal 77 seats, and the 

combined carrier uses commuter aircraft on 344 of its 504 total slots even though it has 

just 146 commuter slots (Exhibit WN-R-204). With all the wastage in American’s DCA 

schedule, it would be a simple matter for American to fund a daily ISP-DCA roundtrip 

from its existing portfolio. For example, American currently serves 19 DCA markets with

at least four daily RJ roundtrips (Exhibit WN-R-206). American could easily drop a 

single roundtrip in one of these markets, and/or up-gauge aircraft on a single roundtrip,

 

17 Delta controls 106 slots at DCA (includes marketing carriers), or 12% of the total DCA slots. 
9

to free up a pair of slots to serve ISP. American’s self-serving claim that it cannot serve 

ISP without the award of slot exemptions is simply not credible. 

New American also wastes enormous DCA capacity to accommodate connecting 

passengers at its DCA hub. Thirty-eight percent of US Airways’ traffic at DCA consists 

of passengers who are only connecting at DCA to other cities (Exhibit WN-R-205). 

These passengers have no reason to be at DCA other than to change planes, thereby 

blocking seats that would otherwise go to local travelers. For example, American/US 

Airways has four daily flights between ISP and its hub at PHL. ISP passengers can 

conveniently connect at PHL to over 100 nonstop destinations. It is not necessary for 

those ISP passengers to connect at DCA, and indeed it would be a waste of valuable 

slot capacity to do so.

The fact that American chooses to use its massive slot portfolio in an inefficient 

and anti-competitive manner is a decision of its own choosing and most certainly should 

not be rewarded with an award of scarce slot exemptions. 

VI. The Consumer Benefits of Southwest’ Service Proposal Dwarf Any Benefits 

Claimed By American

A comparison of the markets demonstrates conclusively that Southwest’s 

proposal to serve DCA-MCI would benefit significantly more local DCA passengers and 

would serve a much larger market than American’s proposal. The DCA-MCI local O&D 

market is more than six times as large as the ISP local market (Exhibit WN-R-207). 

With only 29,685 annual passengers, it is not surprising that American proposes serving 

ISP with a very small 50-seat aircraft, once again wasting scarce capacity at DCA. 

Moreover, Exhibit WN-R-208 shows that over half – 53% of American’s current ISP-
10

DCA on-board traffic are not even local passengers but connect through DCA to and 

from other destinations. 

By comparison, all of Southwest’s capacity would be dedicated to DCA local 

passengers. Moreover, Southwest proposes to use 143-seat aircraft which will provide 

the market with 186% more seats, none of which will be used to connect passengers at 

DCA (Exhibit WN-R-209). On an annual basis this means that Southwest will provide 

local DCA passengers 104,390 seats compared to AA’s total of only 36,500 seats. As 

noted above, the difference in local seats is even greater since 53% of American’s 

onboard passengers will be connecting at DCA and approximately half of the seat 

capacity will be blocked by them.

In total, Southwest can be expected to carry over 74,000 more local DCA annual 

O&D passengers than American (Exhibit WN-R-210), making far greater use of the 

valuable slot exemptions. It is also significant that the total DCA local passenger pool 

for Southwest’s proposal including beyond points is 1.8 million compared to less than 

30,000 for American’s proposal (Exhibit WN-R-211). Without doubt, Southwest’s largejet, low-fare DCA-MCI service will provide significantly greater competitive benefits to a

much larger number of consumers than American could provide with its small plane, 

high-fare service to a much smaller market. 

PEOPLE EXPRESS AIRLINES

VII. Because People Express Holds Neither a DOT or FAA Certificate, it is Not 

Eligible to Receive Slot Exemptions 

People Express proposes to serve Myrtle Beach and West Palm Beach 

seasonally if it were awarded the slot exemptions in this proceeding. This application 

should be disregarded. As it acknowledges in its application, People Express has not 
11

been found fit to hold a DOT certificate or FAA operating authority, and therefore is 

ineligible for the award of slot exemptions. Moreover, it is unclear whether this 

company will ever obtain the necessary DOT and FAA authority, as it has been actively 

pursuing the required certificates for several years without success.18

People Express tries to overcome these difficulties by seeking to “operate under 

the supervision of VISION Airlines while working through certification for its own DOT 

and FAA Certificates”.19 But the applicant does not explain how an entity that is itself 

not legally authorized to provide air transportation could lawfully be awarded slot 

exemptions, or how “supervision” by a separate carrier could overcome the applicant’s 

lack of necessary legal authority. 

Moreover, even if People Express possessed the necessary economic and 

operating authorities, its service proposal pales in comparison to Southwest’s in this 

proceeding. The DCA-MCI local market is 26% larger than the DCA-PBI market and 

75% larger than the DCA-MYR market, both of which People Express would only serve 

seasonally (Exhibit WN-R-301).20 

 

18

 E.g., http://articles.dailypress.com/2013-08-31/business/dp-tidewaterbiz-peoplexpress20130831_1_president-michael-morisi-people-express-xtra-airways (Struggling People Express Lays Off 

Newport News Employees, Aug. 13, 2013); and 

http://articles.dailypress.com/2013-12-10/news/dp-tidewaterbiz-peopleexpress-resign20131210_1_people-express-michael-morisi-startup-airline-people

(People Express President and Founder Resigns, Dec. 10, 2013)

19 Application of People Express, p. 3, filed in this Docket. 

20 All market data are based on 12-month totals, not partial years. 
12

CONCLUSION

For the reasons given above and in its Application, Southwest’s proposal for 

DCA-MCI-OAK service will generate far greater public benefits than the competing 

applications. DCA has for too long suffered from inefficient service, high airfares, and 

inadequate competition. Awarding the slot exemptions available in this proceeding to

Southwest for its large-jet, competitive DCA-MCI-OAK proposal would be an important 

step toward making better use of the limited and valuable opportunity to operate at 

DCA. 

Respectfully submitted,

__________________________

Robert W. Kneisley

April 1, 2014
CERTIFICATE OF SERVICE

I hereby certify that on April 1, 2014, a copy of the foregoing was served via email on the following persons:

msinick@ssd.com (Alaska Airlines)

howard.kass@aa.com (American Airlines)

francis.heil@aa.com (American Airlines)

sascha.vanderbellen@delta.com (Delta Air Lines)

robert.cohn@hoganlovells.com (Republic Airways)

patrick.rizzi@hoganlovells.com (Republic Airways)

robert.land@jetblue.com (JetBlue Airways)

jhill@dowlohnes.com (JetBlue Airways)

perkmann@dowlohnes.com (JetBlue Airways)

shawn.voyles@flypex.com (People Express)

michael.morisi@flypex.com (People Express)

dkirstein@yklaw.com (Spirit Airlines)

jyoung@yklaw.com (Spirit Airlines)

John.Fredericksen@suncountry.com (Sun Country Airlines)

dan.weiss@united.com (United Air Lines)

pmurphy@lopmurphy.com (USA3000)

john.varley@virginamerica.com (Virgin America) 

susan.kurland@dot.gov

bob.goldner@dot.gov

todd.homan@dot.gov

peter.irvine@dot.gov

brian.ctr.meehan@faa.gov

Mark D. VanLoh, A.A.E.

Director of Aviation

Kansas City International Airport

Mark.VanLoh@kcmo.org

Deborah Ale Flint

Aviation Director for the Port of Oakland

Oakland International Airport

dale@portoakland.com

John E. Potter

President and Chief Executive Officer 

Metropolitan Washington Airports Authority

john.potter@mwaa.com

info@airlineinfo.com

__________________________

Leslie C. Abbott
The Local DCA-MCI Market is 29% Larger than the DCA-JAX Market

189,420

146,729

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

MCI JAX

DCA O&D

Passengers 

(YE Q3 2013)

Source: Innovata Schedule data for March 12, 2014; U.S. DOT Origin-Passenger Survey, YE Q3 2013, via Diio.

+29%

Exhibit WN-R-101
The Kansas City Metropolitan Area Population is 

60% Larger than the Jacksonville Population

2.4

1.5

0.0

0.5

1.0

1.5

2.0

2.5

Kansas City Jacksonville

2012 

Population

Note: Uses the Combined Statistical Area definitions.

Source: U.S. Department of Commerce, Bureau of the Census.

Exhibit WN-R-102

million

million

+60%
Southwest’s Proposal Would Serve a DCA Passenger 

Pool of Over 1.8 Million Compared to 270,000 for JetBlue

Proposed WN DCA-MCI

WN Direct DCA-OAK

Proposed B6 DCA-JAX

Potential Connections

JAX JAX

DCA DCA

SJU SJU SJU SJU

OAK OAK OAK

DCA DCA

MCI MCI

LAS LAS LAS LAS

LAX LAX LAX LAX

SAN SAN SAN SAN

DEN DEN DEN DEN

PHX PHX PHX PHX

ABQ ABQ ABQ

PDX PDX PDX PDX

SEA SEA SEA SEA

O&D Passengers

(YE Q3 2013)

MCI 189,420

OAK 35,998

Local Plus Direct 225,417

Connecting 1,581,866

Total Passenger Pool 1,807,283

O&D Passengers

(YE Q3 2013)

JAX 146,729

Connecting 122,850

Total 269,579

Exhibit WN-R-103

Source: Carrier applications and Innovata Schedule data. Eliminates circuitous routings.
0

20,000

40,000

60,000

80,000

100,000

120,000

Southwest DCA-MCI JetBlue's DCA-JAX Proposal

Annual One-Way Seats

104,390

73,000

(737-700) (E190)

+31,390

Source: Carrier Proposals.

Southwest Would Provide 43% More Seats Per Departure and 

31,000 More Annual Seats than JetBlue’s Proposed Service

Exhibit WN-R-104

0

20

40

60

80

100

120

140

160

Southwest DCA-MCI JetBlue's DCA-JAX Proposal

(737-700) (E190)

Average Seats per DCA Departure

143

100

+43%

+43Seats
0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Southwest DCA-MCI JetBlue's DCA-JAX Proposal

Annual One-Way Passengers

88,732

58,400

(737-700) (E190)

+30,332

+52%

1/ 143 seats x 365 days x 2 directions x 85% load factor. The 85% load factor is the actual load factor for the most recent week available (See WN Application Exhibit WN-3)

2/ From page 13 of JetBlue’s application. 

Source: Carrier Proposals.

Southwest Will Carry Over 30,000 More Annual Passengers than JetBlue

/1 /2

Exhibit WN-R-105
Without Southwest's Service, MCI Would 

Be Severely Underserved Compared to JAX

(O&D Passengers per Seat Departure) 

1.38

0.56

0.81

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

MCI Without Southwest JAX without B6 JAX with B6

DCA O&D

Passengers per

Seat Departure

1/ From JetBue’s Application, Exhibit B6-2014-102. 

Source: Innovata Schedule data for March 12, 2014; U.S. DOT Origin-Passenger Survey, YE Q3 2013, via Diio.

 259 201 376

Passengers per

Day Each Way

 188 359 459

Seats per Day

Each Way

/1

Exhibit WN-R-106
The Smaller DCA-JAX Market Has More Seat Capacity than DCA-MCI

188

359

0

50

100

150

200

250

300

350

400

MCI Excluding WN Current JAX

Daily

Seat Departures

Source: Innovata Schedule data for March 12, 2014.

Exhibit WN-R-107

Daily Departures: 3 5 
y = 3404.7x-0.737

0¢

20¢

40¢

60¢

80¢

100¢

120¢

0 250 500 750 1,000 1,250

Absent Southwest Competitive Service, DCA-MCI Fares 

Will Increase to US/AA DCA Monopoly Levels

Nonstop Distance (miles)

US DCA Fare Per Mile

(YE Q3 2013)

Note: Average fare paid per mile excludes zero fare passengers (frequent flyer redemptions, etc.). Includes baggage and cancellation/rebooking fees.

 Includes markets with at least 520 one-way flights for the year (the equivalent of 5 roundtrips per week).

Source: U.S. DOT, Origin-Destination Passenger Survey, YE Q3 2013, via DIIO. 

US DCA Monopoly 

Markets Within the 

Perimeter

US DCA Nonstop 

Markets With LCC

Competition

Exhibit WN-R-108
$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

Southwest DCA-MCI JetBlue's DCA-JAX Proposal

Fare Savings for Passengers

Onboard Each Airline

$5.3 Million

(737-700) (E190)

+$900,000

+18%

1/ If Southwest is forced to exit the DCA-MCI market it is assumed the US will increase fares to its monopoly levels. This fare will be $207, which compares to the current Southwest fare

of $147 (See WN Application Exhibit WN-2 and Exhibit WN-R-108 with the US DCA monopoly yield curve). The fare difference of $60 is multiplied by the projected WN annual DCA-MCI 

onboard passengers of 88,732.

2/ JetBlue estimates that its fare will by $75 lower than American’s monopoly fare. JetBlue’s projected savings is multiplied by 58,400 onboard passengers (See B6 Application at page 13).

Source: Carrier Proposals.

Southwest DCA-MCI Service Will Save Passengers 

$900,000 More than JetBlue’s Proposal Annually

/1 /2

$4.4 Million

Exhibit WN-R-109
JetBlue Charges Many Fees that Southwest Does Not

$0 $0 $0 $0 $0

$40

$75

$150

$0

$20

$40

$60

$80

$100

$120

$140

$160

Fees

Source: Carrier websites and JetBlue Application, page 8, footnote 14.

Exhibit WN-R-110

Southwest JetBlue Southwest JetBlue Southwest JetBlue Southwest JetBlue

1st Checked Bag 2nd Checked Bag Cancel/Change Fee

More than 60 Days

Cancel/Change Fee

Within 60 Days

Up to
Southwest Saves Domestic Passengers Over $6 Billion Annually – 3.5 Times 

As Much As JetBlue and 1.4 Times All Other LCCs Combined

$6.0

$1.7

$0.5

$0.2

$1.1 $0.9

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

Southwest/AirTran JetBlue Frontier Virgin America Spirit Allegiant

Annual Aggregate Fare Benefit 

of Low Cost Carriers (Billions)

Note: Benefit numbers are derived by multiplying the O&D passengers by the fare savings from each carrier derived from a corrected Swelbar/MIT econometric model. Passengers in markets 

served by multiple low cost carriers are allocated based on the carriers’ share of all LCC O&D passengers in those markets. 

Source: U.S. DOT, Origin-Destination Passenger Survey, via Diio, YE Q2 2013.

Exhibit WN-R-111
0.0¢

2.0¢

4.0¢

6.0¢

8.0¢

10.0¢

12.0¢

14.0¢

16.0¢

18.0¢

20.0¢

Southwest DCA-MCI JetBlue's DCA-JAX Proposal

Yield (cent per RPM)

15.5¢

(737-700) (E190)

+12%

Source: Carrier Proposals.

JetBlue’s Proposed Fare per Mile (Yield) is 12% 

Higher than Southwest’s Current DCA-MCI Yield

17.4¢

Fare $147 $110

Nonstop Miles 950 634

Exhibit WN-R-112
Percentage 

Change in WN

Newark Markets

-25%

-17%

-12% -11%

-7%

10%

-26%

-40%

-20%

0%

20%

40%

60%

80%

BWI STL PHX DEN Chicago Houston

+331% +76%

+42%

+37%

+25%

+32%

+0%

Year-Over -Year Market Fare Change

Year-Over -Year O&D Passenger Change

Change in Annual

O&D Passengers: +18,041 +82,705 +117,906 +117,755 +219,673 +92,163 

Includes Fared passengers only and excludes all taxes and fees. For Chicago and St. Louis the before period is YE Q1 2011 and the after period is YE Q1 2012. All other markets 

use YE Q1 2011 as the before period and YE Q2 2012 as the after period. 

Source: DOT, Origin-Destination Passenger Survey., via Diio LLC.

While Other EWR Domestic Fares Increased, Fares in 

Southwest Markets Declined by 13% and Passengers Increased by 36%

EWR Market

All Other 

Domestic

EWR Markets

O&D Passengers

Ave. Fare

+36%

-13%

Wtd. Ave. Change

Exhibit WN-R-113
Percentage 

Change in WN

LaGuardia Markets

-22%

-17% -15%

-40% -37%

-20%

0%

20%

40%

60%

80%

BWI Chicago DEN STL

+192%

+37%

+27%

+35%

Year-Over -Year Market Fare Change

Year-Over -Year O&D Passenger Change

Change in Annual

O&D Passengers: +50,968 +509,210 +175,569 +77,890 

Includes Fared passengers only and excludes all taxes and fees. Includes all markets where data for a full year of nonstop service is available. 

Source: DOT, Origin-Destination Passenger Survey., via Diio LLC.

Fares in Southwest’s LGA Markets Declined by 

20% and Passengers Increased by 37% After Southwest Entered

LGA Market

O&D Passengers

Ave. Fare

+37%

-20%

Wtd. Ave. Change

Before Period: YE Q2 2009 YE Q2 2009 YE Q1 2012 YE Q2 2012 

After Period: YE Q2 2010 YE Q2 2010 YE Q2 2013 YE Q2 2013

Exhibit WN-R-114
-44%

-25%

-35%

-63% -80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

BNA BWI Houston Chicago

Percentage 

Change in WN

GSP Markets +808% +1,006% +232%

+152%

Year-Over -Year Market Fare Change

Year-Over -Year O&D Passenger Change

Change in Annual

O&D Passengers: +26,661 +68,328 +39,083 +78,225 

Includes Fared passengers only and excludes all taxes and fees. Includes all markets initially started by Southwest at GSP. The before period is CY 2010 and the after period is YE Q1 2012.

Source: DOT, Origin-Destination Passenger Survey., via Diio LLC.

GSP Market

O&D Passengers

Ave. Fare

+309%

-38%

Wtd. Ave. Change

Fares in Southwest’s Greenville-Spartanburg Markets Declined by 

38% and Passengers Increased by 309% After Southwest Entered

Exhibit WN-R-115
-33%

-13% -19%

-55%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

BNA BWI Houston Chicago

Percentage 

Change in WN

CHS Markets +308% +308%

+100%

+56%

Year-Over -Year Market Fare Change

Year-Over -Year O&D Passenger Change

Change in Annual

O&D Passengers: +40,268 +99,481 +21,993 +68,517 

Includes Fared passengers only and excludes all taxes and fees. Includes all markets initially started by Southwest at CHS. The before period is CY 2010 and the after period is YE Q1 2012.

Source: DOT, Origin-Destination Passenger Survey., via Diio LLC.

CHS Market

O&D Passengers

Ave. Fare

+150%

-29%

Wtd. Ave. Change

Fares in Southwest’s Charleston Markets Declined by 

29% and Passengers Increased by 150% After Southwest Entered

Exhibit WN-R-116
0

100

200

300

400

500

600

New American Slots Post Divestiture Southwest Slots Post Divestiture Including MCI

DCA Slots Operated

504

DCA Slot Share: 58% 10%

5.7x

Source: Slot Reports, announced divestitures and Innovata Schedule Data March 2014.

American Controls 58% of DCA Slots –

Almost Six Times Southwest’s Total 

88

Exhibit WN-R-201
American Wastes Enormous DCA Operating Capacity

And the Trend Has Worsened Significantly In Recent Years

92 89

83 79 79

92 92 91 87 86 87 86 84

79 77

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US Seats 

per Departure

US Airways flights.

Source: Innovata Schedules for mid-March Mondays, 2000-2014

Down 11%

Since 2010

US 

RJ or Commuter

Percent

Of Departures 

43% 44% 52% 58% 58% 52% 55% 56% 59% 65% 63% 63% 73%

Southwest B737-700 Aircraft Capacity-143 Seats

65% 73%

Exhibit WN-R-202
American’s Average Aircraft Size at DCA is Lower than

the Average at Any Other Domestic Hub

Average Aircraft Size for

Domestic Flights (Seats)

78 83 83 84 87 89 91 94 99 100 103 104 104 107 108 111 115

124 129 132 132

142

77

0

20

40

60

80

100

120

140

160

US-DCA

UA-IAD

UA-ORDAA-ORD

US-PHL

UA-IAH

UA-DEN

DL-LGA

DL-DTW

UA-EWR

DL-SLCUS-CLT

DL-MSP

UA-LAX

UA-SFO

AA-DFW

DL-JFK

AA-LAX

US-PHX

AA-MIA

DL-LAX

DL-ATL

WN/FL Average

US Airways flights. 

Source: Innovata Schedule Data, March 2014.

Exhibit WN-R-203
16

146

294

50

344

130

0

50

100

150

200

250

300

350

400

US Airways American Total American/US Airways

Commuter Slots

DCA Flights with Commuter Aircraft

(Aircraft with 76 seats of fewer)

AA Underutilizes Air Carrier Slots by 

Flying Small Commuter Aircraft

DCA Commuter Slots/Flights 

for US/AA

Note: Commuter slots are restricted to operations with aircraft with 76 seats or less.

Source: FAA slot reports and Innovata Schedule Data, March 2014. 

Exhibit WN-R-204
Local

62%

Connecting/

Thru

38%

Mainline/Large Aircraft Only

RJ/Commuter Aircraft Only

Both Aircraft 

The AA “Hub” at DCA Wastes 

Valuable Slots on Connecting Passengers

AA/US Airways’ DCA Network

Distribution of US Airways’ 

DCA Onboard Passengers/1

1/ US Airways data from U.S. DOT, T-100 and O&D data, via Diio, YE Q3 2013.

Source: Innovata Schedules for September 2014.

DCA DCA

Exhibit WN-R-205
American Could Easily Fund ISP Service With Slots

From One of Many Markets Where it is Slot-Sitting

Note: Markets highlighted in red are FAA large or medium hubs based on CY 2012 enplanements.

Source: Innovata Schedule Data for Monday September 8, 2014.

Daily AA/US 

Roundtrip

Total 

AA/US

Daily % Average Aircraft

Markets Regional Jet Flights Roundtrips RJ Size

Philadelphia 8 9 89% 60

Raleigh/Durham 7 7 100% 66

Columbus 7 7 100% 63

Indianapolis 7 7 100% 69

New York Kennedy 6 6 100% 51

Nashville 6 6 100% 60

Hartford 6 7 86% 71

Providence 5 6 83% 76

Pittsburgh 5 5 100% 64

Charleston 5 5 100% 60

St. Louis 5 5 100% 64

New Orleans 5 5 100% 76

Jacksonville 5 5 100% 72

Huntsville 4 4 100% 60

Portland 4 4 100% 73

Norfolk 4 4 100% 48

Dayton 4 4 100% 50

Westchester County 4 4 100% 48

Syracuse 4 4 100% 60

Total/Average 101 104 97% 63

DCA Markets with at Least 4 Daily AA/US Regional Jet Roundtrips

Exhibit WN-R-206
The DCA-MCI Market is Over Six Times 

As Large As the DCA-ISP Market

189,420

29,685

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

MCI ISP

DCA O&D

Passengers 

(YE Q3 2013)

Source: Innovata Schedule data for March 12, 2014; U.S. DOT Origin-Passenger Survey, YE Q3 2013, via Diio.

6.3x

Exhibit WN-R-207
Over Half of American’s DCA-ISP Passengers Flow Beyond DCA 

Passengers 

Flowing Over 

DCA

53%

DCA Local 

Passengers

47%

Distribution of US DCA-ISP 

Onboard Passengers

Source: U.S. DOT O&D Survey Data, and T-100 Data, YE Q3 2013, via Diio.

There is no valid justification for wasting 

valuable DCA slots on non-Local passengers

Exhibit WN-R-208
0

20,000

40,000

60,000

80,000

100,000

120,000

Southwest DCA-MCI AA's DCA-ISP Proposal

Annual One-Way Seats

104,390

36,500

(737-700) (CRJ-200)

+67,890

Source: Carrier Proposals.

Southwest Would Provide 186% More Seats Per Departure and 

67,000 More Annual Seats than American’s Proposed Service

Exhibit WN-R-209

0

20

40

60

80

100

120

140

160

Southwest DCA-MCI AA's DCA-ISP Proposal

(737-700) (CRJ-200)

Average Seats per DCA Departure

143

50

+186%

+93Seats
0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Southwest DCA-MCI AA's DCA-ISP Proposal Total Onboard AA's DCA-ISP Local Passengers

Annual One-Way Passengers

88,732

13,896

(737-700) (CRJ-200)

+59,167

+200%

1/ 143 seats x 365 days x 2 directions x 85% load factor. The 85% load factor is the actual load factor for the most recent week available (See WN Application Exhibit WN-3)

2/ 50 seats x 365 days x 81% (From page 3 of American’s Application). 

3/ Predicted onboard passengers x US’ local share of total (47%) in the DCA-ISP market for YE Q3 2013.

Source: Carrier Proposals.

Southwest Will Carry Over 74,000 More Local DCA 

Passengers than American

/1 /2

(CRJ-200)

/3

29,565

+74,836

+538%

Exhibit WN-R-210
Proposed WN DCA-MCI

WN Direct DCA-OAK

Proposed US DCA-ISP

Potential Connections

DCA DCA

ISP ISP ISP

OAK OAK OAK

DCA DCA

MCI MCI

LAS LAS LAS LAS

LAX LAX LAX LAX

SAN SAN SAN SAN

DEN DEN DEN DEN

PHX PHX PHX PHX

ABQ ABQ ABQ

PDX PDX PDX PDX

SEA SEA SEA SEA

O&D Passengers

(YE Q3 2013)

MCI 189,420

OAK 35,998

Local Plus Direct 225,417

Connecting 1,581,866

Total Passenger Pool 1,807,283

Southwest’s Proposal Would Serve a DCA Passenger 

Pool of Over 1.8 Million Compared to 29,685 for American

O&D Passengers

(YE Q3 2013)

ISP 29,685

Beyond ISP 0

Total 29,685

Exhibit WN-R-211

Source: Carrier applications and Innovata Schedule data. Eliminates circuitous routings.
The DCA-MCI Market is 26% Larger than 

DCA-PBI and 757% Larger than DCA-MYR

189,420

150,213

22,095

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

MCI PBI MYR

DCA O&D

Passengers 

(YE Q3 2013)

Source: Innovata Schedule data for March 12, 2014; U.S. DOT Origin-Passenger Survey, YE Q3 2013, via Diio.

+26%

+757%

Exhibit WN-R-301