63702 Federal Register / Vol. 76, No. 198 / Thursday, October 13, 2011 / Notices 

1Operating Limitations at New York LaGuardia 

Airport, 71 FR 77,854 (Dec. 27, 2006); 72 FR 63,224 

(Nov. 8, 2007) (transfer, minimum usage, and 

withdrawal amendments); 72 FR 48,428 (Aug. 19, 

2008) (reducing the reservations available for 

unscheduled operations); 74 FR 845 (Jan. 8, 2009) 

(extending the expiration date through Oct. 24, 

2009); 74 FR 2,646 (Jan. 15, 2009) (reducing the 

peak-hour cap on scheduled operations to 71); 74 

FR 51,653 (Oct. 7, 2009) (extending the expiration 

date through Oct. 29, 2011); 76 FR 18,616 (Apr. 4, 

mailing address is U.S. Department of 

State, SA–5, L/PD, Fifth Floor (Suite 

5H03), Washington, DC 20522–0505. 

Dated: October 7, 2011. 

J. Adam Ereli, 

Principal Deputy Assistant Secretary, Bureau 

of Educational and Cultural Affairs, 

Department of State. 

[FR Doc. 2011–26518 Filed 10–12–11; 8:45 am] 

BILLING CODE 4710–05–P 

DEPARTMENT OF STATE 

[Public Notice: 7645] 

Culturally Significant Objects Imported 

for Exhibition Determinations: 

‘‘Aphrodite and the Gods of Love’’ 

SUMMARY: Notice is hereby given of the 

following determinations: Pursuant to 

the authority vested in me by the Act of 

October 19, 1965 (79 Stat. 985; 22 U.S.C. 

2459), Executive Order 12047 of March 

27, 1978, the Foreign Affairs Reform and 

Restructuring Act of 1998 (112 Stat. 

2681, et seq.; 22 U.S.C. 6501 note, et 

seq.), Delegation of Authority No. 234 of 

October 1, 1999, Delegation of Authority 

No. 236–3 of August 28, 2000 (and, as 

appropriate, Delegation of Authority No. 

257 of April 15, 2003), I hereby 

determine that the objects to be 

included in the exhibition ‘‘Aphrodite 

and the Gods of Love,’’ imported from 

abroad for temporary exhibition within 

the United States, are of cultural 

significance. The objects are imported 

pursuant to loan agreements with the 

foreign owners or custodians. I also 

determine that the exhibition or display 

of the exhibit objects at the Museum of 

Fine Arts, Boston, MA, from on or about 

October 26, 2011, until on or about 

February 20, 2012; at the J. Paul Getty 

Museum at the Getty Villa, Pacific 

Palisades, CA, from on or about March 

28, 2012, until on or about July 9, 2012; 

at the San Antonio Museum of Art, San 

Antonio, TX, from on or about 

September 15, 2012, until on or about 

February 17, 2013, and at possible 

additional exhibitions or venues yet to 

be determined, is in the national 

interest. I have ordered that Public 

Notice of these Determinations be 

published in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: For 

further information, including a list of 

the exhibit objects, contact Julie 

Simpson, Attorney-Adviser, Office of 

the Legal Adviser, U.S. Department of 

State (telephone: 202–632–6467). The 

mailing address is U.S. Department of 

State, SA–5, L/PD, Fifth Floor (Suite 

5H03), Washington, DC 20522–0505. 

Dated: October 6, 2011. 

J. Adam Ereli, 

Principal Deputy Assistant Secretary, Bureau 

of Educational and Cultural Affairs, 

Department of State. 

[FR Doc. 2011–26519 Filed 10–11–11; 8:45 am] 

BILLING CODE 4710–05–P 

DEPARTMENT OF STATE 

[Public Notice: 7643] 

In the Matter of the Designation of 

Conspiracy of Fire Nuclei, aka 

Conspiracy of the Nuclei of Fire, aka 

Conspiracy of Cells of Fire, aka 

Synomosia of Pyrinon Tis Fotias, aka 

Thessaloniki-Athens Fire Nuclei 

Conspiracy, as a Specially Designated 

Global Terrorist Pursuant to Section 

1(b) of Executive Order 13224, as 

Amended 

Acting under the authority of and in 

accordance with section 1(b) of 

Executive Order 13224 of September 23, 

2001, as amended by Executive Order 

13268 of July 2, 2002, and Executive 

Order 13284 of January 23, 2003, I 

hereby determine that the organization 

known as Conspiracy of Fire Nuclei, 

also known as Conspiracy of the Nuclei 

of Fire, also known as Conspiracy of 

Cells of Fire, also known as Synomosia 

of Pyrinon Tis Fotias, also known as 

Thessaloniki-Athens Fire Nuclei 

Conspiracy, has committed, or poses a 

significant risk of committing, acts of 

terrorism that threaten the security of 

U.S. nationals or the national security, 

foreign policy, or economy of the United 

States. 

Consistent with the determination in 

section 10 of Executive Order 13224 that 

‘‘prior notice to persons determined to 

be subject to the Order who might have 

a constitutional presence in the United 

States would render ineffectual the 

blocking and other measures authorized 

in the Order because of the ability to 

transfer funds instantaneously,’’ I 

determine that no prior notice needs to 

be provided to any person subject to this 

determination who might have a 

constitutional presence in the United 

States, because to do so would render 

ineffectual the measures authorized in 

the Order. 

This notice shall be published in the 

Federal Register. 

Dated: September 28, 2011. 

Hillary Rodham Clinton, 

Secretary of State. 

[FR Doc. 2011–26367 Filed 10–12–11; 8:45 am] 

BILLING CODE 4710–10–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

[Docket No. FAA–2010–0109] 

Petition for Waiver of the Terms of the 

Order Limiting Scheduled Operations 

at LaGuardia Airport 

ACTION: Notice of grant of petition with 

conditions. 

SUMMARY: The Secretary and the Federal 

Aviation Administration (FAA) are 

granting the joint waiver request of 

Delta Air Lines, Inc. (Delta) and US 

Airways, Inc. (US Airways) (together, 

the Joint Applicants or the carriers) from 

the prohibition on purchasing operating 

authorizations (slots) at LaGuardia 

Airport (LGA). The waiver permits the 

carriers to consummate a transaction in 

which US Airways would transfer to 

Delta 132 slot pairs (265 slots) at LGA. 

In exchange, Delta would transfer to US 

Airways 42 slot pairs (84 slots) at 

Ronald Reagan Washington National 

Airport (DCA), convey route authority to 

operate certain flights to Sa ̃o Paulo, 

Brazil, and make a cash payment to US 

Airways. The waiver is subject to a 

number of conditions, including that the 

carriers dispose of 16 slots at DCA and 

32 slots at LGA to eligible new entrant 

and limited incumbent carriers, 

pursuant to procedures set out in this 

Notice, and achieve a mutually 

satisfactory agreement regarding gates 

and associated facilities with any such 

purchaser. 

DATES: The waiver is effective October 

13, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Rebecca MacPherson, Assistant Chief 

Counsel for Regulations, by telephone at 

(202) 267–3073 or by electronic mail at 

rebecca.macpherson@faa.gov. 

SUPPLEMENTARY INFORMATION: 

The Proposed Transaction and the 

Waiver Request 

The FAA limits the number of 

scheduled and unscheduled operations 

during peak hours at LGA pursuant to 

an Order that was originally published 

in December 2006 and that has been 

extended several times since (the 

Order).1 The Order allocates operating 


sroberts on DSK5SPTVN1PROD with NOTICES
Federal Register / Vol. 76, No. 198 / Thursday, October 13, 2011 / Notices 63703 

2011) (extending the expiration date until the 

effective date of the final Congestion Management 

Rule for LaGuardia Airport, John F. Kennedy 

International Airport, and Newark Liberty 

International Airport, but not later than Oct. 26, 

2013). 

2As previously noted, the Order expires upon the 

effective date of the final Congestion Management 

Rule at LaGuardia Airport, John F. Kennedy 

International Airport, and Newark Liberty 

International Airport, but not later than October 26, 

2013. 

3 14 CFR part 93, subparts K and S. 

4 76 FR 45313. 

5 76 FR at 45315. 

6We proposed an exception from the subsidiaries 

rule for Frontier Airlines, which while whollyowned by Republic has a discretely different lowcost carrier business plan, and whose operations 

were confirmed to be consistent with LCC yields. 

76 FR at 45328. 

authorizations (commonly known as 

slots) to carriers and establishes rules 

for the use and operation of slots. The 

Order allows temporary leases and 

trades of slots between carriers, 

provided that they do not extend 

beyond the duration of the Order.2 Most 

importantly for purposes of this waiver 

request, the Order does not permit the 

purchase and sale of slots at LGA. The 

only way for a carrier to sell or purchase 

a slot at LGA is through a waiver of the 

Order. 

A different legal regime governing 

slots exists at DCA. The High Density 

Rule (HDR) 3 limits scheduled and 

unscheduled operations there. The HDR 

permits carriers to sell or purchase slots 

at DCA freely with only FAA 

confirmation of the transaction. 

On May 23, 2011, the Joint Applicants 

submitted a joint request for a limited 

waiver from the prohibition on 

purchasing slots at LGA. The carriers 

requested the waiver to allow them to 

consummate a transaction in which US 

Airways would transfer to Delta 132 slot 

pairs (265 slots) at LGA, and Delta 

would transfer to US Airways 42 pairs 

(84 slots) at DCA, together with route 

authority to operate certain flights to 

Sa ̃o Paulo, Brazil, and make a cash 

payment to US Airways. 

FAA’s Tentative Determination 

On July 21, 2011 the FAA issued a 

Notice of petition for waiver and 

solicited comments on the proposed 

grant of the petition with conditions, 

through August 29 in this Docket. 76 FR 

45,313 (July 28, 2011). In that notice, we 

tentatively approved the proposed 

transaction subject to certain conditions 

(July 2011 Notice).4 At that time, we 

tentatively found that the proposed 

transaction offered important benefits to 

the public. At the same time, we were 

concerned that the proposed transaction 

could have an adverse impact on 

competition because of the reduction in 

competition between the two carriers 

and their increased market share at the 

two airports, among other factors.5 We 

evaluated the public interest in this 

transaction, examining both the benefits 

that were likely to be attained and the 

possible adverse consequences that 

could result from the proposed 

transaction, and tentatively concluded 

that the waiver should be granted with 

certain conditions. 

To mitigate the competitive harms 

that may accrue from the transaction, 

we proposed conditions that included 

the divestiture of 32 slots at LGA (16 

arrival and 16 departure) and 16 slots at 

DCA, by a blind, cash-only sale through 

an FAA-managed Web site, to limited 

incumbent and new entrant carriers 

having fewer than five percent of the 

total slot holdings at DCA and LGA 

respectively, and that do not code share 

to or from DCA or LGA with any carrier 

that has five percent or more slot 

holdings. We also proposed that carriers 

eligible to purchase the divested slots 

not be subsidiaries, either partially or 

wholly owned, of a company whose 

combined slot holdings are equal to or 

greater than five percent at DCA or LGA 

respectively.6

We proposed that the carriers notify 

the FAA as to whether they intend to 

proceed with the transaction and, if they 

do, that they provide certain 

information regarding the slots to be 

divested. We also proposed that the 

FAA would post a notice of the 

available slot bundles on a Web site and 

provide for eligible carriers to register to 

purchase the slot bundles. The FAA 

would assign each registered bidder a 

random number, so no information 

identifying the bidder would be 

available to the seller or public. A 

bidder would be allowed to indicate its 

preference ranking for each slot bundle 

as part of its offer. The FAA would 

specify a bid closing date and time. All 

offers to purchase slot bundles would be 

sent to the FAA electronically; offers 

would have to include the prospective 

purchaser’s assigned number, the 

monetary amount, and the preference 

ranking for that slot bundle. The FAA 

would review the offers for each bundle 

and would post all offers on the Web 

site as soon as practicable after they are 

received. Each purchaser would be able 

to submit multiple offers until the 

closing date and time. 

Additionally, to allow the new entrant 

and limited incumbent carriers 

purchasing the divested slots to 

establish competitive service, we 

proposed to prohibit both Delta and US 

Airways from operating any of the 

newly acquired slots during the first 90 

days after the closing date of the sale of 

the divested slots and from operating 

more than 50 percent of the total 

number of slots included in the Joint 

Applicants’ Agreement between the 91st 

and the 210th day following the close 

date of the sale of the divested slots, 

after which time the transferee would be 

free to operate the remainder of the 

slots. 

To enable purchasing carriers to 

achieve a critical mass of slots, we also 

proposed to package the slots into 

bundles of 8 slot pairs. (Thus, there 

would be two slot bundles at LaGuardia 

of 8 pairs each, and one slot bundle at 

Reagan National consisting of 8 pairs.) 

An eligible carrier may, under our 

proposal, purchase only one slot bundle 

at each airport (while indicating 

preference ranking for each slot bundle 

as part of its offer). However, should one 

carrier make the highest bid on both 

bundles at LaGuardia, we proposed that 

the seller would have the option of 

accepting both high bids, thus 

overriding the one bundle per carrier 

proposal. 

We further proposed that the slots 

purchased in the auction would be 

subject to the same minimum usage 

requirements as provided in the LGA 

Order and HDR, that is, 80% over a twomonth reporting period. The minimum 

usage would be waived, however, for six 

months following purchase to allow the 

purchaser to begin service in new 

markets or add service to existing 

markets. Additionally, we proposed that 

the purchaser may lease the acquired 

slots to the seller until the purchaser is 

ready to initiate service to maximize 

operations at the airports. However, we 

would require that the slots not be sold 

or leased to other carriers during the 12 

months following purchase because the 

purchaser must hold and use the 

acquired slots. 

The July 2011 Notice invited 

interested parties to submit their 

comments by August 29, 2011. The 

comments we received are summarized 

in the Appendix. We grant all motions 

for leave to file late comments, and all 

comments to date were accepted into 

the docket. 

2009 Proposed Transaction and Waiver 

Request 

This petition for waiver follows a 

prior joint waiver request by the same 

Joint Applicants. 

On August 24, 2009, US Airways and 

Delta requested a waiver of the Order to 

allow a similar transaction to proceed. 

We responded to that petition in a 


sroberts on DSK5SPTVN1PROD with NOTICES
63704 Federal Register / Vol. 76, No. 198 / Thursday, October 13, 2011 / Notices 

7Notice of a Petition for Waiver of the Terms of 

the Order Limiting Scheduled Operations at 

LaGuardia, 75 FR 7306 (Feb. 18, 2010). 

8Notice on Petition for Waiver of the Terms of the 

Order Limiting Scheduled Operations at LaGuardia 

Airport, 75 FR 26,322 (May 11, 2010). 

9 Delta Air Lines and US Airways v. FAA and U.S. 

Dep’t of Trans., Case #10–1153 (D.C. Cir. filed Jul. 

2, 2010). On May 25, 2011, the U.S. Court of 

Appeals dismissed this suit by mutual agreement of 

the parties. 

10Petition for Waiver of the Terms of the Order 

Limiting Scheduled Operations at LaGuardia 

Airport, 75 FR at 7307; 75 FR at 26,324–25; 76 FR 

at 45,313–14. The Order was issued under the 

FAA’s authority to ‘‘develop plans and policy for 

the use of the navigable airspace and assign by 

regulation or order the use of the airspace necessary 

to ensure the safety of aircraft and the efficient use 

of airspace.’’ 49 U.S.C. 40103(b)(1). 

11See South Dakota v. Dole, 483 U.S. 203, 208 

(1987) (‘‘The Federal Government may establish 

and impose reasonable conditions relevant to 

Federal interest * * * and to the over-all objectives 

thereto’’); N.Y. Cent. Sec. Corp. v. United States, 

287 U.S. 12 (1932) (upholding Interstate Commerce 

Commission order approving the acquisition of the 

‘‘Big Four’’ railroad companies by N.Y. Central 

upon the condition that it also acquire short line 

railroads on certain terms). 

12Neither the Joint Applicants nor other carriers 

arguing against the waiver conditions cite any cases 

prohibiting the Secretary or Administrator from 

considering pro-competitive objectives as being in 

the public interest. 

February 2010 Notice,7 in which we 

tentatively found that the transaction 

should not proceed unless the Joint 

Applicants made more slots available 

for new entrants. Based on our analysis 

of competitive factors present at that 

time, we proposed to approve the 

transaction subject to the Joint 

Applicants disposing of 20 slot pairs (40 

slots) at LGA and 14 pairs (28 slots) at 

DCA. Extensive comments were 

received, including from the Joint 

Applicants. After review of the 

comments, we granted the waiver 

request in a Notice dated May 11, 2010 

(May 2010 Notice), subject to the 

conditions set forth in the February 

2010 Notice.8 Delta and US Airways did 

not choose to go forward with the 

transaction subject to our proposed 

conditions, but instead appealed our 

decision to the U.S. Court of Appeals for 

the D.C. Circuit.9

2011 Proposed Transaction 

The transaction as now proposed by 

the carriers is structurally similar to the 

transaction proposed in 2009. The 

carriers have presented the Department 

with an analysis of the benefits they 

assert will accrue from the transaction, 

and claimed that changes in the 

economy and structure of the aviation 

industry at DCA and LGA since 2010 

have dramatically reduced the economic 

harms that we viewed as potential 

adverse consequences of the original 

transaction. 

Among those changes are the market 

penetration of low-cost carriers (LCCs) 

at both DCA and LGA. The carriers state 

that JetBlue, AirTran, and Frontier have 

increased the number of LCC slots at 

DCA by 46, thereby increasing the LCC 

slots at that airport from 3.3% to 8.6%, 

exceeding the 6.5% share that would 

have been obtained under the 

divestiture terms of our May 2010 

Notice. At LGA, the carriers point out 

that Frontier, AirTran, and Southwest 

recently acquired slots, for a net 

increase of 18 LCC slots, increasing the 

LCC slot share from 6.8% to 8.5%, 

closer to the 10.3% LCC slot share 

sought in our May 2010 Notice. The 

carriers also state that the Southwest/ 

AirTran merger will intensify 

competition in these markets. 

Furthermore, the carriers assert that 

the recent United/Continental merger 

enhanced United’s competitive profile 

at both Newark Liberty International 

Airport (EWR) and Washington Dulles 

International Airport, as well as at LGA 

and DCA. Delta also states that this 

transaction will allow it to establish a 

hub at LGA and address the competitive 

advantage secured by American 

Airlines/British Airways through their 

antitrust immunity alliance. 

Statutory Authority To Grant Waiver 

Subject to Slot Divestitures 

The Secretary and the Administrator 

have authority to grant the requested 

waiver of the LaGuardia Order, and to 

grant the waiver subject to certain 

conditions.10 The FAA is authorized to 

grant an exemption when the 

Administrator determines the 

‘‘exemption is in the public interest.’’ 49 

U.S.C. 40109. The Administrator may 

‘‘modify or revoke an assignment [of the 

use of airspace]’’ when required in the 

public interest. 49 U.S.C. 40103(b)(1). 

Courts have upheld the conditions an 

agency may place on its approval of a 

transaction to meet public interest 

standards.11

Our decision to subject the Joint 

Applicants’ waiver request to certain 

slot divestitures is consistent with, and 

carries out, the Department’s Section 

40101(a) pro-competitive public interest 

factors.12 It also complies with the 

FAA’s public interest goals and 

objectives. Congress did not preclude 

the FAA Administrator from 

considering the ‘‘public interest’’ to 

include factors beyond ‘‘safety,’’ 

‘‘national defense’’ and ‘‘security.’’ 

Rather, Congress expressly directed the 

FAA Administrator to consider those 

matters ‘‘among others.’’ Accordingly, as 

we articulated in our February 2010, 

May 2010, and July 2011 Notices, the 

FAA may validly consider, as being in 

the ‘‘public interest,’’ ‘‘other factors’’ 

including the fostering of competition in 

the context of the slot program. The 

‘‘public interest’’ includes policies 

furthering airline competition, as 

provided in 49 U.S.C. 40101(a)(4), (6), 

(9), (10), (12)–(13) and (d). These goals 

have been public policy since at least 

the time of adoption of the Airline 

Deregulation Act of 1978, Public Law 

95–504 (92 Stat. 1705), and they include 

(among others) maximizing reliance on 

competitive market forces; avoiding 

unreasonable industry concentration 

and excessive market domination; and 

encouraging entry into air transportation 

markets by new carriers. 

The Proposed Transaction Serves the 

Overall Public Interest, Although 

Divestitures Remain Necessary To 

Remedy Prospective Harms 

In the context of our public interest 

analysis here, we evaluate the 

prospective economic benefits of the 

transaction together with any potential 

resulting adverse economic 

consequences. We have not determined 

that no economic harm would result 

from the transaction, but rather that the 

adverse consequences that could 

otherwise result can be sufficiently 

mitigated such that overall benefits can 

be realized. 

As noted above, the Joint Applicants 

contend that approval of the slot swap 

would enable both carriers to more 

efficiently operate at the airports and 

permit more passengers and 

destinations to be served, thus creating 

tangible benefits to consumers. They 

argue that efficiencies will occur 

through upgauging of aircraft size at 

both LGA and DCA, thereby increasing 

throughput and competition while 

reducing congestion and delay. In 

addition, they contend that the facilities 

transfer will enable Delta to create a 

seamless hub at LGA, expand 

competition and capacity, and preserve 

and enhance small community access at 

both LGA and DCA. 

Most commenters did not object to the 

Joint Applicants’ overall transaction per 

se, and a number supported it as 

proposed by the carriers. For example, 

the New York Travel Advisory Bureau 

and a number of travel agents and 

corporate travel managers doing 

business in New York expressed 

support for the Joint Applicants’ waiver 

request, generally citing the potential for 

greater benefits to the economy of New 

York, the benefit of improvements 

proposed for the infrastructure at 

LaGuardia, and prospects for improved 

tourism and travel opportunities. 


sroberts on DSK5SPTVN1PROD with NOTICES
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13Comments of Southwest Airlines Co., FAA 

Docket 2010–0109 at pp. 13–14 and Exhibit WN– 

115. 

14 Id., at 4–8. 

15 75 FR at 26,324 (May 11, 2010). 

16 76 FR 45,315. 

17 75 FR 26,323. 

18See 75 FR 26,323, n. 11, and 76 FR 45,315– 

45,316. 

19See Comments of JetBlue, FAA Docket 2010– 

0109, Aug. 30, 2011 at 6. 

20See Comments of Southwest Airlines, FAA 

Docket 2010–0109 at p. 6. 

21See, e.g., Milwaukee Sentinel-Journal, 

‘‘JSOnline,’’ http./www.jsonline.com/business/ 

90750954.html, April 13, 2010. 

However, other comments, especially 

from other air carriers, point to the 

potential adverse competitive impacts of 

increased hub operations at DCA and 

LGA. In particular, Southwest Airlines 

Co., citing a report prepared for it by 

Campbell-Hill Aviation Group, LLC, 

argues that the transaction would permit 

Delta and US Airways to ‘‘squander 

public resources’’ by using their larger 

slot holdings to establish hubs at LGA 

and DCA that will be dependent on an 

even larger number of small regional 

aircraft feeder flights to establish and 

maintain hub operations.13 Southwest 

maintains that hub development at 

these slot-controlled airports would 

only reinforce the inefficient slot 

utilization already in place that could 

best be remedied by supporting 

divestitures to carriers that would 

efficiently operate slots with large 

aircraft to support and benefit local 

Washington and New York passengers. 

Moreover, Southwest contends that the 

consequences for the public of this 

proposed reallocation of markets would 

be higher fares, less competition, and 

fewer service options at both airports.14

While we acknowledge Southwest’s 

claims regarding potential inefficiencies 

resulting from hub development at slot 

controlled airports, we must consider 

both potential operating inefficiencies 

and expected network benefits typically 

resulting from hub development or 

expansion. The Joint Applicants claim 

that numerous benefits will accrue to 

consumers as a result of their 

transaction. Among the more 

compelling benefits that they articulate, 

we are most convinced by their 

arguments that development of a LGA 

hub will lead to enhanced service to 

small communities (even with the small 

aircraft that Southwest contends would 

be used) and improved competition 

versus other east coast hubs, including 

United’s Newark hub and US Airways’ 

hub in Philadelphia. 

In terms of preserving and enhancing 

small community access at LGA and 

DCA, the Dane County Regional Airport, 

serving Madison, WI, expresses support 

for the overall transaction, but 

maintains concern that the nonstop 

service from Madison to LGA and DCA, 

currently provided by Delta, could be 

discontinued if Delta were required to 

divest some of its slots to other carriers. 

In addition, a number of Virginia 

interests express concern about the 

overall transaction, focusing on the 

possibility of losing established nonstop 

Roanoke-LaGuardia service and other 

reductions in travel options at Virginia 

airports. Mayor Bowers of Roanoke, and 

various other businesses, educational 

institutions, and private citizens note 

that US Airways currently serves 

Roanoke from LaGuardia with three 

daily roundtrips, service that could be 

eliminated if the transaction were 

allowed to proceed. 

We agree that grant of the waiver will 

lead to some alterations in the Delta and 

US Airways service patterns and 

capacity per departure, or average 

throughput. However, the carriers have 

asserted that primary benefits of the 

transaction will include enhanced 

service to smaller communities on an 

overall basis. 

In evaluating the public interest in 

this waiver petition, we have carefully 

assessed the benefits and possible 

adverse consequences of the transaction, 

seeking a balanced and proportional 

approach to maintain or enhance access 

to small communities and to provide 

greater efficiencies for Delta and US 

Airways that they will in turn pass on 

to consumers. As we acknowledged in 

the Final Notice concerning the Joint 

Applicants’ initial proposal, the 

transaction does raise concerns as to 

levels of airport concentration, the 

number of monopoly or dominant 

markets in which increased pricing 

power can be exercised, and the 

potential for use of the transferred slots 

in an anticompetitive manner.15

However, as we believed then, the 

appropriate remedy for us to adopt is 

not to deny the petition but rather to 

require divestitures that address those 

concerns. We believe the transaction’s 

promised benefits for the public— 

particularly in light of the increased 

penetration of low cost carriers at the 

airports since the time of our last 

review—are sufficient for us to conclude 

that grant of the requested waiver with 

specified remedies is in the public 

interest. 

Adequacy of These Divestitures To 

Address the Transaction’s Prospective 

Harms 

The Department’s July 2011 Notice, 

proposing to grant Delta’s and US 

Airways’ renewed request for a waiver 

subject to the condition that, among 

other things, the carriers divest 16 slot 

pairs at LGA and 8 slot pairs at DCA, 

was premised on the view that 

circumstances had in fact changed at the 

affected airports since the time of our 

initial review.16 Several airlines in 

competition with the Joint Applicants 

argue that circumstances have not 

changed substantially enough to merit 

approval of the waiver request, and that, 

in any event, the Department was aware 

of these circumstances when it issued 

the July 2011 Notice. Believing the 

proposed slot remedy to be inadequate, 

some commenters—including 

Southwest, Jet Blue, Frontier, and Spirit, 

as well as ACAA—further urge us to 

require the divestiture of roughly 30% 

more slots, as we did under different 

circumstances in our initial review. 

In our initial review of the proposed 

2009 transaction, we concluded that the 

concern about anti-competitive effects 

was compounded by the fact that 

LCCs—which create the most 

competitive impact by their ability to 

dramatically lower fares and increase 

the volume of passengers in a market— 

had only a limited presence at the 

affected airports. The Department’s May 

2010 Notice, and the divestitures it 

would have required, were premised on 

data recited in the Notice finding that 

collectively, LCCs had only 3.3% of slot 

interest holdings at DCA and 6.8% at 

LGA.17 The Department was aware at 

that time of JetBlue’s transaction with 

American Airlines to acquire its first 

DCA slots,18 but JetBlue’s service was 

not initiated until November of 2010,19

six months after the Final Notice was 

issued. Our review and assessment of 

the needed number of divestitures was 

focused on actual, not planned, service, 

recognizing the fact that agreements can 

be modified and plans can change. 

Southwest also argued that DOT must 

have been ‘‘fully aware’’ at the time of 

the Final Notice of the ‘‘Republic to 

Frontier’’ transaction, involving 18 slots 

at DCA and 13 at LGA.20 However, the 

announcement was not made until midApril 2010 that Midwest Airlines 

(which had been acquired by Republic) 

would begin flying under the Republic 

name, with the Midwest brand being 

phased out in 2011.21 And, regardless of 

the announcement, it was uncertain at 

that time whether the Midwest 

operations assumed by Frontier would 

be marketed with yields consistent with 

LCC operations, so it would have been 

premature to then count Frontier’s new 

slots as representing LCC slot increases. 

The third major change in 

circumstances was the AirTranVerDate Mar<15>2010 16:50 Oct 12, 2011 Jkt 226001 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 E:\FR\FM\13OCN1.SGM 13OCN1

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22Southwest argued as well that a few smaller 

transactions affecting LCC presence at Reagan 

National or LaGuardia had occurred prior to the 

May 4, 2010 Final Notice that the Department must 

have known about but did not raise until the July 

2011 Notice was issued in connection with the Joint 

Applicants’ revised proposal. The largest of these 

was a trade of slots between Continental and 

AirTran: AirTran operated the slots but Continental 

remained the holder. We generally looked at 

holdings in the Final Notice but subsequently 

refined our analysis to include operations as 

appropriate in the July 2011 Notice. In any event, 

the Department clearly specified in the Tables in 

the July 2011 Notice the distribution of slots 

actually considered in the May 2010 Notice and the 

origin for each change that was reported. See Table 

5 at 76 FR 45,323 and Table 6 at 76 FR 45,325. 

23See 76 FR 45323–45325. See also 76 FR 45327. 

Due to minor inconsistencies in rounding, the May 

11, 2010 Notice indicated that the pre-transaction 

LCC share at LGA was 6.8%, while the July 28, 

2011 Notice indicated a 6.9% share. 

24See 76 FR 45,327. 25See 76 FR 45,327. 

26Comments of Southwest Airlines Co., Docket 

2010–0109 at 4 (Aug. 29, 2011). 

27 Id., at 6. 

Southwest merger, which was not 

announced until the Fall of 2010, well 

after the May 2010 issuance of the Final 

Notice. Given the size of the transaction 

and its potential to introduce 

Southwest’s brand, passenger loyalty, 

and route network to a broader array of 

customers, this merger is an important 

changed circumstance that could not 

have been considered in May 2010 but 

must be considered now.22

In our subsequent review, the 

Department focused on actual LCC 

penetration and determined that the 

LCC shares at the affected airports had 

increased markedly. At DCA it had gone 

from a de minimis share of 3.3% to 

8.5%; at LGA it increased modestly 

from 6.9% to 8.2%.23 These changes in 

LCC holdings, notably the addition of a 

new competitor at DCA in JetBlue and 

the larger portfolio of a merged 

Southwest/AirTran, portend a gradual 

shift in the competitive dynamics. 

While the changed circumstances 

between our initial and subsequent 

reviews fall well short of addressing all 

concerns at the affected airports, they 

are significant and cannot be 

overlooked. The changes show that 

LCCs have gained a competitive beach 

head at DCA and LGA that is not likely 

to be reclaimed any time soon. 

Aside from the timing of the events, 

the Department also considered the 

magnitude of the changed 

circumstances. We supplied evidence to 

show that our reliance on LCC 

penetration to discipline fares justified 

a departure from the initial decision. 

For example, in the July 28, 2011 

Notice, we determined that average 

weighted yields, used as a proxy for 

fares, had decreased in the DCA–BOS 

market as a result of JetBlue’s entry in 

2010, and had continued to decrease in 

the LGA–IND market following 

AirTran’s entry in 2009.24 At DCA, we 

supplied data and analysis to show that 

fares across all markets had fallen.25 The 

commenters do not challenge these data. 

Their opposition to the remedy now 

being proposed focuses on the number 

of LCC holdings as a percentage of total 

holdings. However, we view the 

increasing levels of LCC penetration and 

the associated favorable effects on fares 

across a number of markets as more 

significant, and these important 

developments support our decision to 

allow the slot swap to proceed so long 

as there is an appropriate divestiture of 

slots auctioned in sufficient numbers to 

qualified new entrants or limited 

incumbents to mitigate the potential 

competitive harm resulting from the 

transaction. 

A number of commenters contend 

that we could do more to enhance 

competition at both these airports than 

we proposed last July, by requiring more 

slots to be divested. However, in the 

particular circumstances of this case, we 

believe it appropriate for us to proceed 

with a remedy that reallocates only the 

number of slots necessary to address the 

competitive harm caused by the 

transaction, while still preserving the 

benefits of the transaction. 

Our approach focuses on the 

incremental competitive change and the 

potentially strong effect of new entrant 

competition that is possible with a 

critical mass of slots. It does not address 

pre-existing conditions that affect 

competition at the airports and, in all 

likelihood, would continue to affect 

competition even if we required 30% 

more slots to be divested. Stated another 

way, our objective has not been to add 

as much new service by new entrants 

and limited incumbents as possible but 

rather to rely to the maximum extent on 

the introduction of a critical mass of 

new services, anticipating that those 

services will have an oversized effect on 

competition across a number of markets 

sufficient to address the potential 

competitive harm resulting from the 

transaction. The Department laid a 

foundation for this approach by 

emphasizing the effect of new entrant/ 

LCC services on prices across a number 

of markets. That foundation is not in 

dispute. Seen in this light, the final slot 

remedy need not necessarily be 

mathematically congruent with the 

increased LCC penetration, as 

commenters suggest. The remedy is 

proportional and effective to address the 

possible adverse consequences of the 

transaction, while still preserving its 

public benefits. 

Southwest asserts that the remedy 

must be larger because the transaction 

will ‘‘permanently lock out’’ low-fare 

competition.26 Southwest claims that it 

will be virtually impossible for LCCs to 

expand at these airports because 

already-scarce slots will become even 

less available, and after the transaction 

is consummated, Delta and US Airways 

will become the most logical high 

bidders for any slots that may come on 

the market.27 Southwest’s assertions do 

not take into account the full 

competitive landscape. While it is true 

that Delta and US Airways will 

significantly increase their presence at 

LGA and DCA, respectively, they will 

not be the only carriers with the 

resources to acquire new slots, which 

are still likely to become available over 

time, as they have thus far. Southwest 

and other carriers have cash on hand, as 

well as developed route networks and 

other assets that can be leveraged for 

greater access to LGA and DCA. 

In summary, we believe the approach 

taken in the July 28 Notice remains 

appropriate under the current 

circumstances, and is justified by recent 

changes in the competitive and 

operating environments at DCA and 

LGA. 

Carrier Eligibility for the Divested Slots 

Some commenters, including JetBlue 

and Virgin America, assert that we may 

not direct the Joint Applicants to divest 

certain DCA and LGA slots to new 

entrant and limited incumbent carriers 

having fewer than five percent of the 

total slot holdings at the respective 

airports, because the ‘‘below five 

percent’’ threshold is contrary to 

statutory definitions of limited 

incumbents or otherwise outside the 

scope of the FAA’s statutory authority. 

We disagree. As an initial matter, the 

FAA routinely imposes special 

conditions that must be met in order to 

either assure an equivalent level of 

safety (not an issue in this case) or to 

ensure that the public interest is met. 

Nothing in the Administrator’s authority 

to issue exemptions prevents the FAA 

from tailoring those conditions to the 

circumstances surrounding the 

exemption request. In the context of the 

July 2011 Notice, we used the term 

‘‘limited incumbent’’ in a generic sense 

to mean an airline with a limited, or 

small, presence at the airport. We 

intend, of course, to provide 

opportunities for competition and lowfare service at DCA and LGA by 

allowing such carriers, as well as new 

entrant airlines, to purchase divested 

slots. 


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28 49 U.S.C. 41714 (h) provides that the 

definitions set forth in that section, including the 

definition of ‘‘Limited incumbent carrier,’’ only 

apply ‘‘[i]n this section and sections 41715–41718 

and 41734(h) * * *.’’ 

29See, e.g., Gimeno, 20(2) ‘‘Reciprocal Threats in 

Multimarket Rivalry: Staking out ‘Spheres of 

Influence’ in the U.S. Airline Industry,’’ Strategic 

Management Journal 101 at 110. 

30 75 FR at 7310–11. 

31Comments of JetBlue Airways, FAA–2010– 

0109, at 19–22 (Aug. 29, 2011). 

32 76 FR 45,330, n. 40. 

33Comments of JetBlue at 13 (Aug. 29, 2011); 

Reply Comments of JetBlue at 3 (Sept. 13, 2011). 

34Comments of Virgin America at 11–12 (Aug.29, 

2011). 

We are not obliged to confine the 

category of air carriers eligible to 

purchase slots to those ‘‘limited 

incumbent air carriers’’ holding or 

operating ‘‘fewer than 20’’ slots or slot 

exemptions, as JetBlue suggests. Rather, 

that statutory definition of ‘‘limited 

incumbent’’ (49 U.S.C. 41714(h)(5)) 

applies only to specific circumstances 

not relevant here.28 The ‘‘limited 

incumbent’’ definition applies, for 

example, to the Secretary’s criteria for 

awarding within-perimeter slot 

exemptions at DCA. 49 U.S.C. 

41718(b)(1). The definition also applies 

to the FAA’s High Density Rule (HDR) 

protocols for withdrawing slots and 

distributing slots in a lottery at DCA. 14 

CFR 93.213(a)(5), 93.223(c)(3), 

93.225(h). Neither the statutory nor 

regulatory definitions of ‘‘limited 

incumbent’’ cabin the Department’s 

authority to promote the public interest. 

The Department has determined that 

fashioning a reasonable class of carriers 

that may purchase divested slots for 

purposes of providing competition at 

congested airports is an appropriate and 

proportionate remedy in these 

circumstances. 

Moreover, Congress’ directive to the 

Secretary to grant certain slot 

exemptions to new entrant or limited 

incumbent carriers at LGA and JFK 

expired upon the January 1, 2007 

statutory termination of the HDR at 

those airports. 49 U.S.C. 41716(b), 

41715(a)(2). The Department is under no 

statutory or regulatory directive to apply 

the ‘‘fewer than 20’’ threshold to 

determine the class of carriers eligible to 

purchase the divested slots in this 

proceeding. 

In the Department’s February 2010 

Notice, in connection with the Joint 

Applicant’s initial request, we proposed 

the use of a five percent threshold, 

because carriers having slot holdings 

above that point provide a minimum 

level of competitive service sufficient to 

affect pricing in the market.29

Restricting eligibility to new and 

smaller carriers below that threshold 

would help attract carriers that offered 

the prospect of increased efficiencies 

and innovations, as well as the ability 

to increase throughput at the airports, so 

long as they had a sufficient number of 

slots to establish sustainable patterns of 

service.30 Moreover, use of a 5% 

standard, rather than setting the 

threshold at a lower level, would 

enlarge the number of potential 

competitors for the divested slots, 

creating a more robust market for them 

and a greater likelihood that the 

awarded slots would be utilized in an 

efficient and effective manner. 

The ‘‘five percent rule’’ is the same as 

that adopted in the May 2010 Notice in 

which we granted the joint waiver 

request of the carriers conditioned on 

divesting certain LGA and DCA slots to 

eligible new entrant and limited 

incumbent carriers, which we defined 

as those: 

having fewer than five percent of total slot 

holdings at DCA and/or LGA, do not code 

share to or from DCA or LGA with any carrier 

that has five percent or more slot holdings, 

and are not subsidiaries, either partially or 

wholly owned, of a company whose 

combined slot interest holdings are equal to 

or greater than five percent at LGA and/or 

DCA. 

75 FR at 26,337. 

JetBlue also states that our definition 

of carriers eligible to purchase divested 

LGA slots unlawfully ignores a 

purported statutory mandate to make up 

to 20 LGA slot exemptions available to 

new entrants and limited incumbents.31

In making this argument, JetBlue claims 

that the ‘‘interim slot rules at New York 

airports,’’ enacted by Congress in the 

Wendell H. Ford Aviation Investment 

Reform Act of 2000 (AIR–21), entitled 

all new entrant and limited incumbent 

carriers to receive up to 20 LGA slot 

exemptions. 49 U.S.C. 41716(b). JetBlue 

suggests that the divestiture must first 

favor those carriers with less than 20 

slots before offering an opportunity for 

those with more than 20 slots to 

purchase the divested slots. 

AIR–21 expired at LGA along with the 

HDR. Any articulation of Congressional 

purpose in enacting AIR–21 simply no 

longer applies at LGA. Thus, we reject 

JetBlue’s argument for the reasons set 

forth above. In addition, JetBlue’s 

reading of Section 41716(b) is overly 

generous to the new entrant/limited 

incumbents. This provision did not 

entitle each applicant to 20 LGA slot 

exemptions, as JetBlue claims. Rather, it 

directed the Secretary, subject to 

procedures set out in Section 41714(i), 

to grant slot exemptions to new entrants 

or limited incumbents at LGA ‘‘if the 

number [ ] granted * * * does not 

exceed 20 * * *.’’ 49 U.S.C. 41716(b). 

In other words, it prohibited the 

Secretary from granting the LGA slot 

exemptions described in Section 

41716(a) to any carrier whose LGA slots 

and slot exemptions would total more 

than 20. 

JetBlue and Virgin America also 

comment on Frontier’s eligibility. Our 

July 2011 Notice tentatively found that 

Frontier, a carrier with limited holdings 

at DCA and LGA, would qualify as an 

eligible bidder for slots.32 We explained 

that it was appropriate for Frontier to 

bid even though it was wholly-owned 

by Republic, which holds more than 5% 

of slots at DCA. The Department noted 

that Frontier has a unique business plan 

and relationship in the Republic 

structure, and confirmed that its yields 

have remained consistent with those of 

LCCs. 

JetBlue and Virgin America contend 

that Frontier should not be eligible. 

JetBlue’s argument centered on the 

assertion that the Department must 

restrict bidding to carriers with 20 or 

fewer slots, and that Frontier is owned 

by a carrier whose slot holdings far 

exceed the ‘‘20 or fewer’’ threshold.33

The ‘‘20 or fewer’’ issue was addressed 

above. Virgin America also cites 

Frontier’s ownership as a concern, but 

suggests that it would be too difficult for 

the Department to monitor whether 

Frontier’s business plan was, in fact, 

delivering lower fares as intended.34

However, Frontier’s inclusion in the 

pool of eligible bidders is consistent 

with our objective of crafting a remedy 

to mitigate the loss of competition 

associated with the Delta/US Airways 

slot swap. Frontier operates as a 

separate business within the Republic 

corporate structure, with a low-cost 

carrier business plan and yields 

consistent with low-cost operations. 

Republic’s other slots are pledged for 

use on a long term basis by Republic’s 

other business, which operates regional 

aircraft on behalf of mainline carriers, 

and the slots are therefore not available 

to exert competitive discipline on 

incumbent carriers. Should Frontier be 

successful in bidding on the slots being 

divested here, the approval to operate 

them will be conditioned upon its 

maintaining a low-cost carrier business 

plan and operating the divested slots 

with yields consistent with LCC 

operations for the duration of the fiveyear minimum hold requirement. 

A final eligibility issue concerns 

Southwest Airlines and AirTran. In the 

July 2011 Notice, the Department 

recognized the merger of Southwest and 


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35 76 FR 45,316. 

36Comments of WestJet at 2, 9 (Aug. 29, 2011); 

Comments of Spirit at 14, n. 23 (Aug. 29, 2011). 

37Comments of Spirit Airlines, Inc., Docket No. 

2010–0109, at 5 (Aug. 29, 2011). 

38Comments of Southwest Airlines Co., Docket 

No. 2010–0109, App. at 15 (Aug. 29, 2011). 

AirTran,35 but Westjet and Spirit seek 

clarification of Southwest/AirTran’s 

status as potential bidders for divested 

slots.36 Southwest and AirTran are 

merging, and therefore have every 

incentive and—unlike Frontier—ability 

to combine their assets to exert 

competitive influence in the market. 

Southwest and AirTran thus will be 

required to bid as a single unit; they are 

eligible to do so because their combined 

holdings do not exceed 5% at either 

airport. 

Slot Bundles of Eight Pairs Will Best 

Promote Competitive Discipline at DCA 

and LGA 

In the Department’s earlier analysis, 

we expressed concern over increased 

levels of airport concentration, which 

together with (1) an increase in the 

number of monopoly or dominant 

markets in which increased pricing 

power could be exercised, (2) the 

prospect for higher fares in some 

markets, and (3) the potential for use of 

transferred slots in an anti-competitive 

manner, warranted conditioning 

approval on the carriers’ agreement to 

divest a number of slots. Given all of 

these concerns, we asserted that limited 

divestitures at both airports would lead 

to an injection of additional competition 

from other carriers, which may 

effectively mitigate these prospective 

harms. 

In our May 2010 Notice we said that 

an effective remedy must (1) provide a 

sufficient number of slots to allow other 

carriers to mount an effective 

competitive response, (2) define the 

pool of eligible carriers to include those 

with the greatest economic incentive to 

use the slots as intensively as possible 

and exert competitive discipline, and (3) 

ensure that the bundles of divested slots 

are suitable for a commercially viable 

service pattern and structured 

proportionate to the slots that are part 

of the slot swap. 

Working from these criteria, we 

proposed to bundle the slots in 8-pair 

units at each airport, meaning that there 

would be one bundle at DCA and two 

at LGA. In the May 2010 Notice, we 

expressed our tentative belief that this 

approach would maintain high 

competitive discipline levels and would 

be preferable to dividing the slots into 

smaller packages that could cause 

underutilizations or inefficiencies. 

In response, several carriers that 

would be designated as new entrants/ 

limited incumbents filed comments 

regarding slot bundles. Allegiant 

proposes smaller bundles to allow the 

largest number of carriers with different 

types of operations to participate. 

JetBlue argues that new LCC entry at 

DCA makes it no longer necessary for 

bundles of slots to be spread throughout 

the day. Instead, JetBlue states that 

eligible carriers should be able to bid on 

individual slot pairs to complement 

their existing schedules. Virgin America 

claims that the bundles are 

unnecessarily large and would likely 

increase market concentration and 

impair competition. Sun Country 

contends that it would be unable to 

utilize all of the slots in a given bundle 

and that the price for the large bundles 

would be prohibitive. West Jet proposes 

that smaller bundles would lead to 

increased participation by smaller LCCs. 

Spirit, in its most recent filing, seeks a 

free distribution of slots ‘‘into sets of 

usable pairs.’’ 37 Finally, Frontier states 

that it, along with every other LCC filing 

comments with the exception of 

Southwest, supports smaller bundles, 

maintaining that such a structure would 

expand the pool of LCCs and 

destinations gaining new or enhanced 

access to DCA and LGA and would 

reduce the relative concentration of slot 

holdings among just a few carriers. 

Southwest contends that packaging 

slots into large bundles for allocation 

would be the most effective competitive 

response to the larger Delta and US 

Airways positions at LGA and DCA, 

especially if the divested slots are 

concentrated in the hands of a single 

strong competitor at both airports. 

Southwest maintains that the 

Department should avoid trying to 

‘‘keep everyone happy’’ by placing 

arbitrary restrictions on the allocation 

process that will only result in slots 

being under-used or even forfeited by 

carriers operating insufficient 

frequencies and therefore unable to 

mount an effective response and 

provide meaningful price discipline to 

the strengthened Delta and US Airways. 

Southwest cites the Campbell-Hill 

report appended to its comments that 

‘‘splitting the slots arbitrarily among 

multiple carriers would only dilute the 

impact of the new service vis-a`-vis the 

incumbents and provide fewer 

competitive benefits to the public.’’ 38

Finally, Southwest concludes that 

dividing the small number of divested 

slots among several low-cost, low-fare 

carriers, as Frontier supports, would be 

counter-productive, as the modified 

bundles would generate only weak and 

diffuse competition, thus benefiting the 

Joint Applicants, and wasting a rare 

opportunity to inject strong and 

sustainable low-fare competition at 

airports that desperately need it. 

After reviewing the competing 

arguments, we have concluded that 

there is likely to be greater overall 

public benefit if the larger (i.e., 8 slot 

pair) bundles are retained. Under their 

proposal, Delta and US Airways are not 

committed to any particular markets for 

defined periods. Each carrier would be 

free to discontinue any of the proposed 

routes and initiate others. With that 

flexibility, they could choose to use 

their increased slot holdings to target 

carriers with more limited slot holdings, 

for example by increasing their 

roundtrips in competitive markets and 

‘‘sandwiching’’ competitor flights. A 

restructured remedy consisting of 

smaller bundles of slots to more carriers, 

as proposed by Spirit, JetBlue, Allegiant, 

WestJet and Virgin America could make 

certain new entrants highly vulnerable 

to such scheduling changes and 

frustrate the competitive responsiveness 

we are seeking. 

Under the approach we take by this 

Notice, the bulk of the benefits derived 

from the divestitures required as a 

condition to this waiver will be from 

new entrant or limited incumbent 

carriers using the divested slots, and in 

order to be effective the bundles of 

remedied slots must be structured in 

such a way to enhance the likelihood of 

sustainable service. Diminishing the 

size and extensive time of day coverage 

of remedied bundles, an approach 

promoted by Spirit, JetBlue, Allegiant, 

WestJet, and Virgin America, will not 

create the degree of competitive impact 

required to compensate for the expected 

harm to be generated from this 

transaction. 

We find that establishing bundles of 

slots for sale will enable an eligible 

carrier to purchase a sufficient array of 

slots to operate and maintain 

competitive service throughout the day. 

Bundling will assist the purchasing 

carrier in initiating or increasing service 

in an operationally efficient and procompetitive manner. Packaging more 

slots in fewer bundles is the best 

approach to optimize competitive 

discipline. Furthermore, bundling eight 

slot pairs at DCA and two bundles of 

eight slot pairs each at LGA will help to 

avoid underutilization and 

inefficiencies of resources, including 

facilities, aircraft and staffing, that may 

result from more bundles containing 

fewer slot pairs. 


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39Response of Joint Applicants to Show Cause 

Order, FAA–2010–0109, at 3 (August 29, 2011). 

40The Airports Council International (ACI–NA) 

argued that slots should be treated as community 

assets that should be used to benefit the 

communities and airports, rather than carriers, and 

the Consumer Travel Alliance argued that the slots 

contemplated in the transaction are not assets of the 

air carriers and should be treated as property of the 

American public. These commenters commonly 

referred to FAA’s regulations that state that ‘‘[s]lots 

do not represent a property right but represent an 

operating privilege subject to absolute FAA 

control.’’ 14 CFR 93.223(a). 

41Comments of Spirit Airlines, FAA–2010–0109, 

at 4, 10 (Aug. 29, 2011), referencing FAA’s Notice 

of Order on Operating Limitations at New York 

LaGuardia Airport, 71 FR 77854, 77857 (Dec, 27, 

2007). 

42 50 FR 52195 (Dec. 20, 1985); 14 CFR 93.221. 

43 14 CFR 93.223. 

Procedures for Transferring Divested 

Slots 

In connection with the proposed 

auction mechanics for the purchase by 

eligible carriers of the divested slots, 

Southwest objected to the imposition of 

a deadline for bids. It believes that a 

deadline such as the one we proposed 

creates disincentives for early bidding 

and is subject to manipulation through 

last-minute bidding. It proposes a 

different approach, with features like 

minimum increases between offers and 

time limits on submitting a higher offer 

following the most recent offer. 

We disagree. In order to allow the sale 

to be completed, there must be some 

closing time for offers. Southwest’s 

system would create a moving deadline 

based on how much time has elapsed 

since the previous bid. Different buyers 

will have different strategies, and 

submitting an offer at the last minute is 

just one such strategy. For example, a 

bidder might equally attempt a high 

preemptive ‘‘shut out’’ offer. We cannot 

predict the various strategies, and, 

therefore, choose not to depart from our 

proposal, which will be easier for the 

FAA to manage. 

Once the sales period closes, the FAA 

will determine the highest offer for each 

bundle. If each bundle receives only a 

single offer, the FAA would notify the 

seller by forwarding the purchaser’s 

identification. If one eligible carrier had 

made the highest purchase offer on 

multiple bundles at LGA, the FAA 

would determine which offer is valid 

based on preference ranking. The 

successful bid for the other LGA bundle 

will be the next-highest offer from a 

carrier that remains eligible to purchase 

the slots. This information will be 

forwarded to the respective seller. The 

FAA will notify the selling and 

purchasing carriers to allow them to 

carry out the transaction, including any 

gate and ground facilities arrangements. 

The full amount of the proceeds could 

be retained by the selling carrier. The 

seller and purchaser will be required to 

notify the FAA that the transaction has 

been completed and certify that only 

monetary consideration will be or has 

been exchanged for the slots. 

In the July 2011 Notice, we had 

proposed that if the highest bidder for 

both LGA bundles was the same eligible 

carrier, the amounts of the offers would 

be communicated to the seller and the 

seller could choose to accept both 

highest offers instead of the highest 

offers of two different eligible bidders as 

identified by the FAA. In its comments, 

the Port Authority of New York and 

New Jersey (Port Authority) would 

allow more than one bundle there to go 

to a single purchaser, and Southwest 

argued that we should dispense with the 

proposed restriction that an eligible 

carrier may purchase no more than one 

of the LGA bundles. However, JetBlue 

asserted that our procedures should not 

enable one carrier to purchase all of the 

available slots, but rather should 

enhance the competitive benefits to the 

public by giving greater opportunities to 

new entrants and limited incumbents in 

light of the new and different services 

they provide. Frontier offered similar 

comments. In response, the Joint 

Applicants afforded ‘‘deference to the 

Department on how it chooses to 

conduct the slot auction.’’ 39

Upon further reflection, we believe 

that having two carriers receive slots at 

LGA achieves the better result, as it will 

appropriately balance our goal of a 

remedy introducing additional 

competition at the airports with our 

belief that the number of slots obtained 

by each carrier must be sufficient to 

assure that they can be used effectively 

to stimulate competition. Thus, we will 

modify the position on this issue that 

we had taken earlier and require that the 

carriers package the divested slot pairs 

at LGA into two bundles which must be 

sold to two separate eligible carriers, as 

further discussed below. 

In the unlikely event that there are no 

offers for a slot interest, the slot interests 

will revert automatically to the FAA. If 

necessary, the FAA may announce at a 

later date a means for disposing of a slot 

interest that attracts no purchase offer. 

Alternatively, under the Order, the FAA 

could simply retire the slot as a 

congestion mitigation measure. We do 

not expect that this need will arise. 

We have adopted our proposal to 

conduct sales by a cash-only, FAA 

‘‘blind’’ web site. A blind-only 

mechanism has the capability of 

maximizing the competitive potential of 

the divestiture packages, as that sale 

method would target the potential 

competitors with the greatest economic 

incentive to use slots as intensively and 

efficiently as possible. 

Retention of the Sale Proceeds by the 

Joint Applicants 

A number of commenters, including 

several air carriers, question our 

proposal to allow the Joint Applicants to 

retain the proceeds from the slot sales 

we are requiring as a condition to this 

waiver. These, and some others, argued 

that the current owners received the 

slots from the FAA without payment, 

are not the owners of slots, and that any 

divestitures should serve to benefit 

parties other than the carriers.40

Additionally, Spirit asserts that limited 

incumbent airlines are entitled to the 

divested slots at no cost under the procompetitive policies in Section 40101(a) 

and the prohibition on purchases or 

sales of slots in the LGA Order. Spirit 

also expresses concern that the Joint 

Applicants could enjoy a ‘‘financial 

windfall’’ by being able to retain the 

proceeds of a sale, citing a 2007 FAA 

Notice regarding operating limitations at 

LGA indicating that rights held under 

slot rules would end on December 31, 

2006.41

The Joint Applicants respond that 

their application does not contemplate 

that slots would be divested without 

compensation, and that they would not 

have offered to divest any slots if they 

believed that would be required. 

Allowing the Joint Applicants to 

retain the proceeds from the sale of the 

divested slots in this case is within our 

authority. Since 1985, the FAA has 

permitted carriers to purchase, lease, 

sell, and otherwise transfer slots for 

consideration under the HDR’s Buy-Sell 

Rule.42 The FAA’s regulatory 

permission to buy and sell slots is 

consistent with the complementary HDR 

provision that slots do not represent a 

property ‘‘right’’ but a privilege subject 

to FAA control and encumbrances.43

Furthermore, a secondary market in 

slots conforms to the pro-competitive 

policies of the Airline Deregulation Act 

by, among other things, relying on 

‘‘competitive market forces’’ and 

‘‘encouraging entry into air 

transportation markets by new and 

existing carriers.’’ 49 U.S.C. 40101(a)(6), 

(12). Accordingly, the FAA is under no 

statutory obligation to have the divested 

slots allocated to eligible carriers free of 

charge. Additionally, a sale of the slots 

is not a financial windfall but allows the 

Joint Applicants to maximize the value 

of their slots as originally intended as 

part of the larger transaction. 75 FR at 


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44Spirit and the Air Carrier Association of 

America contend that the Joint Applicants did not 

seek compensation for the divested slots. Comments 

of Air Carrier Ass’n of Am., FAA–2010–0109, at 3 

(July 1, 2011); Comments of Spirit Airlines, FAA– 

2010–0109, at 2 (June 24, 2011). The Joint 

Applicants dispute this allegation, and state that 

‘‘[t]hey would not have offered to divest slots if they 

had believed that they would be withdrawn and 

reallocated without compensation.’’ Response of 

Joint Applicants to Show Cause Order, FAA–2010– 

0109, at 4 (Aug. 29, 2011). 

45Comments of Airports Council Int’l—N. Am., 

FAA–2010–0109, at 4 (Aug. 30, 2011). We note that 

neither the Port Authority nor MWAA has made 

this assertion on their own behalf. 

7311.44 Finally, the purchasers of the 

LGA slots will receive the same interest 

that current slot holders at LGA have. 

This interest is comparable to that 

which Delta will receive in connection 

with its purchase of the US Airways’ 

LGA slots. Our waiver of the LGA Order 

transfers to Delta the same interests that 

US Airways currently holds under the 

terms of that Order. 

After review of these comments, we 

remain persuaded that both our earlier 

position on these issues and our 

approach in granting the petition with 

divestitures are the correct ones. 

Implementation in Tranches 

In the July 2011 Notice, the 

Department proposed to prohibit each 

transferee Joint Applicant from 

operating any of the newly acquired 

slots during the first 90 days after the 

closing date of the sale of the divested 

slots. We further proposed to prohibit 

them from operating more than 50 

percent of the total number of slots 

included in the Joint Applicants’ 

Agreement between the 91st and the 

210th day following the close date of the 

sale of the divested slots. After that 

time, we would allow the transferee to 

operate the remainder of the slots. The 

purpose of these prohibitions was to 

allow the new entrant and limited 

incumbent carriers that purchased the 

divested slots a sufficient period to 

establish competitive service, without 

interference from new operations of the 

Joint Applicants. 

The Joint Applicants have not 

objected to this proposal, nor have 

others contended that it is unfair or 

impractical. We will therefore finalize 

this aspect of the waiver as it had been 

proposed. 

Availability of Facilities to Purchasing 

Carriers 

Our Notice proposed to require the 

selling carrier to make airport facilities 

available to the purchaser under 

reasonable conditions only if the 

purchasing carrier lacks access to 

facilities and is unable to obtain such 

access from the airport operator. We see 

no need to change this proposal or, as 

suggested by Southwest, to waive the 

use-or-lose period until such time as the 

purchasing carrier actually occupies the 

airport facilities. Nor do we agree with 

the Port Authority’s suggestion to 

extend the proposed six-month use-orlose waiver due to potential difficulties 

with arranging facilities for requesting 

carriers. 

Rather, we fully expect both the Port 

Authority, as the operator of LGA, a 

large hub, and the Metropolitan 

Washington Airports Authority 

(MWAA), as the operator of DCA, also 

a large hub, to make facilities available, 

with reasonable dispatch, to requesting 

carriers and within the six-month 

period after the purchase of the divested 

slots. The Port Authority and MWAA 

each are bound by DOT federal grant 

assurances to provide reasonable and 

competitive access at their respective 

airport facilities to requesting airlines 

and airlines wishing to expand service 

at their airports. They must file 

competition disclosure reports with the 

FAA if they fail to do so. Additionally, 

they have each taken action, under their 

airport competition plans, to reduce 

barriers to entry and enhance 

competitive access at their airports. 

Furthermore, the Department and the 

FAA are available to facilitate access at 

appropriate airport facilities if 

necessary. 

Additionally, we note that Airports 

Council International—North America 

(ACI–NA) comments that the grant of 

this waiver, subject to the conditions 

specified in the initial Notice, would 

‘‘unlawfully * * * usurp the 

proprietary right of the Port Authority 

and the Metropolitan Washington 

Airports Authority to control how their 

facilities at LGA and DCA were used.’’ 45

Under 49 U.S.C. Section 40103(b)(1), 

however, it is the FAA, not the airports, 

that has the authority ‘‘to develop plans 

and policy for the use of the navigable 

airspace and assign by regulation or 

order the use of the airspace necessary 

to ensure the safety of aircraft and the 

efficient use of airspace.’’ This power 

includes the authority to limit flight 

operations at congested airports and to 

distribute and allocate landing and 

takeoff reservations (slots) to designated 

air carriers at controlled airports. 

Further, because the airports are under 

federal obligations to make facilities 

available, on a reasonable basis, to 

requesting carriers, we fully expect the 

airports to work with the carriers as they 

have in the past, in providing 

accommodation to requesting carriers. 

Finally, WestJet filed comments 

urging that Customs and Border 

Protection pre-clearance procedures be 

made available at the applicable 

Canadian airport in the event that any 

successful bidder intends to use its slots 

for service to Canada, or in the 

alternative that FAA extend the sixmonth startup grace period in order to 

allow the bidder to obtain the necessary 

pre-clearance privileges. The granting of 

such privileges is within the purview of 

the Department of Homeland Security 

(DHS), not FAA, and WestJet or any 

other interested party may make 

appropriate inquiries on this issue with 

DHS. Should there be extenuating 

circumstances with preclearance 

matters in connection with compliance 

with the six-month startup provision, 

the Department will be available to 

work with the carrier and other 

appropriate parties as noted above. 

Other Issues Raised by Commenters 

Among its other comments, Virgin 

America, Inc. urges the Department to 

create a ‘‘strategic slot reserve,’’ with the 

divested slots, so that if (1) the available 

slots were not purchased by eligible 

participants in the divestiture process, 

(2) the purchasers did not meet 

minimum utilization requirements in 

operating the slots, or (3) the purchasers 

no longer met new entrant or limited 

incumbent eligibility requirements, the 

slots would be reserved for allocation to 

only eligible new entrants and limited 

incumbents. 

The Department had already proposed 

certain alienation limitations in the 

Notice to ensure that the divestiture 

process did not enable or result in 

transactions that undermined the procompetitive purpose of the proposal. 

Under our tentative proposal, the 

successful bidders would not be 

permitted to sell or lease the slots for 12 

months following purchase, although 

one-for-one trades for operational 

purposes would be permitted. The slots 

could, after the initial 12 months, be 

sold, traded, or leased to any carrier 

that, at the time of the sale, trade, or 

lease, qualified as a new entrant or 

limited incumbent, for four years 

thereafter, with all restrictions on 

alienation thus ending five years 

following the initial sale. If by some 

chance slots went unsold, they would 

revert to the FAA and, if appropriate, it 

would announce at a later date whether 

it would retire them to reduce 

congestion or make them available to 

other carriers. 

After considering Virgin America’s 

comment, DOT believes the July 2011 

Notice’s approach better implements a 

pro-competitive market environment at 


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46Comments of San Francisco Int’l Airport, FAA– 

2010–0109 (Aug. 29, 2010); see also Comments of 

Airports Council Int’l—N. Am., FAA–2010–0109, at 

4 (Aug. 30, 2010). 

the airports and better balances 

competing objectives in the bidding 

process. Virgin America’s proposal does 

not address sale, trade or lease issues, 

and after review of other comments we 

are confident both that the bidding 

process will attract robust competition 

for the slots, and that the successful 

bidders will be highly motivated to 

maintain high utilization rates. 

Moreover, creating permanent 

encumbrances on the slots with ‘‘in 

perpetuity’’ restrictions would likely 

generate greater caution by carriers in 

bidding, and produce greater burdens in 

administering the slot rules. 

San Francisco International Airport 

expresses concern that the grant of this 

waiver to the Joint Applicants would 

create an incentive for carriers to create 

congestion at other airports that are not 

currently slot-constrained, so as to cause 

those airports to become slotconstrained, and allow those carriers to 

benefit from the sale of the newlycreated slots.46 We do not believe this 

concern is well-founded. Carriers that 

intentionally over-schedule their 

operations at an airport incur significant 

costs and delays in their own 

operations. If the FAA is forced to 

reduce schedules, carriers should not 

expect the FAA to accept any flights 

that perpetuate congestion. Moreover, 

under the Buy-Sell rule, carriers have 

enjoyed the ability to sell slots and 

retain the sales proceeds at certain slotcontrolled airports (and still enjoy that 

ability at DCA), and that has not 

resulted in any effort by carriers to 

create other slot-controlled airports. 

Finally, our decision in this case should 

not be viewed as a policy statement or 

rulemaking with far-reaching effect; to 

the contrary, it is a waiver based on the 

specific facts before us and the 

circumstances are unlikely to be 

replicated at other airports. 

In addition, Virgin America urges the 

Department to fulfill its intention to 

establish and implement a rule to 

manage congestion issues at Newark 

Liberty, John F. Kennedy, and 

LaGuardia airports. It also comments 

that carriers that obtain LaGuardia slots 

in this process should be able to seek to 

use those slots at other congested 

airports (such as Newark Liberty, where 

Virgin America asserts that monopoly 

conditions exist). While we appreciate 

these points, they are beyond the scope 

of this proceeding. As Virgin America’s 

own comments acknowledge, a 

comprehensive rule to manage 

congestion at the three airports is under 

development in a different rulemaking 

process, and comments to this docket 

cannot serve as a substitute for 

participation in the correct proceeding. 

Terms of the Final Waiver Notice 

Accordingly, we will grant the waiver 

requested by the Joint Applicants, 

conditioned on: the divestiture of 32 

slots at LGA (16 arrival and 16 

departure) and 16 slots at DCA, through 

a blind, cash-only sale through an FAAmanaged Web site to limited incumbent 

and new entrant carriers having fewer 

than five percent of the total slot 

holdings at DCA and LGA respectively, 

and that do not code share to or from 

DCA or LGA with any carrier that has 

five percent or more slot holdings. We 

also require that, to be eligible to bid on 

the divested slots, carriers not be 

subsidiaries, either partially or wholly 

owned, of a company whose combined 

slot holdings are equal to or greater than 

five percent at DCA or LGA 

respectively, with the exception of 

Frontier Airlines for the reasons noted 

above. 

To enable purchasing carriers to 

achieve a critical mass of slots, the 

divested slots shall, as proposed, be 

bundled into eight slot pairs at each 

airport, with two such bundles at LGA 

and one at DCA. An eligible carrier may, 

under our proposal, purchase only one 

slot bundle at each airport (while 

indicating preference ranking for each 

slot bundle as part of its offer). For the 

reasons outlined above, we are not 

adopting our earlier proposal to allow 

the seller to opt to accept both bids of 

the same purchasing carrier at 

LaGuardia. The selling carriers may 

retain, in full, the proceeds of the sale 

of these slots. 

More specifically, as outlined in the 

July 2011 Notice, the single bundle at 

DCA would include the following slots: 

0700, 0800, 0800, 0900, 1000, 1000, 

1100, 1200, 1300, 1400, 1600, 1700, 

1800, 1800, 2000, and 2100. 

At LGA, Bundle A would include 

slots at 0600D, 0630D, 0730A, 0830D, 

0830A, 0930D, 1100A, 1230D, 1300A, 

1400D, 1500A, 1600D, 1700A, 1830D, 

2000A, and 2100A. Bundle B would 

consist of slots at 0630D, 0700D, 0800A, 

0930D, 1000A, 1030D, 1230A, 1330D, 

1430A, 1600D, 1630A, 1730D, 1830A, 

1930D, 2030A, and 2130A. 

Within 30 days of this grant of waiver, 

Delta and US Airways must notify in 

writing to the FAA whether they intend 

to proceed with the slot transfer 

transaction. If they intend to 

consummate the slot transfer transaction 

subject to this waiver, that notice must 

provide the following information for 

the divested slots: 

(1) Operating Authorization number 

(LGA) or slot number (DCA) and time; 

(2) Frequency; 

(3) Effective Date(s); 

(4) Other pertinent information, if 

applicable; and 

(5) Carrier’s authorized representative. 

The FAA will post a notice of the 

available slot bundles on the FAA Web 

site at http://www.faa.gov shortly after 

receiving all required information from 

the sellers and, if practicable, will 

publish the notice in the Federal 

Register. The notice will provide seven 

business days for purchase offers to be 

received and will specify a bid closing 

date and time. Eligible carriers may 

register to purchase the slot bundles via 

e-mail to 7-awa-slotadmin@faa.gov. 

Registration must be received 15 days 

prior to the start of the offer period and 

must state whether there is any common 

ownership or control of, by, or with any 

other carrier and certify that no 

purchase offer information will be 

disclosed to any person other than its 

agent. 

The FAA will specify a bid closing 

date and time. The bidders’ identities 

will not be revealed. An eligible carrier 

will register for each slot bundle it 

wishes to buy, and the FAA will assign 

it a random number for each 

registration, so no information 

identifying the bidder will be available 

to the seller or public. A bidder will be 

allowed to indicate its preference 

ranking for each slot bundle as part of 

its offer. Finally, the FAA will review 

the offers for each bundle in order. All 

offers to purchase slot bundles will be 

sent to the FAA electronically, via the 

e-mail address above, by the closing 

date and time. The offer must include 

the prospective purchaser’s assigned 

number, the monetary amount, and the 

preference ranking for that slot bundle. 

No extensions of time will be granted, 

and late offers will not be considered. 

The FAA will post all offers on the Web 

site as soon as practicable after they are 

received. Each purchaser would be able 

to submit multiple offers until the 

closing date and time. 

Once the sales period closes, the FAA 

will determine the highest offer for each 

bundle. If each bundle receives only a 

single offer, the FAA will notify the 

seller by forwarding the purchaser’s 

identification. If one eligible carrier had 

made the highest purchase offer on 

multiple bundles at LGA, the FAA will 

determine which offer is valid based on 

preference ranking. The successful bid 

for the other LGA bundle will be the 

next-highest offer from a carrier that 

remains eligible to purchase the slots. 


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This information will be forwarded to 

the respective seller. The FAA will 

notify the selling and purchasing 

carriers to allow them to carry out the 

transaction, including any gate and 

ground facilities arrangements. The full 

amount of the proceeds may be retained 

by the selling carrier. The seller and 

purchaser will be required to notify the 

FAA that they have entered into a 

binding agreement with respect to the 

sale of the slots and certify that only 

monetary consideration will be or has 

been exchanged for the slots. This 

notification must occur within five 

business days of notification by the FAA 

of the winning offer. The FAA then will 

approve the transaction and will 

maintain and make publicly available a 

record of the offers received, the 

identity of the seller and purchaser, and 

the winning price. 

Additionally, to allow the new entrant 

and limited incumbent carriers 

purchasing the divested slots to 

establish competitive service, we shall 

prohibit each transferee Joint Applicant 

from operating any of the slots acquired 

by virtue of this waiver during the first 

90 days after the closing date of the sale 

of the divested slots and from operating 

more than 50 percent of the total 

number of slots included in the Joint 

Applicants’ Agreement between the 91st 

and the 210th day following the close 

date of the sale of the divested slots, 

after which time the transferee will be 

free to operate the remainder of the 

slots. 

As discussed above and as proposed, 

if the purchasing carrier lacks access to 

gates and ground facilities and is unable 

to obtain such access from either the 

Port Authority, the operator of LGA, or 

from MWAA, the operator of DCA, the 

selling carrier must make these available 

to the purchaser under reasonable terms 

and rates. We also direct the Joint 

Applicants to cooperate fully with the 

purchasing carrier and the respective 

airports to enable the startup operations 

to begin within six months after 

purchase. 

Slots obtained through this procedure 

will be subject to the same minimum 

usage requirements as provided in the 

LGA Order and HDR. However, we will 

waive the respective use or lose 

provisions of the LGA Order and HDR 

for slots operated by the purchaser for 

six months following purchase to allow 

the purchaser to begin service in new 

markets or add service to existing 

markets. The purchaser must initiate 

service no later than six months 

following purchase. 

The purchaser may lease the acquired 

slots to the seller until the purchaser is 

ready to initiate service to maximize 

operations at the airports. As proposed, 

however, slots may not be sold or leased 

to other carriers during the 12 months 

following purchase, because the 

purchaser must hold and use the 

acquired slots. 

Purchasers could engage in one-forone trades of these slots for operational 

needs. The limitations would attach to 

any slot acquired by an eligible carrier 

in a one-for-one trade. Any one-for-one 

trades are subject to the FAA notice 

requirements in the LGA Order and 

HDR. Any trades or leases of LGA slots 

may not exceed the duration of the LGA 

Order. 

After the initial 12 months, and for 

four years thereafter, the slots may be 

sold, traded, or leased (as authorized by 

the HDR at DCA and as otherwise 

authorized at LGA) to any carrier that at 

the time of the sale, trade, or lease 

would have met the eligibility 

requirements to make an offer for the 

divested slots under this waiver. These 

alienation restrictions will increase the 

likelihood that the divested slots are 

used and operated by carriers that will 

enhance competition at LGA and DCA, 

lower fares, and benefit the traveling 

public. We recognize, however, that 

restrictions on alienation of these slots 

may depress their value for the carriers 

holding them. Accordingly, the 

alienation restrictions on the divested 

slots will terminate five years after 

initial sale. This will balance the need 

and desire of those carriers to maximize 

the value of the divested slots with the 

Department’s desire to afford the 

traveling public a broad array of 

competitive service. 

In the unlikely event that there are no 

offers for the slots, they will revert 

automatically to the FAA. If necessary, 

the FAA may retire the slots or 

announce at a later date a means for 

disposing of a slot bundle that attracts 

no purchase offer. We do not expect that 

this need will arise. 

The grant of waiver becomes effective 

upon the issuance of this Notice. Failure 

by the Joint Applicants to comply with 

the terms and conditions contained in 

this Notice may result in partial or 

complete withdrawal of the waiver or 

other penalties. 

Issued in Washington, DC, on October 7, 

2011. 

Ray LaHood, 

Secretary. 

J. Randolph Babbitt, 

Administrator, Federal Aviation 

Administration. 

Appendix 

Summary of Comments 

We received comments from numerous 

commenters, which are summarized below. 

Southwest Airlines Co. argues that FAA 

should require divestitures that are, at a 

minimum, in-line with DOT’s May, 2010 

Order, which was 20 slot pairs at LGA and 

14 slot pairs at DCA. Southwest urges FAA 

to eliminate the possibility of the Joint 

Applicants playing a role in the selection 

process, to use a true market-based auction 

where the highest cash bid on each slot 

bundle wins, and to remove the restriction 

that an eligible air carrier may only purchase 

one LGA slot bundle. Other options have the 

potential of manipulation in that the seller 

may have the ability to choose the weakest 

competitor and thereby the ability to act in 

an anti-competitive manner. FAA should also 

amend its order to require that the air carriers 

selling the divested slots should work with 

the respective airport authorities to make 

airport facilities available on no less 

favorable terms than those now afforded to 

the Joint Applicants and that airport ground 

equipment is made available on reasonable 

terms. 

JetBlue Airways Corp. commented on June 

15, 2011, before our Notice on the Joint 

Applicants’ revised Petition was issued, and 

again on August 30, 2011. JetBlue suggests 

that the Department structure the auction so 

that the Joint Applicants have no ability to 

select the winning bidders. Further, JetBlue 

argues that the Department should make 

minor adjustments to the procedures defined 

in its May, 2010 Final order. Specifically, 

DOT should: (1) Clarify the rights associated 

with the divested slots; (2) auction off the 

divested slots in pairs rather than bundles; 

(3) limit participation in the auction to ‘‘new 

entrant and limited incumbents’’ in 

accordance with 49 U.S.C. 41714(h)(5), i.e, 

generally, to carriers having fewer than 20 

slots and slot exemptions at the respective 

airport; and (4) limit participants in the 

auction to purchasing two slot pairs in the 

first round of bidding. 

Frontier Airlines, Inc. submitted initial 

comments urging the Department to require 

divestitures consistent with our May, 2010 

Notice, of no less than 28 DCA slots (14 slot 

pairs) and 40 LGA slots (20 slot pairs). In 

order to maximize the number and 

geographic diversity of LCC’s, Frontier urged 

the Department to reallocate the slots in 

bundles of no more than eight slots (or four 

slot pairs) in each bundle. Frontier is 

supportive of the Department’s determination 

of its eligibility for the auction process, but 

suggested a few modifications to that process. 

Specifically, DOT should use a single round 

of bidding and require eligible air carriers to 

submit their best and final offer, or establish 

a multi-bid process with set deadlines for 

each round of bids and require that bidders 


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participate in each round of bidding in order 

to be eligible to participate in the final round 

of bidding. Additionally, FAA should be the 

sole entity controlling the selection of the 

winning bidders. Frontier encourages the 

Department to treat Southwest and AirTran 

as one single air carrier for the purpose of the 

auction, and urges the Department to 

publicly disclose the winning bidder and 

amount of each winning bid. 

Spirit Airlines, Inc. is supportive of the 

divestment of slots, but urges the Department 

to modify the transaction process. Spirit 

discourages the Department from using an 

auction based approach to reallocate the 

divested slots, and proposes that FAA 

reallocate the slots, without requiring 

compensation, to LCC incumbents that 

operate less than five percent of the slots at 

DCA and LGA. Spirit takes the position that 

the Joint Applicants have not sought 

payment and according to 49 U.S.C. 40101(a), 

US Airways and Delta are prohibited from 

selling such slots. Further, Spirit claims that 

the Joint Applicants did not pay for the slots 

contemplated in the proposed transaction; 

rather, those slots were allocated to the Joint 

Applicants through AIR–21, and therefore 

the Joint Applicants should not reap 

financial benefit at the expense of LCCs. 

Additionally, Spirit claims that it is in the 

public’s best interest to distribute the 

divested slots without charge, and forcing 

eligible LCCs to purchase the divested slots 

will result in higher fares for passengers. 

Spirit further urges the Department to 

group the divested slots into four bundles of 

four slot pairs each at LGA, and four bundles 

of two slot pairs each at DCA. Spirit states 

that the proposed auction method puts it at 

a disadvantage, and that the carriers with the 

‘‘deepest pockets’’ could acquire all of the 

available slots. The air carrier claims it is 

80% smaller than JetBlue and 95% smaller 

than Southwest/AirTran, and urges the 

Department to adopt the limited incumbent 

definition proposed in the Department’s 

Final Notice of May 2010. 

The Air Carrier Association of America 

(‘‘ACAA’’) supports Spirit’s proposal to 

distribute the divested slots without charge. 

ACAA urges the Department to impose 

divestitures of 40 slots at LGA and 28 slots 

at DCA, and to allocate those slots to LCCs 

with less than five percent of the slots at 

DCA/LGA. ACAA asserts that there has been 

no change in the level of competition at LGA 

or DCA since the Department issued its 

previous Final Notice of May 2010. 

Allegiant Air asserts that it is eligible to 

acquire a portion of the LGA slots, and 

encourages the Department to re-bundle the 

divested slots into smaller groups. 

WestJet encourages the Department to 

modify the proposed requirements that allow 

air carriers to bid on a minimum of eight slot 

pairs. Additionally, in the event that LGA 

slots are obtained by carriers proposing 

service to Canada, WestJet urges the 

Department to assist in their obtaining 

authority to pre-clear passengers through 

U.S. Customs and Border Protection at 

applicable Canadian airports. 

Virgin America, Inc. urged the Department 

to mandate a greater number of slots to be 

divested, and encourages the Department to 

establish and implement congestion 

mitigation strategy at the major airports in 

and around New York City. Additionally, 

Virgin suggests that the Department modify 

its conditions in the following ways: (1) 

Lower the definition of limited incumbent 

from fewer than five percent; (2) not exempt 

Frontier Airlines from the ‘‘no subsidiaries’’ 

requirement; (3) modify the number of 

bundles, which are ‘‘unnecessarily’’ large; (4) 

establish a ‘‘strategic slot reserve’’ as detailed 

in its comments in the docket; and (5) allow 

air carriers to use the divested slots at other 

congested New York airports such as Newark 

Liberty International Airport (‘‘EWR’’). 

Sun Country Airlines urges the Department 

to allow air carriers the ability to purchase 

individual slots rather than bundles of slots, 

and proposes that half of the divested slots 

should be returned to the Department and 

subsequently reallocated to new entrants or 

limited incumbents through a lottery system 

without charge. 

San Francisco International Airport 

commented to express concerns about (1) the 

future use and sale of slots at congested 

airports, and (2) possible negative 

repercussions of allowing air carriers to reap 

financial reward from the sale of slots. 

The Port Authority of New York and New 

Jersey offered a number of suggestions 

regarding the proposed transaction: (1) 

Certain aspects of the sale mechanism should 

be changed to increase competition and 

reduce collusive behavior; (2) a six-month 

deadline to commence use of the divested 

slots is unreasonable; and (3) the Department 

should not allow any of the divested slots to 

be retired in the unlikely event that no air 

carriers assumes control of the divested slots. 

Airport Council International (‘‘ACI–NA’’) 

discourages the Department from granting the 

waiver petition. ACI–NA urges the 

Department to treat the divested slots as 

property of the community and not assets of 

air carriers. ACI–NA contends that the Joint 

Applicants should not be allowed to receive 

payment from the divestment of slots, which 

potentially has negative repercussions. 

The City of Tallahassee, Florida encourages 

the Department to move through the 

divestment process as expeditiously as 

possible. 

Dane County Regional Airport (Madison, 

Wisconsin) is supportive of the transaction, 

but is concerned about possible loss of 

service. 

The New York Travel Advisory Bureau, 

and various travel agents and corporate travel 

managers expressed support for the Joint 

Applicants’ proposed transaction, generally 

citing the potential for greater benefits to the 

economy of New York, the benefit of 

improvements proposed for the infrastructure 

at LaGuardia, and prospects for improved 

tourism and travel opportunities. 

The Honorable Jeff Miller, Representative 

of the First District of Florida, expressed 

support for the proposed transaction as 

potentially leading to more air transportation 

connectivity between Northwest Florida and 

DCA. 

Mayor Bowers of Roanoke, Virginia, and 

various other businesses, educational 

institutions, and private citizens in and 

around Roanoke, expressed strong concern 

about the potential loss of nonstop service to 

LGA from their community. 

The Consumer Travel Alliance (‘‘CTA’’) 

urges the Department to reexamine the 

proposed transaction from the taxpayers’ 

point of view. CTA argues that the slots 

contemplated in the transaction are not assets 

of the air carriers and should be treated as 

property of the American public. CTA has 

concerns about the repercussions of 

incentivizing air carriers by allowing airlines 

to reap financial reward in exchange for 

scarce slots. CTA urges the Department to 

reallocate the divested slots to those air 

carriers that propose to operate large aircraft 

with those slots, and to air carriers willing to 

invest in equipping their fleet with NextGen 

technology. Additionally, CTA urges the 

Department to consider the difficult task of 

reallocating the limited airport facilities to 

the winning bidders. 

Supplemental and Responsive Pleadings 

The Joint Applicants submitted responsive 

comments in the docket, and assert that they 

take no issue with JetBlue’s position on the 

subject of the Joint Applicants’ role in the 

selection of recipients of the divested slots. 

Furthermore, the Joint Applicants take no 

position with comments regarding 

modifications to the auction process. Delta 

and US Airways assert that they did not 

contemplate divesting the slots without 

monetary compensation, and would not have 

offered to divest such slots had they believed 

the slots would be withdrawn and 

reallocated without compensation. The Joint 

Applicants claim they have the authority to 

sell slots, and argue that divestiture of 32 

slots at LGA and 16 slots at DCA is consistent 

with the public interest standard. The Joint 

Applicants further argue that Frontier is not 

eligible to participate in the auction without 

special dispensations. 

Spirit submitted additional comments in 

the docket on August 30, 2011, in which it 

opposes the transaction unless an additional 

four slot pairs are divested. Spirit claims that 

16 slot pairs at LGA will not be an adequate 

number of divested slots to counter-balance 

the anti-competitive impact of Delta’s newly 

acquired LGA slots. Spirit strongly opposes 

an action process that results in the Joint 

Applicants receiving monetary compensation 

in exchange for the divested slots. Spirit 

contends that Congress has defined ‘‘limited 

incumbents’’ as air carriers holding fewer 

than 20 slots, and the Department should 

adopt this definition. 

In its responsive submission, ACAA urges 

the Department to require more divested slots 

than 16 slot pairs at LGA and 8 slots pairs 

at DCA. ACAA argues that the Joint 

Applicants obtained control of the slots 

contemplated in the transaction without 

payment and therefore should not receive a 

financial windfall from low cost carriers in 

exchange for the slots. ACAA encourages the 

Department to promote competition at DCA 

and LGA by divesting slots to air carriers that 

hold less than five percent of the slots at the 

respective airports and proposes to use those 

slots to operate aircraft with at least 110 

seats. 

Frontier Airlines encourages the 

Department to define ‘‘limited incumbents’’ 


sroberts on DSK5SPTVN1PROD with NOTICES
63714 Federal Register / Vol. 76, No. 198 / Thursday, October 13, 2011 / Notices 

as those air carriers that operate fewer than 

five percent of the slots at DCA and LGA. 

Frontier urges the Department to allocate the 

divested slots into smaller bundles than what 

was proposed in the Notice of the revised 

Petition and prohibit an air carrier from 

acquiring all of the slots. Additionally, 

Frontier argues that divested LGA slots 

should not be transferable to EWR, and that 

exempting Frontier from the ‘‘no 

subsidiaries’’ requirement is fully justified 

and in the public interest. 

Southwest submitted responsive comments 

supporting the Department’s definition of 

‘‘limited incumbent’’ in this proceeding, 

pointing out that any other definition would 

be inconsistent with the May 2010 Notice 

regarding the previous, similar transaction, 

and arguing that the proposed definition 

ensures that the divested slots are ‘‘put to 

their best competitive use * * * to produce 

the maximum public benefits and partially 

offset the anticompetitive effects of the slot 

swap.’’ Southwest further argues that this 

definition is justified in order to ensure that 

the transaction is in the public interest. It 

also claimed that smaller bundles of slots 

would provide only ‘‘weak and diffuse’’ 

competition by low-fare carriers. Southwest 

also supported a simple auction format in 

which the highest bidder won each bundle of 

slots. 

Continental Airlines, Inc. and United Air 

Lines, Inc. submitted responsive comments 

opposing Virgin America’s suggestion that 

divested LGA slots should be transferable to 

EWR. 

In a September 13, 2011 submission, 

JetBlue reiterated its position that additional 

slot divestitures are required to ameliorate 

the anticompetitive effects of the proposed 

transaction. It also continued to argue that 

‘‘limited incumbent’’ was defined in statute 

by the Wendell H. Ford Aviation Investment 

and Reform Act for the 21st Century (AIR– 

21), and that implementation of AIR–21 is 

the core issue in this proceeding. 

ACAA responded to these comments in a 

September 21, 2011 filing, and restated the 

benefits it believes accrue to the public from 

allowing carriers with more than five percent 

of the slots at either airport to participate in 

the auction. 

[FR Doc. 2011–26465 Filed 10–11–11; 4:15 pm] 

BILLING CODE 4910–13–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

Technical Standard Order (TSO)– 

C129a, Airborne Supplemental 

Navigation Equipment Using the 

Global Positioning System (GPS) 

AGENCY: Federal Aviation 

Administration (FAA), DOT 

ACTION: Notice of cancellation of TSO– 

C129a, Airborne Supplemental 

Navigation Equipment Using the Global 

Positioning System (GPS). 

SUMMARY: This notice announces the 

FAA’s cancellation of TSO–C129a, 

Airborne Supplemental Navigation 

Equipment Using the Global Positioning 

System (GPS) effective October 21, 

2011. TSO cancellation will not affect 

production according to an existing TSO 

authorization (TSOA). Articles 

produced under an existing TSOA can 

still be installed according to existing 

airworthiness approvals and 

applications for new airworthiness 

approvals will still be processed. 

The effect of the cancelled TSO will 

result in no new TSO–C129a design or 

production approvals. However, we will 

accept applications for new TSO–C129a 

TSO Authorizations (TSOA) until 

October 21, 2012 if we know that you 

were working toward a TSO–C129a 

approval prior to October 21, 2011. 

DATES: Comments must be received on 

or before October 20, 2011. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Kevin Bridges, AIR–130, Federal 

Aviation Administration, 470 L’Enfant 

Plaza, Suite 4102, Washington, DC 

20024. Telephone (202) 385–4627, fax 

(202) 385–4651, e-mail to: 

kevin.bridges@faa.gov. 

SUPPLEMENTARY INFORMATION: The FAA 

published a Federal Register notice on 

August 16, 2011 (76 FR 50808) 

describing our intent to cancel TSO– 

C129a to solicit feedback. We received 

a total of six comments from three 

parties with questions or concerns about 

the cancellation. For example, there was 

a comment to provide a transition 

period for applicants working toward a 

TSO–C129a approval prior to the 

cancellation date. The FAA agreed with 

this comment and has included a 

transition period in this notice. Another 

comment expressed concern regarding 

how an existing TSO–C129a technical 

standard order authorization (TSOA) 

would be addressed on an article with 

multiple TSOAs that has a change not 

affecting TSO–C129a. The FAA agrees 

to address this issue through a policy 

revision and/or policy memo. However, 

none of the parties providing comments 

expressed an objection to TSO–C129a 

being cancelled or provided reasons to 

not cancel the TSO. 

Comments Invited 

You are invited to comment on the 

cancellation of the TSO by submitting 

written data, views, or arguments to the 

above address on or before October 14, 

2011. The Director, Aircraft Certification 

Service, will consider all comments 

post-marked or received before the TSO 

cancellation date. 

Background 

On September 21, 2009, the FAA 

published TSO–C196, Airborne 

Supplemental Navigation Sensors for 

Global Positioning System Equipment 

Using Aircraft-Based Augmentation; an 

updated minimum performance 

standard for GPS sensors not augmented 

by satellite-based or ground-based 

systems (i.e., TSO–C129a Class B and 

Class C). The FAA has also published 

two TSOs for GPS augmented by the 

satellite-based augmentation system 

(TSO–C145c, Airborne Navigation 

Sensors Using the Global Positioning 

System Augmented by the SatelliteBased Augmentation System; and, TSO– 

C146c, Stand-Alone Navigation 

Equipment Using the Global Positioning 

System Augmented by the SatelliteBased Augmentation System). 

TSO–C145c, TSO–C146c, and TSO– 

C196 incorporate more stringent 

standards and testing requirements that 

make the GPS equipment more accurate 

and robust than sensors built to the 

minimum requirements in TSO–C129a. 

Two examples of these improvements 

are: (1) A requirement for the receiver to 

properly account for satellite range error 

if it is reflected in the User Range 

Accuracy index (commonly referred to 

as being ‘‘Selective Availability aware’’); 

and, (2) requirements to ensure 

performance is not degraded due to an 

increasing radio frequency noise 

environment as other satellite systems 

become available. 

Since 2005, there has only been one 

application for a TSO–C129a TSOA on 

a new article. Many manufacturers 

informally indicate they are 

transitioning, or planning to transition, 

their product lines to the new TSOs. 

Therefore, we believe cancelling TSO– 

C129a is an appropriate way to assist 

the natural phase-out/upgrade cycle 

given the eventual obsolescence of 

TSO–C129a equipment and industry’s 

lack of interest in new TSO–C129a 

designs. 

Issued in Washington, DC, on October 7, 

2011. 

Susan J.M. Cabler, 

Assistant Manager, Aircraft Engineering 

Division, Aircraft Certification Service. 

[FR Doc. 2011–26449 Filed 10–12–11; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF TRANSPORTATION 

Surface Transportation Board 

[Docket No. FD 35553] 

Big Spring Rail System, Inc.;Operation 

Exemption;Transport Handling 

Specialists, Inc. 

Big Spring Rail System, Inc. (BSRS), 

a noncarrier, has filed a verified notice 

of exemption under 49 CFR 1150.31 to 


sroberts on DSK5SPTVN1PROD with NOTICES