BEFORE THE 

U.S. DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

___________________________________________

)

Application of )

)

SOUTHWEST AIRLINES CO. )

) 

for an exemption pursuant to 49 U.S.C § 40109 ) Docket No. OST-2014-0222

to engage in foreign scheduled air transportation ) 

of persons, property and mail between Houston ) 

Hobby International Airport and Cancun, Mexico City )

Puerto Vallarta, and San Jose del Cabo, Mexico )

)

 (HOU-CUN) )

 (HOU-MEX) )

 (HOU-PVR) )

 (HOU-SJD) )

___________________________________________ )

CONTINGENT ANSWER OF SOUTHWEST AIRLINES CO. 

AND MOTION FOR LEAVE TO FILE 

Communications with respect to this document should be sent to:

Ron Ricks Robert W. Kneisley

 Executive Vice President - Associate General Counsel

 Chief Legal & Regulatory Officer Leslie C. Abbott

Mark Shaw Senior Attorney

 Vice President General Counsel & SOUTHWEST AIRLINES CO.

 Corporate Secretary 919 18th Street, N.W., Suite 600

Southwest Airlines Co. Washington, D.C. 20006 

2702 Love Field Drive bob.kneisley@wnco.com

Dallas, TX 75235-1611 (202) 263-6284

January 16, 2015
1

BEFORE THE 

U.S. DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

___________________________________________

)

Application of )

)

SOUTHWEST AIRLINES CO. )

) 

for an exemption pursuant to 49 U.S.C § 40109 ) Docket No. OST-2014-0222

to engage in foreign scheduled air transportation ) 

of persons, property and mail between Houston ) 

Hobby International Airport and Cancun, Mexico City, )

Puerto Vallarta, and San Jose del Cabo, Mexico )

)

 (HOU-CUN) )

 (HOU-MEX) )

 (HOU-PVR) )

 (HOU-SJD) )

___________________________________________ )

CONTINGENT ANSWER OF SOUTHWEST AIRLINES CO. 

AND MOTION FOR LEAVE TO FILE 

Southwest Airlines files this Contingent Answer in response to the unauthorized 

Consolidated Surreply filed by United Airlines and SkyWest Airlines (“United’s Surreply”) 

in this docket on January 12, 2015.

1 United’s Surreply consists almost entirely of rehash of arguments that United made (or could have made) in prior pleadings. The 

Surreply therefore fails to demonstrate “good cause” as required by Rule 6 of the 

Department’s Rules of Practice (14 CFR § 302.6) for the acceptance of unauthorized 

pleadings. 

If, however, the Department accepts United’s Surreply, Southwest seeks leave to 

file this Contingent Answer under Rule 6 for good cause. Southwest’s Answer is 

 1

 Common names of carriers are used herein. 
Contingent Answer of Southwest Airlines

January 16, 2015

2

narrowly tailored to address misleading statements in United’s filing and will thereby 

contribute to a more accurate basis for the Department’s decision. 

I. There is no Basis for Holding a Formal Carrier Selection Proceeding, 

Which Even United Now Concedes “Will Unduly Harm Consumers.”

While United continues to argue that the Department cannot reallocate one of 

United’s two designations to Southwest in the subject markets without “instituting a 

carrier selection proceeding,” United undercuts its own argument by conceding that 

such a proceeding is “unnecessary and costly” and “will unduly harm consumers.”2 On 

the latter point, Southwest agrees. Moreover, there is no legal or policy basis for 

requiring a formal “carrier selection proceeding” in this case. 

Unlike the cases cited by United, the relief that Southwest seeks here will not in 

any way prevent United from continuing to serve the markets. The Haneda slot 

allocation proceeding, for example, is inapplicable for several reasons including the fact 

that a DOT decision in that case will necessarily grant one carrier access to a particular 

market while denying it to all other applicants. Here, by contrast, reallocating one of 

United’s two designations in both the Houston - MEX and Houston - SJD markets to 

Southwest will not deny access to United. Instead United will retain one designation in 

each market, allowing United to offer any number of frequencies with any gauge of 

aircraft.

Further, United’s characterization of its partner carrier SkyWest as a “competitive 

alternative”

3 in these markets is greatly exaggerated at best. SkyWest operates in 

these markets solely on behalf of United Airlines under the United Express d/b/a. 

 2 United Surreply, pp.2-3. 3 Id., p. 3.
Contingent Answer of Southwest Airlines

January 16, 2015

3

Accordingly, United, not SkyWest, controls the pricing, capacity, scheduling, and 

marketing of SkyWest’s United Express service. A consumer cannot book a SkyWestnamed or -marketed flight from Houston to MEX or SJD. Far from being a “competitive 

alternative” to United, SkyWest provides no competition that is in any way independent 

from United. Thus the reallocation of SkyWest’s designations would not eliminate a 

separate competitor, it would open the door to Southwest to provide independent 

competition to United’s service that now does not exist. If United wishes to continue to 

offer small aircraft service in these markets, it is authorized to do so under its remaining 

designation. 

II. Southwest Does Not Object to United Pursuing Extra-Bilateral Authority for 

Itself or United Express, but there is no Justification for Requiring 

Southwest to Obtain Extra-Bilateral Authority Just to Enter these Markets.

United continues to argue – for a third time now – that Southwest should be 

required to obtain “extra-bilateral authority” in order to compete in markets that are 

dominated by United and its express partner via double designations that preclude new 

entry by any U.S. carrier. United also insinuates that Southwest is somehow seeking to 

eliminate competition simply by trying to enter these markets under the current bilateral 

agreement.

United has it exactly backwards. It is United, not Southwest, that is trying to 

suppress competition in these markets by relegating Southwest to an uncertain, timeconsuming, and unusual “extra-bilateral” process just to enter markets that are 

dominated by United’s dual designation, high-fare service. Let us be clear – Southwest 

has no objection to United seeking extra-bilateral authority for itself or its express 
Contingent Answer of Southwest Airlines

January 16, 2015

4

partner if it wishes to do so.4 Southwest welcomes any and all competition in these 

markets. But United has offered no justification why Southwest – a new entrant that will 

provide sorely needed low-fare competition -- should be forced into an extra-bilateral 

remedy for its sole access to these markets while United retains two designations under 

the current agreement. United’s suggestion that Southwest’s application to provide 

independent competition in these markets would somehow lessen competition and 

consumer choice has no basis whatsoever. 

III. United Has Misrepresented Southwest’s Position on the Timing of the 

Withdrawal and Reallocation of United’s Double Designations.

Finally, United’s Surreply misrepresents Southwest’s position in claiming that 

Southwest is asking the Department to withdraw and reallocate United’s double 

designations in the affected markets immediately.5 To the contrary, Southwest is 

requesting the DOT to reallocate the designations on October 15, 2015, the date that 

Southwest will initiate its Houston – MEX and Houston – SJD service. Consistent with 

the Department’s recent handling of U.S. – Mexico designation reallocations, United 

would be free to market and sell tickets on the SkyWest United Express service until the 

designations are reallocated.6 Given that the date of withdrawal is a full nine months 

away, United has ample time to re-accommodate the very small number of United 

Express passengers – if any – that are booked on flights after October 15 onto United 

 4 Similarly, Southwest does not object to the DOT asking the Government of Mexico to relax its metalbased designation requirement to allow SkyWest to operate under United’s single designation. However, 

this effort should not delay Southwest’s entry in these markets. 5 See United Surreply, p. 7 (“Southwest would also apparently have the Department withdraw United’s 

and/or SkyWest’s designations and force them to stop marketing, ticket sales and associated services 

immediately...) 6 See, e.g., Notice of Action Taken in Dockets DOT-OST-2014-0129 and -0130 at 2 (DOT authorized 

United to continue marketing and selling United Express service on ExpressJet until the date the 

designation was withdrawn from ExpressJet and reallocated to SkyWest). 
Contingent Answer of Southwest Airlines

January 16, 2015

5

mainline flights in the two markets at issue. In fact, United Express service did not even 

operate in the IAH-SJD market from October through December in either 2013 or 

2014.7

~~~~~~~~~~~~~~~~~~~

Nothing in United’s Surreply changes the overriding fact that Southwest’s 

proposed Houston -- Mexico service will provide independent competition, significant 

new low-cost travel options for passengers, and is in the public interest. Accordingly, 

we respectfully request that the Department expeditiously grant Southwest’s application 

to enable it to provide HOU-MEX and HOU-SJD service as it has proposed.

8 

Respectfully submitted,

______________________

Robert W. Kneisley

January 16, 2015

 7 U.S. DOT, T-100 Data, YE June 2014 and Innovata Schedule Data.

8 Southwest also requests that the Department grant the uncontested HOU-CUN and HOU-PVR authority 

and corresponding designations requested in its Application as well. 
CERTIFICATE OF SERVICE

I hereby certify that on January 16, 2015, a copy of the foregoing was served via 

e-mail on the following persons:

msinick@ssd.com (Alaska Airlines)

howard.kass@aa.com (American Airlines)

robert.wirick@aa.com (American Airlines)

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

chris.walker@delta.com (Delta Air Lines)

matwood@cozen.com (Frontier Airlines)

stephen.lachter@cozen.com (Frontier Airlines)

robert.land@jetblue.com (JetBlue Airways)

jhill@cooley.com (JetBlue Airways)

perkmann@cooley.com (JetBlue Airways)

robert.cohn@hoganlovells.com (Republic Airways)

patrick.rizzi@hoganlovells.com (Republic Airways)

dkirstein@yklaw.com (Spirit Airlines)

jyoung@yklaw.com (Spirit Airlines)

thomas.ting@suncountry.com (Sun Country Airlines)

dan.weiss@united.com (United Airlines)

steve.morrissey@united.com (United Airlines)

gmurphy@crowell.com (United Airlines)

sseiden@crowell.com (United Airlines)

john.varley@virginamerica.com (Virgin America) 

pjackson@swapa.org (Southwest Airlines Pilots’ Association)

rbtrinder@zsrlaw.com (City of Houston)

susan.kurland@dot.gov

brian.hedberg@dot.gov

brett.kruger@dot.gov

reese.davidson@dot.gov

todd.homan@dot.gov

peter.irvine@dot.gov

cristinasa@state.gov

info@airlineinfo.com

__________________________

Leslie C. Abbott