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

____________________________________ _ ______ ) Application s of ) ) AIR CANADA ) ALASKA AIRLINES, INC. ) F RONTIER AIRLINES, IN C. ) JETBLUE AIRWAYS CORP ORATION ) SOUTHWEST AIRLINES C O. ) Docket No. OST - 20 12 - 0029 SUN COUNTRY AIRLINES ) VIRGIN AMERICA INC. ) ) For exemptions from 14 C.F.R. Part 93, Subparts ) K and S, pursuant to 49 U.S.C. § 41718 ) (BEYOND

- PERIMETER SLOT EXEMPTIONS) )

________________________ ______ __ _____ ______ )

CONSOLIDATED ANSWER OF SOUTHWEST AIRLINES CO.

Communication with respect to this document should be addressed to:

Ron Ricks Robert W. Kneisley Executive Vice President

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

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

- 6284

March 2 7 , 20121 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

__ ________ _________________________________ ) Applications of ) ) AIR CANADA ) ALASKA AIRLINES, INC. ) F RONTIER AIRLINES, IN C. ) JETBLUE AIRWAYS CORP ORATION ) SOUTHWEST AIRLINES C O. ) Docket No. OST - 20 12 - 0029 SUN COUNTRY AIRLINES ) VIRGIN AMERICA INC. ) ) For exemptions from 14 C.F.R. Part 93, Subparts ) K and S, pursuant to 49 U.S.C. § 41718 ) (BEYOND

- PERIMETER SLOT EXEMPTIONS) )

____________ ____________________ ___________ )

CONSOLIDATED ANSWER OF SOUTHWEST AIRLINES CO.

Pursuant to Order 2012

- 2
- 21 establishing this proceeding, Southwest files this Consolidated Answer to the Applications filed by the six other participating carriers for the eight beyond

- perimeter slot exemptions created by the recently enacted FAA Modernization and Reform Act of 2012 (“FAA Act”). 1 As is detailed below, a review of the competing Applications filed in this proceeding makes clear that Southwest’s proposal is materially superior to the other proposals . When scored against the seven decisional criteria specified in the F AA Act , as well as considered side

- by

- side for substance and public benefits , there is no doubt that Southwest’s proposal is by far the strongest and most beneficial to the public in this case.

1 Common names of airlines are used.2

Overview Southwest is requesting two of the eight available beyond

- perimeter slot exemptions to provide nonstop service between Ronald Reagan Washington National Airport (DCA) and Austin, Texas (AUS) with single

- plane service beyond Austin to San Diego, California (SAN). In Order 2012

- 2
- 21 the Department clearly articulated the statutory criteria required for a grant of slot exemptions in this case. Southwest’s Application explained in detail how Southwest’s DCA

- AUS

- SAN proposal met all seven decisional criteria set forth in that order (Application at pp. 3
- 6). In fact, a close review of all the application s filed in this case demonstrates that Southwest is the only applicant to fully satisfy all seven carrier selection criteria. Every other applica nt does not meet one or more of the selection criteria, either by failing to offer significant network benefits and /or competition in beyond

- perimeter markets, or by failing to present credible evidence of public benefits that would result from their proposals. In fact, n o carrier other than Southwest has offe red a fully explained and documented estimate of consumer fare savings that would be created by the proposed beyond

perimeter service, along with a transparent calculation of the additional passengers that would benefit from the new low fares to be offered

. T able I below summarizes the seven carrier applications in this case as measured against the statutory selection criteria :3 Table I Only Southwest Airlines Fully Satisfies All Selection Criteria i n This Case

WN B6 AS VX F9 SY AC DOT Carrier Selection Criteria AUS AUS SJU PDX SAN SFO COS LAS YVR A. Domestic network benefits beyond the perimeter Y M Y Y M M M N N B. Increase competition in multiple markets Y N Y Y M M Y N N C. Not reduce travel options for small and medium hub communities inside the perimeter Y Y Y Y Y Y Y Y Y

D. Not result in meaningful delays Y Y Y Y Y Y Y Y Y

E. Enhance options for nonstop travel to/from the beyond perimeter airports Y Y Y Y Y Y Y Y Y

F. Positive impact on overall competition Y M Y Y M M M M N

G. Product public benefits, including lower fares, higher capacity and variety of service options. Y M M M M M M M M

TOTAL “YES” COUNT 7 3 6 6 3 3 4 3 3

Scoring Code Y = Yes N = No M= Minimal effect or insufficient data given in Application Beyond th e above tabulation, the superiority of Southwest’s A pplication becomes clear from the detailed carrier

- by

- carrier evaluations that are provided below. First, however, a few general observations:4 DCA

- AUS is the most over

- priced market in this case (Exhibit WN

- R

- 102) and is most in need of Southwest’s low

- fare service to provide relief to over

charged travelers

. Southwest’s forecast of traffic stimulation (146,082 annual passengers) dwarfs the next largest estimate (JetBlue

– San Juan (SJU) ) by a factor of 3.5 to 1 (Exhibit WN

- R

- 103). Alaska, Frontier, Virgin America, Sun Country and Air Canada make no estimate o f newly generated traffic. In some cases their costs and likely fares would not provide a basis for any price stimulation. With its new 175

- seat B737

- 800 aircraft Southwest proposes the largest air craft in the case (Exhibit WN

- R

- 104). Some carriers are proposing aircraft as small as 120 seats (Air Canada), 119 seats (Virgin America), and even the 100
- seat E190 regional jet (JetBlue). DCA

- AUS is the second largest un

- served market in this case (Exhibit WN

- R

105). At the opposite end of the spectrum is DCA

- Colorado Springs ( COS ) , which is less than 40% the size of DCA

- AUS, and is the smallest O&D market being proposed

. 2 Among the competing markets in this case, DCA

- AUS has no current nonstop service, and the Dulles service is only two daily round trips . Austin’s current service and capacity pales in comparison to other contending markets, including several that already have, or shortly will have, DCA nonstop service (Exhibits WN

- R

- 106 and WN

- R

- 107).

2 DCA

- COS reported 29,435 fared O&D passengers for YE Q3 2011 , compared to 76,995 for DCA

- AUS in the same period.5 The limited incumbents as a group have 111 DCA slot s, or 13.0% of the airport total (Exhibit WN

- R

- 108). Southwest has 25 DCA slots , all by virtue of its acquisition of AirTran Airways, now Southwest’s wholly

- owned subsidiary. When examined on a size

- adjusted basis, however, Southwest has by far the smallest pool of slots of any limited incumbent in this case relative to its presence in the domestic market (Exhibit WN

- R

- 109). On this relative scale JetBlue and Frontier have more than seven and eight times respectively, the sl ots of Southwest. Southwest is only one of only three applicants offering single

- plane one

- stop beyond service (between DCA and SAN in Southwest’s case), which is the best and strongest way to increase competition in multiple markets beyond the perimeter , and to provide maximum network benefits. Detailed carrier

- by

- carrier evaluations of each proposal are given below and in the attached exhibits. A brief summary follow s
. I. JetBlue’s Two - Route Application Is Seriously Flawed JetBlue ’s first choice is for two slot exemptions to serve DCA

- SJU

. “ If and only if ” the Department grants that request (Application at p. 29) , JetBlue wants two more slot exemptions to provide regional jet (“ RJ ”) service between DCA and AUS (Exhibit WN

- R

202). JetBlue’s AUS proposal is far inferior to Southwest’s AUS proposal , and even its DCA

- SJU proposal is serious ly flaw ed

.

Regarding its conditional DCA

- AUS proposal, JetBlue would utilize only small 100

- seat E

- 190 RJ aircraft to serve this important market

. Southwest’s 175
- seat B737

- 800 service and consumer benefits would6 dwarf anything JetBlue could generate. Southwest would offer DCA

- AUS passengers 75% more annual seats than JetBlue (Exhibit WN

- R

- 203), and assuming an 85% load factor for both carriers, Southwest would carry 45,000 more annual passengers than JetBlue (Exhibit WN

- R

- 204). Moreover, t he unit cost of JetBlue’s E

- 190 aircraft is almost five cents per mile more, or 88% higher , than Southwest’s 737

- 800 per
- mile unit cost (Exhibit WN

- R

- 206). This dramatically lower operating cost will allow Southwest to serve the DCA

- AUS market profitably at much lower fares than JetBlue. By several standard metrics Southwest is six to seven times la rger than JetBlue at Austin (Exhibit WN

- R

- 205). In fact, Southwest has over 700, 000 Rapid Rewards members in Austin and nearby San Antonio. Southwest ’s much larger presence in the AUS area will unquestionably enable it to attract many more passengers on the DCA

- AUS route than JetBlue , leading to a stronger service with greater consumer savings

. Southwest’s detailed and transparent forecasts indicate that total consumer savings from its proposal will be approximately $23 million per year (Exhibit WN

- 120). JetBlue provides no analysis, no evidence, and no corroboration to support its alleged “forecasts , ” which it relegates to an un

explained footnote on page 27. JetBlue makes no attempt to evaluate consumer savings g enerated by its proposal. So , its claim of 36,500 fare

stimulated passengers is unsupported by any empirical evidence or analysis and should be rejected.7 JetBlue has made no commitment to proposed fares in the markets it wishes to serve . It only states, without any explanation or support, that its fares will range from $125 to $665 in the DCA

- AUS market (Application at p. 24)

. But based on JetBlue’s fares in markets of similar distance, its average DCA

- AUS fare would have to be least $ 30 or 18% higher than Southwest’s (Exhibit WN

- R

- 207). Southwest’s fares would be significantly lower tha n JetBlue’s in the DCA

AUS market. As shown in Exhibit WN

- 121, Southwest’s system average fare for the DCA

- AUS distance is $169, which would be a 36% discount below current DCA

- AUS connecting fares. As for SJU, this is a 50% smaller and leisure

- oriented market that already has low fares . In fact , DCA

- SJU fares on a distance

- adjusted basis are currently 22% lower than DCA

- AUS fares (Exhibit WN

- R

- 208). A lthough JetBlue does not make any effort to calculate fare savings from its proposal , any such savings w ould be minimal in light of the low

- fare nature of the SJU market to begin with ( see Exhibit WN

- R

- 210 ). Once again JetBlue has avoided any commitment t o DCA

- SJU fares in its proposal to the Department. It side

- stepped this critical decisional issue by stating that its “low fares” would range from $127 to $667 (Application at p. 21) , and that in some unexplained fashion these fares would stimulate 41,610 new passengers in the market (Application at p. 29, footnote 28). This claim is unsupported by any analysis and has no credibility.8

In sum , JetBlue offers no traffic forecast, no concrete fare proposal, and does not even attempt to claim any fare savings for consumers. For these and other reasons, JetBlue’s application

-- with respect to both SJU and its distant second choice AUS

-- is far inferior to Southwest’s application

. Given that only four new beyond

- perimeter routes are available in this case, JetBlue certainly does not warrant two routes, and even its first choice of DCA

- SJU is weak

. II. Alaska Does Not Deserve An Allocation Of Four Slots , a nd Its DCA - SAN Proposal Has Been Mooted By US Airways ’ Selection Of San Diego Alaska Airlines has requested two slot exemption s to serve DCA

- PDX service (its clearly stated first choice), and two more to serve DCA

- SAN as a second choice

. To ask for 50% of the total slot exemptions available is an extraordinary request for a carrier that does not have low costs or low fares. While PDX is a market that would benefit from nonstop service to DCA, Alaska’s proposal will likely generate no fare savings for PDX

- DCA passengers

. The same is true for Alaska’s second choice SAN

DCA proposal, but that proposal is effectiv ely mooted by US Airways ’ March 21 announcement of DCA

- SAN as its beyond

- perimeter nonstop market selection

. Alaska’s DCA

- SAN request would simply double

- track the US Airways operation with out meaningful price competition

. Southwest , in contrast, will o ffer substantial price competition to U S A irways with its proposed single plane SAN

- AUS

- DCA service . The US fare between DCA and SAN will average approximately $395 assuming it tracks US Airways’ pricing in its DCA

- PHX market. Southwest’s one

- stop far e between SAN and DCA will average $196, or 50% less (Exhibits WN

- 122 and WN

- R

- 308 through

- 311)

. There is therefore no question9

that Southwest will carry its conservative forecast of 10,000 DCA

- SAN annual passengers (Exhibit WN

- 202). Alaska’s application suffers from a number of additional flaws : Alaska is not a low

- far e carrier compared to Southwest. In the domestic system its fares are typically 20% to 2 5 % higher than Southwest’s for the same distance (Exhibit WN

- R

- 301). Southwest’s service proposal is superior to Alaska’s with respect to both capacity and fares . With 18 more seats per departure, Southwest would provide 13,140 more seats per year (Exhibit WN

- R

- 304) , and would carry nearly 11,000 more annual passengers tha n Alaska would under either of its proposals (Exhibit WN

- R

- 305). Southwest’s AUS

- DCA service will do much more to impact current DCA fares than Alaska’s proposal. As shown in Exhibit WN

- R

- 306, current DCA

- AUS yields are significantly higher than both DCA

- PDX and DCA

SAN on a distance

- adjusted basis. Except for temporary introductory fares, 3 Alaska does not make any commitment to proposed fares for either PDX or SAN . U sing Alaska’s current DCA

- SEA and DCA

- LAX fares as a benchmark, however, Alaska’s proposal is unlikely to deliver any fare savings to consumers since its average fares in both PDX and SAN would likely be higher than the prevailing DCA one

- stop fares (Exhibit s WN

- R

- 307 and R

- 308). In fact,

3 Alaska’s Application at p. 2 refers to initial fares as low as $149 for DCA

- PDX and $159 for DCA

- SAN. But these are introductory fares that Alaska commits to only for one year and only so long as fuel costs do not rise. Such temporary fares have little rel evance
. The real question is what will Alaska’s average fares be in the longer term ( i.e ., in the first normalized year of operations ) , a question which Alaska ’s application does not answer
.10 Alaska’s likely fare in the DCA

- SAN market would be 37% higher ($73

one - way) than Southwest’s single

- plane one

- stop fare (Exhibit WN

- R

308) . Alaska’s claims of consumer savings are thus a myth , contrary to the experience of Alaska’s existing beyond

- perimeter service s
. As with JetBlue, Alaska certainly does not deserve an award of two routes in this proceeding, 50% of the beyond

- perimeter slot pool available. Its second choice proposal for SAN is especially weak, both by its own terms and in light of US Airways’ announcement of nonstop SAN

- DCA service. Even Alaska’s first choice proposal of PDX

- DCA is inferior to Southwest’s AUS

- DCA proposal, given that Alaska would operate smaller aircraft at higher fares and will deliver minimal or no fare savings to

consumers. III. Virgin America’s Request for Four slots in One Market is Unjustified Virgin America’s request for four slot exemptions , or 50% of th e total available for seven applicants , is not justified on the face of Virgin’s application. This is particularly true given that United has selected its San Francisco ( SFO ) hub for nonstop service to DCA in the Incumbent Carrier proceeding. The Washing ton DC area enjoys another 15 round

- trips per day between IAD and SFO. Among the serious flaws in Virgin America’s proposal are the following : As noted above, WAS

- SFO is abundantly well

- served already , and United will now provide nonstop service between its SFO hub and DCA

. Virgin America offers the smallest mainline aircraft in the case (119 seats). Southwest’s 175

- seat B737

- 800 will provide 47%, or 41,000 more seats11 per year and carry 34,000 more annual passengers than Virgin America (Exhibits WN

- R

- 402 and R

- 403). The current DCA

- SFO fare is actually 12% below the DCA

- AUS fare in absolute terms even tho ugh the SFO route is nearly twice the distance of the AUS route (Exhibits WN

- R

- 405 and R

- 406). Thus there is little opportunity for fare savings on the SFO route , and certainly minimal compared to the AUS route. Despite its claims about disciplining pricing in the DCA

- SFO market , Virgin America has had little to no effect on United’s fares in bot h the IAD

- SFO and IAD

- LAX markets (Exhibits WN

- R

- 407 and R

- 408). There is no reason to expect a materially different result in the DCA market. Virgin America’s IAD

- SFO fare is actually $10 more than the current average fare in the connecting DCA

- SFO marke t (Exhibit WN

- R

- 4 09 ). The Department should therefore expect no price stimulation under Virgin’s proposal. Virgin America provided no traffic forecast, no fare proposal, and no estimates of traffic stimulation or consumer fare savings. In addition, U nited has already selected SFO for daily nonstop service to DCA

. Virgin’s proposal to provide two SFO

- DCA daily round

- trips on top of United’s nonstop i s not justified

. IV. Frontier Has Given No Public Interest or Evidentiary Basis to Justify an Award of Slots f or t he Small DCA - COS Market Frontier’s application to serve DCA

- COS is e specially weak and undeserving of an award of the limited slot exemptions available. In fact, Frontier has a serious dilemma defending its a pplication

. DCA

- COS by itself is by far the smallest market in12

this case, too small to support Frontier’s proposed 168

- seat aircraft, and too small to justify an award of slot exemptions. Nor can Frontier re ly on traffic from BWI or IAD to support its DCA

- COS proposal. 4 On the other hand, if COS is viewed as part of the Denver market , Frontier’s application is also deficient since Frontier already provides three daily nonstop s, and United provides one, in the DCA

- DEN market (the most DCA nonstops of any beyon d

- perimeter destination) . In total, DEN has 16 daily nonstop round trips to DCA and IAD combined (Exhibit WN

- R

- 501). There are many additional reasons to reject Frontier’s application in favor of Southwest’s: The DCA

- AUS market is 162% larger than DCA

- COS (Exhibit WN

- R

- 503).

In fact, COS is only the 14 th largest beyond

- perimeter market without nonstop service to DCA (Exhibit WN

- R

- 506)

. In Exhibit F9

- 6 Frontier alleges that the “ Washington Metro Region ” is the largest O&D market for COS , at 126 PDEW. However, when the irrelevant BWI and IAD traffic is stripped away, the DCA

- COS market is left with only 40 PDEW and it ranks 10 th (not first) in market size for COS (Exhibit WN

- R

- 507). Southwest serves 20 destinations from AUS; Frontier serves on ly 5 markets from COS (Exhibit WN

- R

- 503a).

4 See, e.g. , DOT/FAA Notice Grant ing P etition W ith C onditions ( DL/ US s lot s wap), where the Department explains at length why the three Washington area airports “are not interchangeable” and “are not economic substitutes.” 75 Fed. Reg. 26322, 26332

- 26333 (May 11, 2010).13 Like Southwest, Frontier proposes one

- stop service to San Diego ; however, unlike Southwest, Frontier has almost no presence in San Diego and will have difficulty generating local traffic against US Airways’ nonst op and Southwest’s single

- plane one

- stop to DCA

. Southwest is the largest carrier at SAN, accounting for 41% of all SAN point of sale passenger , while Frontier carries only 2% of SAN passengers (Exhibit WN

- R

- 509). Frontier’s alleged connecting markets at COS do not actually connect to Frontier’s proposed DCA flight , so it will gain no traffic support from any of them (Exhibit WN

- R

- 510). Only Denver connects at all, but just in the eastbound direction (Exhibit WN

- R

- 510). Frontier claims its proposal will generate over $12 million in “total annual savings” (Exhibit F9

- 4), but provide s no evidence or analysis to support these alleged savings. Frontier does not even disclose its expected fares in the markets it propos es to serve. Further, Its claimed traffic and savings are not even broken out by market, so it is impossible to discern what if any benefits would accrue to DCA

- COS passengers. (Exhibit WN

R

- 511). On a size

- adjusted basis Frontier has 8 times as many D CA slots as Southwest (Exhibit WN

- R

- 502). In sum , DCA

- COS is too small, DCA

- DEN is too well served, and Frontier has not proven any public benefits to support its request. Frontier also has failed to offer a credible consumer savings estimate , or even to disclose its proposed fares to the14

Department. Frontier has not met a reasonable burden of proof for an allocation of slot exemption s in this case . Its application is far inferior to Southwest’s. V. Sun Country’s Application Lacks Any Economic Support and Will Produce Little Consumer Benefit Sun Country has provided no evidentiary support for its request to double

- track US Airways’ nonstop in the DCA

- Las Vegas ( LAS ) market (Exhibit WN

- R

- 601) , and the nature of this market makes it unlikely that S un Country would generate any significant consumer benefits in any event

. DCA

- LAS is already a low

- fare market , and Sun Country has made no showing that its service would produce meaningful competiti ve benefits (Exhibit WN

- R

- 602). In addition:

Sun Country has not provided any forecast of traffic or consumer benefits in th is proceeding. Sun Country does not disclose the fares it would charge DCA

- LAS passengers , nor does it offer a ny analysis of traffic or prospective fare savings. Sun Country bets the credibility of its DCA

- LAS application on its “success” in developing the DCA

- Lansing ( LAN ) market with A IR

- 21 slot exemptions

. Yet Sun Country has u nder

- performed in that market and missed its t raffic forecast by 31% (Exhibit WN

- R

- 606)

. Moreover, Sun Country’s DCA

- LAN service has only marginally affected Delta’s pricing (Exhibit WN

- R

- 606)

. Southwest would make superior use of DCA slots by providing 36% more seats than Sun Country (Exhibit WN

- R

- 6 03). While Sun Country provided no estimate of fare savings, Southwest has

e stimate d that it will generate more than $ 23 million annually in consumer15 savings from its DCA

- AUS

- SAN proposal , based on detailed and transparent economic analysis for the Depar tment and all parties to see. In sum, Sun Country has failed to support its application with reasonable evidentiary a nalysis. Sun Country’s chosen market of LAS is already a low

- fare market from both DCA and IAD , and any consumer savings from Sun Country service will be minimal. Its application is inferior to Southwest’s under all relevant decisional criteria

. VI. Air Canada ’s Vancouver Proposal Does Not Merit An Award of Scarce Slot Exemptions Air Canada’s application for DCA

- Vancouver ( YVR ) does not deserve an award of scarce beyond

- perimeter slot exemptions for several reasons. On f ive separate occasions between 2000 and 2008 Air Canada and United attempted nonstop IAD

- YVR service with A319 aircraft . As Star Alliance partners it appeared to be an ideal market

– Air Canada ’s hub at Vancouver connected to United ’s hub at Washington Dulles. But all five efforts (three by Air Canada and two by United) failed miserably

-- Air Canada’s load factor averaged onl y 52% to 62% during its attempts (Exhibit WN

- R

- 701 A ). A significant reason for the se repeated failures is that Air Canada and United charged very high fares (Exhibit WN

- R

- 700)

. 5 Simply moving this transcontinental flight 28 miles from IAD to DCA will not change the outcome. With all the “on

- line” connecting markets at both ends of the unsuccessful IAD

- YVR route it is difficult to imagine how a route from Vancouver to DCA could succeed (Exhibit WN

- R

- 702). Air Canada’s application suffers from several additional flaws: Air Canada has provided no traffic analysis, no proposed fares, and no estimates of consumer benefits in support of its proposal

.

5 Campbell

- Hill’s analysis of historical fare data showed that the Air Canada and United fares were well over 50% higher than Southwest fares for the same nonstop distance.16 Air Canada would operate a small 120

- seat airplane with schedule times keyed to its transpacific bank at YVR, and not for the convenience of local DCA

- YVR travelers. Air Canada ’s high fares would stimulate no new traffic. Traditionally Air Canada’s unit costs in transborder operations have at least equaled the costs of U.S. legacy carriers, and have been well above Southwest’s costs. It is clear from Air Canada’s Application that it views this case as an opportunity to tap into fifth freedom traff ic between Washington and Asia. In fact, Air Canada’s proposed schedule is not timed for the convenience of the local Washington

- Vancouver markets but i nstead is “timed to ensure that Washington, DC area travelers will be able to access Air Canada’s wide array of services to Asia and the Pacific that it operates from Vancouver” (Application at p. 7). The specific on

- line YVR connecting markets cited by Air Canada are Hong Kong, Seoul, Shanghai, Beijing, Sydney and Tokyo. But, a s shown in Exhibit WN

- R

- 70 3, United’s hub at SFO already serves all of these Asian markets , and in May United will begin DCA

- SFO nonstop service

. An award to Air Canada in this proceeding would give United, its closely aligned Star Alliance partner, access to another transpacific gateway (YVR) , and effectively bestow on United

– a Large Incumbent carrier

- two DCA beyond

- perimeter routes , contrary to the expressed purpose of this proceeding. United and Air Canada would naturally code share on the17 DCA

- YVR segment for both transborder traffic as well as Washington

- Asia passengers. As a foreign flag carrier , Air Canada has been treated well at DCA. It has 18 slots in its own name, and it enjoys much more access to the DCA market through United’s 76 slots (Exhibit WN

- R

- 108). For all the reasons stated above, Air Canada’s application for slot exemptions to serve DCA

- Vancouver should be denied

. C ONCLUSION For the reasons given above and in its Application , Southwest’s proposal for DCA

- AUS

- SAN service is superior to the competing applications in this proceeding w i t h

r e s p e c t t o i t s o v e r a l l public benefit s , as well as s a t i s f y i n g the seven carrier selection criteria specified in the Department ’s I nstituting O rder

. Accordingly, Southwest urges the Department to grant it two beyond

- perimeter DCA slot exemption s to provide nonstop service between DCA and AUS , with single

- plane beyond service to SAN. Respectfully submitted ,

__________________________ Robert W. Kneisely

March 2 7 , 2012C ERTIFICATE OF SERVIC E

I hereby certify that on March 27 , 2012 , a copy of the foregoing was served via e - mail on the following persons:
anita.mosner@hklaw.com (Air Canada) megan.lawrence@alaskaair.com (Alaska Airlines) Marshall.Sinick@squiresanders.com (Alaska Airlines) Edward.Saucer@squiresanders.com (Alaska Airlines robert.cohn@hoganlovells.com (Frontier Airlines) patrick.rizzi@hoganlovells.com (Frontier Airlines robert.land@jetblue.com (JetBlue Airways) jhill@dowlohnes.com (JetBlue Airways) perkmann@dowlohnes.com (JetBlue Airways) John.Fredericksen@suncountry.com (Sun Country Airlines) barbara.russell@virginamerica.com (Virgin America) john.varley@virginamerica.com (Virgin America) jegillick@zsrlaw.com (Virgin America) susan.kurland@dot.gov todd.homan@dot.gov brian.ctr.meehan@faa.gov Jim Smith Director of Aviation Austin

- Bergstrom International Airport jimsmith@ci.austin.tx.us John E. Potter President and Chief Executive Officer Metropolitan Washington Airports Authority john.potter@mwaa.com info@airlineinfo.com

__________________________ Leslie C. Abbott

# Summary Section

## Southwest Airlines Would Generate More Consumer Savings Than Any Other Applicant
Annual Fare Savings (Millions)

1/ It is unclear from Frontier’s exhibits whether this estimate includes savings claimed for COS

- SAN local O&D passengers. This market is irrelevant to this case and should not be included in any estimate of benefits. Source Exhibit WN

- 120, Exhibit F9

- 4 and AS

- D

- 10. Docket OST - 2012 - 0029 Exhibit WN - R - 101

(PDX) (SAN) Did Not Address Consumer Savings 1/

## DCA
– AUS is the Most Overpriced of 

# All Markets Proposed in This Case

Nonstop Miles YE Q3 2011 Market Yield

1/ Curve derived from all DCA beyond perimeter markets with 50 or more fared passenger per day each way. Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees. Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Yield Curve for DCA Beyond Perimeter Markets 1 AUS

SJU SAN

COS

PDX

SFO Docket OST

- 2012 - 0029 Exhibit WN - R - 102 Page 1 of 2

LASPercentage Market Yield Above DCA Market Yield Curve

1/ Regression curve shown on page 1. Source : US DOT O&D Survey YE Q3 2011, via Diio, LLC. Current DCA Yield 20.1¢ 17.1¢ 11.3¢ 11.4¢ 1 1.7¢ 9.5¢ 13.9¢ Market Yield Curve Yield 1 18.0¢ 16.2¢ 10.8¢ 11.1¢ 12.0¢ 10.5¢ 15.6¢ 

## DCA
– AUS is the Most Overpriced of 

# All Markets Proposed in This Case Docket OST - 2012 - 0029 Exhibit WN - R - 102 Page 2 of 2

## Southwest is One of Only Two Applicants That Estimated Traffic Stimulation

New Passengers (000)

1/ JetBlue provided no evidence or analysis to support its claims of traffic stimulation (Application Page 27, footnotes 28 a nd 29). Source: Exhibit WN

- 124, JetBlue Application, page 27. Docket OST - 2012 - 0029 Exhibit WN - R - 103

Applicant: (SJU) (AUS) A320 E190 Did Not Address Stimulation

1/ 1/

## Southwest Proposes to Operate the Largest Aircraft Among All Applicants

Seats Docket OST - 2012 - 0029 Exhibit WN - R - 104

Applicant: DCA Market: AUS COS PDX SAN SJU AUS SFO LAS YVR Aircraft Type: B737 - 800 A320 B737 - 800 B737 - 800 A320 E190 A319 B737 - 700 A319 157 157

129 120 119

## DCA - AUS Is the Second Largest Un - Served Market In This Case Fared O&D Passengers YE Q3 2011 Docket OST - 2012 - 0029 Exhibit WN - R - 105

1 / Frontier operates 3 DCA

- DEN round trips per day and United has one per day

. 2 / Notice of US Airways of Beyond

- Perimeter Service, March 21, 2012 3/ Notice of Intent of United Air Lines, February 27, 2012. Source : US DOT O&D Survey, YE Q3 2011, via Diio, LLC. Current DCA Nonstops : Carrier Daily Frequency --

0 --

0 US 1 2 -- 0 --

0 1 UA 1 3 US

1 -- 0 NA

## Current Nonstop Frequencies Between Washington and

Applicants’ Beyond - Perimeter Market Choices Weekly Roundtrips Docket OST - 2012 - 0029 Exhibit WN - R - 106

Market: DCA : F9 - 21 UA - 7 US - 7 US - 7 UA - 7
IAD: UA - 14 UA - 62 UA - 7 UA - 75 UA - 14 UA - 21 UA - 7 UA - 7 WN - 14 VX - 27 104 DCA IAD 109

21

Source: OAG Schedules for the week of June 11 th through 17 th , 2012. Includes US Airways’ recently announced choice to serve DCA

- SAN. 111

28Total Domestic O&D Passengers (Millions) 20.4 101.4 10.7 N/A 15.1 5.5 1.1 4 .3 41.6 78.9 46.2 64.2 Percent of Airport Total 4.0 % 2.9 % 2.3 % 2.1% 0.7% 0.7 % 0.2% 0.0% 53.9 % 12.8% 11.4% 8.9% 

## DCA Slots by Carrier

1/ In its Answer filed March 20, 2012 in the inside - perimeter case (Docket DOT - OST - 2000 - 7182) Frontier advances the theory that it only has 12 slots because 8 of its 20 are actually held by its sister company Republic Airlines. Consistent with Frontier’s theory, while Southwest has 25 slots it is in fact a new entrant and not even a limited incumbent because its slots are operated by its wholly owned subsidiary AirTran Airways. Source: FAA Slot Reports, Current and Future, dated 2

- 13
- 2012 and OAG schedules June 2012. Non - Limited Incumbent Carriers Limited Incumbent Carriers DCA Slots 

### Total Slots = 853 Docket OST - 2012 - 0029 Exhibit WN - R - 108

1

## Southwest’s Share of DCA Slots is

Disproportionately Small Among Limited Incumbents
DCA Slots per 100,000 Daily Domestic O&D Passengers Docket OST - 2012 - 0029 Exhibit WN - R - 109

Note: VX and AC excluded (VX= 0 slots, AC=unreported O&D). Source : US DOT O&D Survey, YE Q3 2011, via Diio, LLC; and FAA Slot Reports, Current and Future, dated 2

- 13
- 2012 and OAG schedules June 2012

.

# Rebuttal to JetBlue

## JetBlue Has 7 Times More DCA Slots Than Southwest On a Size - Adjusted Basis DCA Slots per 100,000 Daily Domestic O&D Passengers Docket OST - 2012 - 0029 Exhibit WN - R - 201

Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC

. ; FAA Slot Reports, Current and Future, dated 2

- 13
- 2012 and OAG schedules June 2012.

## JetBlue Has Relegated Its Request to Serve Austin to a Distinctly Conditional Status

Source : JetBlue’s Application 

## “JetBlue requests two (2) slot exemptions for new service between DCA and 

## JetBlue’s focus city at SJU and, if the slots for SJU are granted, two (2) slot exemptions for new service between DCA and JetBlue’s growth city of AUS ...” (p. 1)

“ Only if that service to our focus city (SJU) is granted does JetBlue request that DOT consider its second request for service to Austin, Texas .” (p. 1)

“ If, and only if, the SJU service proposal is selected , JetBlue also requests that it be awarded two (2) slots for service between DCA and Austin, Texas...” (p. 29) Excerpts from JetBlue’s Application Docket OST - 2012 - 0029 Exhibit WN - R - 202

# Southwest Would Offer 75% More DCA - AUS Seats

Per Flight Than JetBlue’s Conditional RJ Proposal

+75%

Source : Carrier Applications. Seats per Departure Docket OST - 2012 - 0029 Exhibit WN - R - 203+45,607

Source : Carrier Applications. Assumes an 85% load factor for both carriers. Docket OST - 2012 - 0029 Exhibit WN - R - 204

Annual Onboard Passengers Assuming 85% Load Factor 

## Southwest Would Carry 45,000 More DCA - AUS Annual Passengers than JetBlue’s Conditional Proposal

### Southwest AUS

Nonstop Service JetBlue AUS Nonstop Service

Departures per Week Seat - Departures per Week Number of Destinations Share of Point of Sale SAN O&D Passengers 364 49,829 20 36% Departures per Week

Seat - Departures per Week Number of Destinations Share of Point of Sale SAN O&D Passengers 49 7,350 6 6% Docket OST

- 2012 - 0029 Exhibit WN - R - 205

Source: US DOT O&D Survey, YE Q3 2011; OAG Schedules for the week of June 11 th through the 17 th , 2012.



## Southwest Is 7 Times the Size of JetBlue at Austin

## JetBlue’s Conditional Proposal to Serve AUS Would Use a Small Aircraft

With Unit Costs 88% Higher Than Southwest’s B737 - 800

+88% Aircraft Direct Operating Cost per ASM (cents) Docket OST - 2012 - 0029 Exhibit WN - R - 206

Source : US DOT Form 41, via Diio, LLC. Southwest’s Direct operating cost for the B737

- 800 is based on its reported Form 41 costs for the B737

- 700 adjusted for differences in unit operating costs between the two aircraft types. Average Stage Length (Miles) 732 672 ¢ ¢Docket OST - 2012 - 0029 Exhibit WN - R - 207

DCA Fared O&D Passengers 

# JetBlue’s DCA - AUS Fares Would Be

At Least $30 Higher Than Southwest’s

+18%

1/ Includes all markets over 1000 miles where B6 operated for the entire YE Q3 2011 period exclusively with E190s. Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees. Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC; Exhibit WN

- 121. 1 Estimated at Weighted Average B6 Yield In E190 Markets Over 1000 Miles

## DCA - SJU Already Has Low Fares But DCA - AUS Does Not

Nonstop Miles Market Yield per RPM YE Q3 2011

1/ Curve derived from all DCA beyond perimeter markets with 50 or more fared passenger per day each way. Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees. Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Yield Curve for DCA Beyond Perimeter Markets 1 AUS

SJU Docket OST - 2012 - 0029 Exhibit WN - R - 208 Page 1 of 2Docket OST - 2012 - 0029 Exhibit WN - R - 208 Page 2 of 2
Percentage Market Yield Above DCA Market Yield Curve

Note: Regression curve shown on page 1. Source : US DOT O&D Survey YE Q3 2011, via Diio, LLC. Current DCA Yield 20.1¢ 13.9¢ Market Yield Curve Yield 1 18.0¢ 15.6¢ 

## DCA - SJU Already Has Low Fares 

# But DCA - AUS Does Not+51% Docket OST - 2012 - 0029 Exhibit WN - R - 209

DCA Fared O&D Passengers



## The DCA - AUS Market Is 51% Larger than the DCA - SJU Market

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

## JetBlue’s DCA - SJU Fares Would Not Be More Than 13% Below Current Fares
SJU Average Fare Docket OST - 2012 - 0029 Exhibit WN - R - 210

1/ Estimated DCA

- SJU fare based on fare per mile in JetBlue’s nonstop JFK route. Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees

. Source : US DOT O&D Survey YE Q3 2011; US DOT Form 41, via Diio, LLC. Nonstop Distance: 1,554 1,597 1 Estimated JetBlue Fare Based on Its JFK - SJU Yield

# Southwest Would Offer 17% More Seats

Per Flight Than JetBlue’s Proposed SJU Service

+17%

Source : Carrier Applications. Seats per Departure Docket OST - 2012 - 0029 Exhibit WN - R - 211+15,202

Source : Carrier Applications. Assumes as 85% load factor for both carriers. Docket OST - 2012 - 0029 Exhibit WN - R - 212

Annual Onboard Passengers Assuming 85% Load Factor 

## Southwest Would Carry

15,000 More Annual Passengers than JetBlue’s SJU Proposal

# Rebuttal to Alaska

## Alaska Is Not a Low Fare Carrier And Will

Not Likely Reduce Yields in Its Proposed Markets

Nonstop Miles

Note : Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fee s
. Includes all markets domestic markets with 600 or more one

- way flights for YE Q3 2011. Alaska Yield Curve: y = 2219.9x - .692 Southwest Yield Curve: y= 2292.2x
- .722
Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Southwest Yield Curve Docket OST - 2012 - 0029 Exhibit WN - R - 301

Alaska Yield Curve AS Yield Curve Nonstop Miles Higher than WN Yield Curve 1200 20% 1500 21% 2000 22% 2500 23% Yield per RPM YE Q3 2011

## For Its Size Alaska Has Significantly More DCA Slots Than Southwest DCA Slots per 100,000 Daily Domestic O&D Passengers Docket OST - 2012 - 0029 Exhibit WN - R - 302

Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC

. ; FAA Slot Reports, Current and Future, dated 2

- 13
- 2012 and OAG schedules June 2012.

## Southwest Has A Significantly Larger San Diego Presence than Alaska

Source : OAG Schedules for June 2012; US DOT O&D Domestic Survey YE Q3 2011; US DOT Form 41, via Diio, LLC. Docket OST - 2012 - 0029 Exhibit WN - R - 303



### Southwest Nonstop Service at SAN Alaska Nonstop Service at SAN

Departures per Week Seat - Departures per Week Number of Destinations Share of Point of Sale SAN O&D Passengers 648 88,851 19 41% Departures per Week

Seat - Departures per Week Number of Destinations Share of Point of Sale SAN O&D Passengers 137 18,611 9 6 %

## Southwest Would Offer 11% More Seats Per Flight Than Alaska

+11%

Source : Carrier Applications. Seats per Departure Docket OST - 2012 - 0029 Exhibit WN - R - 304

# Southwest Would Carry

Nearly 11,000 More Annual Passengers than Alaska

+10,946

Note: Includes fared and non

- fared passengers. Assumes a 98% completion factor. Source : Carrier Applications. Assumes an 85% load factor for both carriers. Annual Onboard Passengers Assuming 85% Load Factor Docket OST - 2012 - 0029 Exhibit WN - R - 305

# AUS - DCA Yields Are Significantly Higher Than PDX and SAN Yields

1/ Curve derived from all DCA beyond perimeter markets with 50 or more fared passenger per day each way. Note : Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fee s. Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Docket OST - 2012 - 0029 Exhibit WN - R - 306 Page 1 of 2

Nonstop Miles Yield Curve for DCA Beyond Perimeter Markets 1 AUS

SAN PDX Market Yield per RPM YE Q3 2011Docket OST - 2012 - 0029 Exhibit WN - R - 306 Page 2 of 2
Percentage Market Yield Above DCA Market Yield Curve

Note: Regression curve shown on page 1. Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC. Current DCA Yield 20.1 ¢ 11.3¢ 11.4¢ Market Yield Curve Yield 1 18.0 ¢ 10.8¢ 11.1¢



# AUS - DCA Yields Are Significantly Higher Than PDX and SAN Yields

## Using Actual Alaska Yields at DCA Its Fares

for DCA - PDX Would Be Higher Than the Current Market Average

Average Fare Docket OST - 2012 - 0029 Exhibit WN - R - 307

+5%

1/ See Exhibit WN

- R

- 309 for calculation of AS current yield for LAX and SEA to/from DCA. Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees

. Source : US DOT O&D Survey YE Q3 2011; US DOT Form 41, via Diio, LLC. 1 

## DCA - PDX Local 

# Fare Savings with Alaska =$0

## DCA - SAN Local Fare Savings with Alaska =$0 Alaska’s Fares for DCA - SAN Would Be 4% Higher than the Current Market Average And 37% Higher Than Southwest’s Fare

Average Fare Docket OST - 2012 - 0029 Exhibit WN - R - 308

+4%

1/ See Exhibit WN

- R

- 309 for calculation of AS current yield for LAX and SEA to/from DCA. 2/ From Exhibit WN

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

. Source : US DOT O&D Survey YE Q3 2011; US DOT Form 41, via Diio, LLC. 1 +37%

2 (All Carriers)

## Calculation of Actual Alaska Average Yield in Current DCA Nonstop Markets Docket OST - 2012 - 0029 Exhibit WN - R - 309

AS DCA

- SEA and DCA

- LAX Actual Source/Basis
1 Fared Passengers 195,987 YE Q3 2011 from O&D Survey via Diio, LLC.
2 Fared Revenue Including Fees 1 $53,762,971 YE Q3 2011 and Form 41 Data from O&D Survey via Diio, LLC.
3 Fared RPM’s 455,245,747 YE Q3 2011 from O&D Survey via Diio, LLC.
4 Average Fare Including Fees 1 $274 Line 2 / Line 1
5 Average Yield (cents) 11.8 Line 2 / Line 3 x 100

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

## US Airways’ DCA - SAN Average Fare Should Approximate $395 Docket OST

- 2012 - 0029 Exhibit WN - R - 311

1/ From U.S. DOT, Origin

- Destination Passenger Survey, via Diio, LLC. Inc. Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees

. 2/ Nonstop Miles 3/ Row 1 x Row 2 

## 1. US DCA - PHX Yield (Cents) 17.34

2. DCA - SAN Nonstop Miles 2,276



## 3. Estimated US DCA - SAN Fare $395

# Rebuttal to Virgin America

## California Will Receive Three New Nonstop

Routes from DCA Added By Large Incumbent Carriers Docket OST

- 2012 - 0029 Exhibit WN - R - 401

Source: American and United Announcements Weekly Departures Weekly Seat - Departures LAX 7 1,309 SFO

7 868 United DCA - SFO American DCA - LAX US Airways DCA - SAN UA B737 - 700

AA B757

From DCA To: SAN

7 1,050 US A320

## Southwest Would Offer 47% More Seats Per Flight Than Virgin America

+47%

Source: Carrier Applications. Seats per Departure Docket OST - 2012 - 0029 Exhibit WN - R - 402

# Southwest Would Carry 34,000 More Annual Passengers than Virgin America With One Slot Pair

+34,053

Note: Includes fared and non

- fared passengers. Assumes a 98% completion factor. Source: Carrier Applications . Assumes an 85% load factor for both carriers. Annual Onboard Passengers Assuming 85% Load Factor Docket OST - 2012 - 0029 Exhibit WN - R - 403

## DCA - AUS Is Under - Served Relative to DCA - SFO Including



# the Proposals of Southwest and Virgin America

Source: OAG Schedules for the week of June 11, 2012 and proposals of Southwest and Virgin America and announced United service. PDEW per Daily Flight Docket OST - 2012 - 0029 Exhibit WN - R - 404

Fared O&D Passengers 76,995 133,170 133,170 Daily Roundtrips including WN and VX Proposals: 1 2 3 +15% +72%

## DCA - SFO Already Has Low Fares But DCA - AUS Does Not

Nonstop Miles

1/ Curve derived from all DCA beyond perimeter markets with 50 or more fared passenger per day each way. Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fee s. Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Yield Curve for DCA Beyond Perimeter Markets 1 AUS

SFO Docket OST

- 2012 - 0029 Exhibit WN - R - 405 Page 1 of 2

Market Yield per RPM YE Q3 2011Docket OST - 2012 - 0029 Exhibit WN - R - 405 Page 2 of 2
Percentage Market Yield Above DCA Market Yield Curve

Note: Regression curve shown on page 1. Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC. Current DCA Yield 20.1¢ 9.5¢ Market Yield Curve Yield 1 18.0¢ 10.5¢ 

## DCA - SFO Already Has Low Fares But DCA - AUS Does Not

## Despite a Nonstop Distance Nearly Double that of DCA - AUS,

the Current DCA - SFO Fare is 12% Lower than the DCA - AUS Fare

Average Fare Docket OST - 2012 - 0029 Exhibit WN - R - 406

12%

Distance (Miles) 1,315 2,442

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

. Source : US DOT O&D Survey YE Q3 2011; US DOT Form 41, via Diio, LLC.

## Virgin America Had No Effect on United’s Fares Or

Passenger Volume After It Entered the IAD - SFO Nonstop Market

United IAD - SFO Fare Before And After VX Nonstop

Last Full Year For VX Nonstop (YE Q2 2007) First Full Year

With VX Nonstop (YE Q3 2008) Last Full Year For VX Nonstop (YE Q2 2007) First Full Year

With VX Nonstop (YE Q3 2008) United IAD - SFO Fared Passengers Before And After VX Nonstop

Note: Fared passengers only. Excludes all taxes and government charges. Source : US DOT O&D Survey YE Q3 2011, via Diio, LLC. Docket OST - 2012 - 0029 Exhibit WN - R - 407

+0.4% Over 15 Mos. +6.3% Over 15 Mos.

## Virgin America Had Virtually No Effect on United’s Fares

Or Passenger Volume After It Entered the IAD - LAX Nonstop Market

United IAD - LAX Fare Before And After VX Nonstop

Last Full Year For VX Nonstop (YE Q3 2007) First Full Year

With VX Nonstop (YE Q4 2008) Last Full Year For VX Nonstop (YE Q3 2007) First Full Year

With VX Nonstop (YE Q4 2008) United IAD - LAX Fared Passengers Before And After VX Nonstop

Note: Fared passengers only. Excludes all taxes and government charges. Source : US DOT O&D Survey YE Q3 2011, via Diio, LLC. Docket OST - 2012 - 0029 Exhibit WN - R - 408

- 2.2% Over 15 Mos. - 1.4% Over 15 Mos.

## Virgin America’s Fares for IAD - SFO Are $10 More

than the Market Average for DCA - SFO
– Negating Any Fare Stimulation From DCA - SFO Service

Average Fare Docket OST - 2012 - 0029 Exhibit WN - R - 409

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

. Source : US DOT O&D Survey YE Q3 2011; US DOT Form 41, via Diio, LLC.

# Rebuttal to Frontier

## There Are Already 16 Daily Nonstops Between DCA/IAD and COS/DEN

DEN

COS IAD

DCA



## Airline Frontier Southwest United United United 

## Origin

Denver Denver Colorado Springs Denver Denver 

## Destination

DCA IAD IAD DCA IAD Total 

## Daily

Departures

3 

### 2 1 1 9 

### 16 

## Daily Seat Departures

486 

### 274 66 170 1,348 

### 2,284 Docket OST

- 2012 - 0029 Exhibit WN - R - 501

UA UA WN

UA F9

## On a Size - Adjusted Basis Frontier Has

Eight Times As Many DCA Slots As Southwest DCA Slots per 100,000 Daily Domestic O&D Passengers Docket OST - 2012 - 0029 Exhibit WN - R - 502

Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC

. ; FAA Slot Reports, Current and Future, dated 2

- 13
- 2012 and OAG schedules June 2012.

## The AUS - DCA Market Is Over 160% Larger than the DCA - COS Market

+162% Fared DCA O&D Passengers (YE Q3 2011) Docket OST - 2012 - 0029 Exhibit WN - R - 503

Note: Fared passengers only. Source : US DOT O&D Survey YE Q3 2011; US DOT Form 41, via Diio, LLC.

### Southwest AUS

Nonstop Service Frontier COS Nonstop Service

Departures per Week Seat - Departures per Week Number of Destinations 364 49,829 20 Departures per Week

Seat - Departures per Week Number of Destinations 46 5,009 5 Docket OST

- 2012 - 0029 Exhibit WN - R - 503A

Source: US DOT O&D Survey, YE Q3 2011; OAG Schedules for the week of June 11 th through the 17 th , 2012.



## Southwest’s Network at AUS is Over 9 Times Larger Than Frontier’s at COS

## Austin’s Population is Over 4 Times the Size of Colorado Springs

+325%

Source: US Census 2010. Population Docket OST - 2012 - 0029 Exhibit WN - R - 504Nonstop Miles

YE Q3 2011 Market Yield

1/ Curve derived from all DCA beyond perimeter markets with 50 or more fared passenger per day each way. Note : Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fee s. Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Yield Curve for DCA Beyond Perimeter Markets 1 AUS

COS Docket OST - 2012 - 0029 Exhibit WN - R - 505 Page 1 of 2 

## Current DCA - AUS Yields Are Higher Than DCA - COS YieldsDocket OST - 2012 - 0029 Exhibit WN - R - 505 Page 2 of 2
Percentage Market Yield Above DCA Market Yield Curve

Note: Regression curve shown in Page 1. Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC. Current DCA Yield 20.1¢ 17.1¢ Market Yield Curve Yield 1 18.0¢ 16.2¢



## Current DCA - AUS Yields Are Higher Than DCA - COS Yields

# There Are 13 Beyond - Perimeter Markets Without DCA Nonstop

Service That Have More Passengers Than COS Docket OST - 2012 - 0029 Exhibit WN - R - 506

Rank 1 2 3 4 5 6 7 8 9

10 11 12 13 14 Market San Antonio (SAT) Portland (PDX) Austin (AUS) Tucson (TUS) Albuquerque (ABQ) San Juan (SJU) San Jose (SJC) Honolulu (HNL) Sacramento (SMF)

El Paso (ELP) St. Thomas (STT) Ontario (ONT) Anchorage (ANC) Colorado Springs (COS) $ 226 $265 $265 $241 $261 $216 $230 $489 $268
$225 $237 $239 $404 $254 16.3 11.3 20.1 12.3 15.8 13.9 9.5 10.1 11.3

13.1 14.9 10.6 12.0 17.1

Excludes applicant markets with nonstop service (SFO and LAS) and YVR is not shown. Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees

. Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. DCA Fared PDEW 136 117 105 89 78 70 64 60 59

57 50 50 48 40 Average Fare Yield (Cents)

## DCA is Only the 10 th 

## Ranked COS O&D Market

Source: US DOT O&D Survey, YE Q3 2011. Docket OST - 2012 - 0029 Exhibit WN - R - 507

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Market Dallas (DFW) Las Vegas (LAS) Houston (IAH) Los Angeles (LAX) Washington (IAD) Atlanta (ATL) Orlando (MCO) Chicago (ORD) Salt Lake City (SLC) Washington (DCA) San Antonio (SAT) Phoenix (AZA) Long Beach (LGB) Phoenix (PHX) Tampa (TPA) 103 78 64 55 47 45 45 43 41 40 40 38 37 37 36 COS Fared PDEW

## Denver Has More DCA Flights Than Any Other Beyond - Perimeter Market
DCA Daily Roundtrips Docket OST - 2012 - 0029 Exhibit WN - R - 508

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

### Southwest Nonstop

Service at SAN Frontier Nonstop Service at SAN

Departures per Week Seat - Departures per Week Number of Destinations Share of Point of Sale SAN O&D Passengers 648 88,851 19 41% Departures per Week

Seat - Departures per Week Number of Destinations Share of Point of Sale SAN O&D Passengers 28 3,825 1 2 % Docket OST

- 2012 - 0029 Exhibit WN - R - 509

Source: US DOT O&D Survey, YE Q3 2011; OAG Schedules for the week of June 11 th through the 17 th , 2012.



## Southwest Is Over 20 Times Larger Than Frontier at San Diego

# Frontier’s Schedules Do Not Provide Roundtrip Connections

to Any of Its Claimed Markets Beyond COS Including Its DEN Hub

1/ Used 30 minute minimum connect time, 3 hour maximum connect time. Source: OAG Schedules for the week of June 11 th through the 17 th , 2012 Claimed connecting markets are from Exhibit F9

- 3. Docket OST - 2012 - 0029 Exhibit WN - R - 510



## Westbound Connection Within 3 Hours 1 

## NO NO NO NO NO Los Angeles Phoenix 

## Seattle Portland Denver Eastbound Connection Within 3 Hours 1 

## NO NO NO NO YES Eastbound

Same Day Over 3 Hours NO NO NO NO NO Westbound Same Day Over 3 Hours NO NO NO NO NO

## A Selection of Austin
– Washington DC Links

No supportable traffic forecast is provided. Without analysis Frontier 

## simply assumes an 80% load factor. No details or derivation are provided for the “blended O&D average fare,” or for the “blended forecast average fare.”
It appears that benefits are erroneously claimed for local COS - SAN O&D passengers (an irrelevant market for this case).
It appears that Frontier has double - counted its claimed benefits for DCA SAN passengers (counted once on the DCA - SAN segment and once more on the SAN - COS segment). 

## Frontier Provides No Evidence or Analysis to Support Its Claimed Consumer Savings Docket OST - 2012 - 0029 Exhibit WN - R - 511



## Rebuttal to Exhibit F9 - 4

## Because the DCA - COS Market Is So Small Frontier Would

Need to Achieve A Traffic Stimulation Rate of At Least 330% to 545% Docket OST

- 2012 - 0029 Exhibit WN - R - 512

Source/Basis
1 F9 Forecast DCA

- COS Onboard Passengers 98,381 Exhibit F9

- 4 (196,761 Onboard Passengers /2)
2 Maximum F9 DCA

- SAN One

- Stop Passengers 17,313 WN Projected Unconstrained DCA

- SAN Passengers including non

- fared passengers. Exhibit WN

- 202 Line 9 x 1.086 (adjustment to include non

- fared passsengers). WN passengers should exceed F9 passengers because of WN's larger presence at SAN.
3 Other Connections 0 F9 Has No roundtrip connections for its proposed times at COS.
4 Total Remaining for DCA

- COS 81,067 Line 1

- Line 2

- Line 3

5 Current DCA

- COS O&D Passengers (Including Zero

- Fared) 31,443 U.S. DOT, Origin

- Destination Passenger Survey, YE Q3 2011 via Diio, LLC.

Required DCA

- COS Stimulation Assumed Share Stimulation 6 40% 545% Line 4 / Line 5 / 40% Share 7 50% 416% Line 4 / Line 5 / 50% Share 8 60% 330% Line 4 / Line 5 / 60% Share

# Rebuttal to Sun Country

## DCA - LAS Already Has Nonstop Service Docket OST - 2012 - 0029 Exhibit WN - R - 601

Source : OAG Schedules for the week of June 11 th through the 17 th , 2012 Weekly Departures Weekly Seats 7 1,050 US A320

## DCA - LAS Already Has Low Fares But DCA - AUS Does Not

Nonstop Miles Market Yield per RPM YE Q3 2011

1/ Curve derived from all DCA beyond perimeter markets with 50 or more fared passenger per day each way. Note: Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees. Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC. Yield Curve for DCA Beyond Perimeter Markets 1 AUS

LAS Docket OST - 2012 - 0029 Exhibit WN - R - 602 Page 1 of 2Docket OST - 2012 - 0029 Exhibit WN - R - 602 Page 2 of 2
Percentage Market Yield Above DCA Market Yield Curve

Note: Regression curve shown on page 1. Source : US DOT O&D Survey YE Q3 2011, via Diio, LLC. Current DCA Yield 20.1¢ 11.7¢ Market Yield Curve Yield 1 18.0¢ 12.0¢ 

## DCA - LAS Already Has Low Fares But DCA - AUS Does Not

## Southwest Would Offer 36% More Seats Per Flight Than Sun Country

+36%

Source : Carrier Applications. Seats per Departure Docket OST - 2012 - 0029 Exhibit WN - R - 603

# Southwest Would Carry 28,000 More Annual Passengers than Sun Country

+27,972

Note: Includes fared and non

- fared passengers. Assumes a 98% completion factor. Source : Carrier Applications. Assumes an 85% load factor for both carriers. Annual Onboard Passengers Assuming 85% Load Factor Docket OST - 2012 - 0029 Exhibit WN - R - 604

## Sun Country Has Significantly More DCA Slots for Its Size Than Southwest DCA Slots per 100,000 Daily Domestic O&D Passengers Docket OST - 2012 - 0029 Exhibit WN - R - 605

Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC

. ; FAA Slot Reports, Current and Future, dated 2

- 13
- 2012 and OAG schedules June 2012.

## Sun Country’s DCA - LAN Traffic is 31% Below Forecast and It Has Had Little Effect on Delta’s Fares

DCA - LAN Local Passengers

Forecast First Year 1 Actual 2 Delta Average Fare

1/ See corrected Exhibit SY

- 2, Docket DOT

- OST

- 2000
- 7182. 2/ Q2 and Q3, 2011 traffic in letter from Sun Country to Docket FAA

- 2012
- , January 26, 2012, Attachment A. Two quarters of data annualized by doubling the number from Attachment A. 3/ From Sun Country letter to Docket FAA

- 2012
- , January 26, 2012, Attachment A. Docket OST - 2012 - 0029 Exhibit WN - R - 606

Q2 + Q3 2010 Q2 + Q3 2011 - 31%

- 9%

# Rebuttal to Air Canada

## Air Canada and United Have Attempted IAD - YVR Five Times And Have Failed Every Time Docket OST - 2012 - 0029 Exhibit WN - R - 701A

Source: U.S. DOT, T

- 100 Data, via Diio LLC. 

## Historical YVR - IAD Service

Average Low Month Period Load Factor Load Factor Air Canada June 2000

- October 2001 52% 32%

June 2002

- September 2002 57% 36% June 2004

- September 2004 63% 49% United May 2006

- September 2007 70% 39%

June 2008

- August 2008 86% 82%

## Vancouver is the Only Proposed Market That Does Not Have Service from IAD Weekly IAD Roundtrips Docket OST - 2012 - 0029 Exhibit WN - R - 701

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

## If YVR Doesn’t Work at United’s IAD Hub How Would it Work at DCA? Docket OST

- 2012 - 0029 Exhibit WN - R - 702

Air Canada Beyond YVR Weekly Departures Weekly Seat - Departures Destinations 454 35,715 17 United Beyond IAD Weekly Departures Weekly Seat - Departures Destinations 1,311 105,749 68

Note: United and Air Canada are Star Alliance partners. Source : OAG Schedules for the week of June 11 th through 17 th , 2012

## The Asia Connecting Markets Proposed By Air Canada Are Well Served By United

Hong Kong (HKG) Seoul (ICN) Tokyo (NRT) Beijing (PEK) Shanghai (PVG) Sydney (SYD) YES YES YES YES YES YES UA @ SFO Docket OST - 2012 - 0029 Exhibit WN - 703



### YES YES YES YES YES YES AC @ YVR


### NO NO YES NO YES YES UA @ LAX 

### YES NO YES YES YES NO UA @ ORD 

### NO

NO YES YES NO NO UA @ IAD

Source : OAG Schedules for the week of June 11 th through the 17 th , 2012 Nonstop Service Offered From:

## Air Canada Has Significantly More DCA Slots for Its Size Than Southwest

DCA Slots per 100,000 Daily U.S. Domestic or Transborder Seats Docket OST - 2012 - 0029 Exhibit WN - R - 704

Source: OAG Schedules for the week of June 11 th through 17 th , 2012; FAA Slot Reports, Current and Future, dated 2

- 13
- 2012 and OAG schedules June 2012. No. of DCA Slots 25 18

## Southwest Will Offer 46% More Seats Per Flight Than Air Canada

+46%

Source : Carrier Applications. Seats per Departure Docket OST - 2012 - 0029 Exhibit WN - R - 705

# Southwest Would Carry Over

33,000 More Annual Passengers than Air Canada

+33,445

Note: Includes fared and non

- fared passengers. Assumes a 98% completion factor. Source : Carrier Applications. Assumes an 85% load factor for both carriers. Annual Onboard Passengers Assuming 85% Load Factor Docket OST - 2012 - 0029 Exhibit WN - R - 706