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

__________________________________________ ) Application of ) ) SOUTHWEST AIRLINES CO. ) ) For exemptions from 14 C.F.R. Part 93, Subparts ) Docket DOT
- OST - 2000 - 7182 K and S, pursuant to 49 U.S.C. § 41718(g)(2) ) ( WITHIN

- PERIMETER SLOT EXEMPTIONS ) ) For service between Ronald Reagan ) Washington National Airport (DCA) and ) Oklahoma City (OKC ) )

_________________________ _________________)

COMMENTS OF THE SOUTHWEST AIRLINES PILOTS’ ASSOICATION

Communications with respect to this document should be addressed to: Therese Merrick General Counsel Southwest Airlines Pilots ’ Association 1450 Empire Central Dallas, TX 75247 ( 214 ) 722

- 4212 tmerrick@swapa.org2 I. INTRODUCTION Southwest Airlines Pilots’ Association (“SWAPA”) is the exclusive b argaining representative for more than 6 , 000 Southwest Airlines pilots

. Due to the Spring 2011 Southwest Air lines C o. (“Southwest”) acquisition of AirTran Airways , Inc. (“AirTran”) and a recent seniority integration plan negotiated between Southwest, AirTran, SWAPA, and the Airline Pilots Association (“ALPA”) (the current b argaining repr esentative of AirTran pilots), by
2015 SWAPA will also represent AirTran’s nearly 1 , 700 pilots. Once all AirTran pilots have transitioned over to Southwest , SWAPA will be the sole bargaining representative for nearly
8 , 000 pilots at the nation’s largest domestic carrier

. Having reviewed the applications for exemption submitted by US Airways , Frontier Airlines, and South west Airlines , SWAPA strongly support s the application of Sou thwest Airlines for the slot exem ption s to serve passengers between Ronald R eagan Washington National Airport ( “ DCA ” ) and Will Rogers World Airport in Oklahoma City , OK ( “ OKC " ) , with continuing single

- plane service to Dallas Love Field (“DAL”)

.

II. ANALYSIS OF AVAILABLE DCA SLOT EXEMPTION S
A. SOUTHWEST’S PROPOSED SERVICE USING DCA SLOT EXEMPTION S BEST FULFILLS THE AIR - 21 SELECTION CRITERIA SWAPA recognizes that in accordance with Title 49 U.S.C. § 41718(b), the Secretary of Transportation must allocate perimeter slots in a manner that promotes air transportation: 1) By new entrant air carriers and limited incumbent air carriers; 2) To communities without existing nonstop air transportation to Ronald Reagan Washington National Airport;3

3) To small communities; 4) That will provide competitive nonstop air transportation on a monopol y nonstop route to Ronald Reagan Washington National Airport; or 5) That will produce the maximum competitive benefits, including low fares. The Southwest application fulfills four of these five criteria, the maximum possible. First, Southwest is a limited incumbent in the market and holds a disproportionately small number of slots given the carrier’s size

. (Exhibit 1 ) Despite previous attempts to gain access to DCA, Southwest came up short until its recent acquisition of AirTran Airw ays which resulted in nominal slots and operating rights at DCA. Second, OKC currently has no nonstop service to
DCA . Third, OKC is currently classified by the Federal Aviation Administration as a “small hub” airport, which fulfills the “small community” c riterion (to our knowledge, the term “small community” has not been defined by Congress or the Department in this context). Finally, and most importantly, Southwest’s proposed service will provide nonstop air transportation that will introduce low fares a nd competitive benefits to the OKC

– DCA market while also extending
convenient same plane and connecting service beyond OKC to markets such as Dallas Love Field

. Available DCA slots are precious commodities that should be utilized in a manner that serves the greatest public benefit. Aircraft type and market size should be considered when determining the best

- suited carrier for the available exemptions

. Southwest Airlines pr opose s to operate a 137

- seat 1 Boeing 737

- 700 aircraft between DCA and OKC. This aircraft is 71% larger than the Embraer 175 previously used by Delta Air L ines (“Delta”) to serve Mississippi’s Jackson

- Medgar Wiley Evers International Airport ( “ JAN ” ) with th ese exemption s , and 99%

1 Southwest is currently in the process of reconfiguring its entire fleet of

- 700s with 143 seats

.4

larger than the Embraer 170 that US Airways has proposed to operate to JAN if awarded the exemption s . Currently DCA

– OKC is the nu mber one inside

- perimeter O&D market without non st op service to DCA (Exhibit 2 ). More passengers currently fly between OKC and DCA, using either connecting or direct one

- stop flights, than fly between JAN and DCA

. T his statistic includes the JAN advantage of available nonstop service to DCA for the last seven years. (Exhibit 2 ) Of the top 10 inside

- pe rimeter markets without nonstop service to DCA, flights between DCA and OKC command the highest fares

. (Exhibit 3 ) The OKC

– DCA market is ripe to benefit from the “Southwest Effect” 2 , as Southwest Airlines can stimulate the market with its low fare model. When using current yield curves as a predictive guide, Southwest anticipates that it will offer fares that average $108 less than the current average in the market base. (S ee Southwest Application ) If awarded the slot exemptions, Southwest could stimulate 4 6 , 220 new passengers in the local OKC to DCA market, increasing the total O&D market size to some 80 ,000 passengers, including both reven ue and non

- revenue passengers . ( Southwest Application, Exhibit WN

- 203) Southwest service will also likely stimulate further demand nation

- wide by providing new one stop (same plane) and connecting service to DCA, complete with lower fares, from the large Dallas, Las Vegas, Phoenix, Denver, and Houston markets. The Southwest p roposal may also provide two

- stop connecting opportunities to other points in Texas such as Lubbock and Amarillo.

2 The “Southwest Effect” was coined in 1993 by the U.S. DOT to describe the considerable boost in air travel that invariably resulted from Southwest’s entry into new markets. Market stimulation results from Southwest’s competitive, low

- cost service, particularly in markets where so

- called “Legacy” airlines previously enjoyed monopoly or near

- monopoly status on certai n routes.5

Southwest is likely to carry approximately 29,000 passengers in the single

- plane DCA

DAL market plus other connecting markets during the fi rst year of DCA

– OKC service

. (Exhibit
WN

- 202) Lower fares will have an added benefit of imposing pricing discipline on competitive connecting routes from DCA. In essence, the “Southwest Effect” will benefit not only Southwest’s customers, but also our co mpetitors’ customers. Neither US Airways nor Frontier Airlines can offer consumer s benefits from a vibrant , competitive and dynamic system l ike South west.
B. OTHER APPLICANTS’ PROPOSED USE S OF DCA SLOT EXEMPTION S WILL NOT BENEFIT THE FLYING PUBLIC TO THE SAME EXTENT AS SOUTHWEST The slot exemption s recently relinquished by Delta Airlines w er e flown using a 50

- seat CRJ or a 75

- seat CRJ

- 700. Based on load factor reports from the Department of Transportation,
t his regional jet service was not particularly successful for Delta. Since 2005 , load factors were generally at or below 50% of seat capacity, ranging from 24 to 33 passengers per flight on average . (Exhibit 4 ) Despite the high

- yield nature of DCA traffic, Delta was losing significant

mon ey on the JAN

– DCA route.
In applications and letters of support for the DCA slot exemptions , the value of US Airways ’ service to JAN has been debated. Some suggest that any action taken by the DOT other than awarding the exemptions to US Airways will result in reduced JAN service. However, it must be noted that US Airways does not requi re these slot exemption s to continue servicing the JAN

– DCA market. US Airways controls a huge number of DCA slots and certainly could assign one of its existin g slots to the JAN market if its service is demanded as assert ed in the US Airways application

. (Exhibit 1 ) Nonetheless, a decade’s worth of e mpirical data makes it clear that JAN

- DCA passengers do not regularly travel to DCA. (Exhibit 4 )6

US Airways has a cost structure similar to that of Delta , so it may very well see the same negative 20% margins that Delta experienced flying nonstop between DCA and JAN

. (Exhibit 5 )

. F acilitating hub

- and

- spoke style connection options is not a stated, or eve n implied objective for the Air

- 21 slots. However, even if connecting options were a selling point , one must question how long US Airways would maintain a route with low load factors and negative net margins

. Frontier Airlines (“Frontier”) proposes service to Louisville, Kentucky with the available exemption s , but this appears to be a very limited market opportunity due to Frontier’s lack of a robust network at Louisville International Airport’s Standiford Field ( “ SDF ” ). Although Frontier commits to fly a 138

- seat A

- 319 aircraft for the nonstop service between Louisville and DCA, its use of the exemptions would simply not benefit the flying public on a far

- reaching basis like Southwest would, considering Southwest’s robus t route network based at OKC

. To date, Southwest operates 21 daily flights (all Boeing 737 aircraft) to eight cities on a nonstop basis, plus an additional 64 cities on a one

- stop or connecting basis. Keeping it simple, Southwest proposes to use the DCA e xemption s to fly one round

- trip flight per day between DCA and OKC, using a 137

- seat Boeing 737 aircraft. SWAPA supports Southwest’s forecast model which projects this number to be nearly 110 passengers on each leg by the latter part of the first year of service. Furthermore, these passengers will likely have paid a significantly lower fare to travel between OKC and DCA than the US Airways’ passengers would be forced pay to fly between DCA and JAN

. In total , Southwest’s use of the exemption s could have a far

- reaching effect on U.S. travelers. F ull airplanes , low fares and sustainable7

service should be a goal of the Department in the award of these scarce and valuable within

perimeter slots

. III. CONCLUSION As a representative for Southwest employees, SWAPA is acutely aware of Southwest’s lack of access to major airports such as DCA and LGA where grandfathered rights

-- in some cases dating back before deregulation

-- dictate all the places where the largest U.S. domestic carrier is prohibited from provid ing its legendary low

- fare service . T he rare availability of two DCA within

- perimeter slot exemptions provides the Department with a compelling opportunity to enable Southwest to expand its limited DCA service wi th a new low

- fare, large aircraft nonstop flight to OKC, a market currently without nonstop service. By awarding the DCA slot exemption s to Southwest, utilization of a scarce resource can be maximized to produce the greatest public benefits

. For the reasons stated above, SWAPA fully supports the Southwest application and urges the Department to grant the two currently available DCA slot exemptions to Southwest Airlines so that it may begin non

- stop service from Oklahoma City to Washington Nati onal Airport.

### CERTIFICATE OF SERVI CE

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

- mail on the following persons:

robert.cohn@hoganlovells.com (Frontier Airlines) patrick.rizzi@hoganlovells.com (Frontier Airlines ) leslie.abbott@wnco.com (Southwest Airlines) bob.kneisley@wnco.com (Southwest Airline s) howard_kass@usairways.com (US Airways) benjamin.slocum@usairways.com (US Airways) susan.kurland@dot.gov todd.homan@dot.gov mark.kranenburg@okc.gov ( Mark Kranenburg ) john.potter@mwaa.com ( John E. Potter )

___________________ Therese Merrick

# Exhibit #1: DCA Slots vs. Carrier Size

Based on July 2012 peak day slots. Based on schedules filed with Innovata LLC as of March 8 th , 2012 and certain assumptions made about future operations.

0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 Domestic O&D Passengers 

## O&D Passengers By Carrier Brand YE2011Q3

Based on US Origin & Destination Survey updated as of January 10 th , 2012 

# DCA Slot Breakdown

- July 2012

0 50 100 150 200 250 300 350 400 450 500 DCA Slots

# Exhibit #2: Top DCA markets without N/S Service

Based on YE2011Q3 US Origin & Destination Survey 

# Fared Passengers Daily Each Way YE2011Q3

97
87

74

59 55 54 53 52 50 48 66

0 20 40 60 80 100 120

OKC TUL ICT MLI CID EYW XNA GPT BTR MGM JAN Passengers Daily Each Way

# Exhibit #3: Fare Comparison for Top DCA markets

without N/S Service

$263.06 $254.19 $241.02 $224.80 $211.24 $200.71 $198.99 $186.76 $177.75 $174.35

$0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00

OKC CID MGM XNA BTR TUL GPT EYW MLI ICT O&D Net Fare 

## Net Fare for Fared O&D Passengers YE2011Q3

Based on YE2011Q3 US Origin & Destination Survey. Fare is net of estimated taxes and government fees.

# Exhibit #4: Historic DCA
– JAN Performance

69.9%

58.8% 57.4% 59.0% 55.4%

46.5% 47.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%

2005 2006 2007 2008 2009 2010 2011* Load Factor 

## Delta Airlines Bidirectional Load Factor

Sourced from T100 Segment d ata filled as of 02/23/2011 *Data is through November 2011 

## Delta Airlines Average Onboard Passengers Per Flight
33
29 28 28 27
24 29

0 5 10 15 20 25 30 35

2005 2006 2007 2008 2009 2010 2011* Onboard Passengers

Sourced from T100 Segment d ata filled as of 02/23/2011 *Data is through November 2011

# Exhibit #5: Estimated Delta Performance

$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000

Total Segment Cost Total Revenue Allocated to Segment Estimated Ancillary Revenue Prorated to Segment Prorated Portion of Connect Revenue
Local Revenue Total Segment Cost $5,159,490

$3,447,182 

### ($1,712,308) Estimated Segment Loss 

# Bidirectional Delta Segment Profit(Loss) for DCA

- JAN

Based on O&D Survey, T

- 100, and Form 41 data for the YE2011Q3. Segment costs includes direct, indirect, CPA, and ownership cost s associated with ASA or Comair flying a CRJ

- 700 with 65 seats for Delta Airlines. Fuel was assumed to by at average cost for the time frame for the Del ta domestic system. Proration of connect revenue was done on a individual ticket basis and used the common SQRT(Segment A)/(SQRT(Segment A)+SQRT(Segment B)) m eth od. 

### Summary Table Local Passengers 11,493 Connecting Passengers 4,685 Total Onboard Passengers 16,628 Local Revenue $2,734,428 Prorated Portion of Connect Revenue $551,629 Beyond Portion of Connect Revenue $536,608 Estimated Ancillary Revenue Prorated to Segment $161,125 Total Segment Revenue $3,447,182 Departures 622 Estimated Cost Per Departure $8,295 ($3,822 per hour, 14.84¢ per ASM) Total Cost $5,159,490 Profit (Loss) ($1,712,308)