BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of SOUTHWEST AIRLINES CO. for an exemption pursuant to 49 U.S.C. § 40109 to engage in foreign scheduled air transportation of persons, property and mail between Houston Hobby Airport an d Cancun, Mexico City, Puerto Vallarta, and San Jose del Cabo, Mexico (HOU

- CUN) (HOU

- MEX) (HOU

- PVR) (HOU

- SJD) Docket DOT

- OST

- 2014

- 0222

REPLY OF THE CITY OF HOUST ON

Communications with respect to this document should be sent to: Mario C. Diaz Director Ian Wadsworth Chief Commercial Officer Department of Aviation CITY OF HOUSTON 16930 John F. Kennedy Blvd. Houston, TX 77032 (281) 233

- 3000 (281) 233

- 1859 (fax) Rachel B. Trinder ZUCKERT, SCOUTT & RASENBERGER, L.L.P. 888 Seventeenth Street, N.W. Washington, D. C. 20006

- 3309 (202) 973

- 7927 (202) 342

- 0683 (fax) rbtrinder@zsrlaw.com For the City of Houston Dated: January 8, 2015BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of SOUTHWEST AIRLINES CO. for an exemption pursuant to 49 U.S.C. § 40109 to engage in foreign scheduled air transportation of persons, property and mail between Houston Hobby Airport and Cancun, Mexico City, Puerto Vallarta, and San Jose del Cabo, Mexico (HOU

- CUN) (HOU

- MEX) (HOU

- PVR) (HOU

- SJD) Docket DOT

- OST

- 2014

- 0222

R EPLY OF THE CITY OF HOUST ON

The City of Houston ( “ Houston ” or the “ City ” ) respectfully submits this reply regard ing the application filed in this docket on December 11 , 2014 by South west Airlines Co. (“Southwe st”) for authority in four Houston

- Mexico markets, and to the answers subsequently filed on December 29, 2014 by United Airlines, Inc. (“United”) and SkyWest Airlines, Inc. (“ SkyWest ”), and Spirit Airlines, Inc. (“Spirit”) , relating to Southwest’s proposed Houston

- Mexico City/San Jose del Cabo operations

. Houston wishes to make the following points:Reply of the City of Houston

Page 2

2 1. I n connection with the negotiations between the U.S. and Mexico concerning the liberalized bilateral agreement initialed in November 2014 , and again in this proceeding, Houston has expressed its strong support for authority to be made available to all carriers that wish to provide services. For the benefit of consumers and the public interest, t he City also strongly supports new market entry , low

- fare servic es and maximizing competition , while not wishing to disrupt or lose existing services

. 2. Houston has for some time been working closely with its carriers

– including both United and Southwest

– on multiple projects designed to accommodate the significan t increases in international traffic experienced over several years and anticipated for the future . This effort is taking place on several fronts, and includ e s : securing additional CBP officers and the installation of new technology to enhance the efficie ncy of international arrivals processing at George Bush Intercontinental Airport ( “ IAH ” ) ; a public

- private initiative with United to remodel IAH Terminals B and D , to include a n expanded and enhanced Fede ral Inspection Facility (“FIS”) ; and a public

privat e initiative with Southwest for the design and construction of a new international terminal and FIS at William P. Hobby Airport ( “ HOU ” )

. Southwest’s proposed new, low

fare, large

- jet services to Mexico are a key element of th e HOU project

. Houston has been working closely with the Department of Homeland Security, U.S. Customs and Border Protection , and the Congress towards the goal of ensuring that all FIS facilities at the Houston airports will be appropriately staffed for applicable operations

. The City b elieves that Houston is well

- positioned to manage the additional increases in international passengers that the future will bring. C onstruction of the new FIS and international termin al at HOU is on schedule for the O ctober 2015 opening

.Reply of the City of Houston

Page 3

3 3. Houston is f ortunate that multiple carriers are interested in providing additional service s on various Mexico routes. This includes carriers from Mexico as well as the U.S. Given this interest, the growing demand in Houston

- Mexico markets for expanded services, and the limitations of the current U.S.

- Mexico bilateral agreement , Houston supports the grant of extra

- bilateral rights where necessary to enable all carriers to provide the services they wish in all Houston

- Mexico markets without delay

. As indicated in its answer of Dece mber 29, 2014, Houston hopes that the Department will explore with Mexico all options available to secure additional rights needed, including extra

- bilateral authority. H owever, Houston recognizes that such authority requires the cooperation of Mexico. The timing of such efforts and the grant of authority is critical given the need for carriers to engage in advance mar k eting and start

- up planning for new services. In particular the City asks that DOT use its best efforts to persuade the Me xican Government to withdraw its historical interpretation of the existing bilateral that a mainline carrier and its regional partner each must hold a designation even where all services are marketed under the name of the mainline carrier . This informal
i nterpretation of the existing agreement is not in the public interest, and but for it this proceeding would not have been necessary

. Houston is aware that in the past the U.S. has made significant, albeit unsuccessful, efforts with Mexico to have this int erpretation withdrawn. The City hopes that because of the informal nature of Mexico ’ s approach (as opposed to it being an agreed formal element of the existing bilateral ) , and given the recent decision of both the U.S. and Mexico to implement a liberalize d bilateral agreement ( subject to approval of Mexico ’ s Senate ), Mexico will be willing to withdra wReply of the City of Houston

Page 4

4 its interpretation immediately . Should this occur, United and S ky W est will be able to continue to operate all their existing H ouston
- M exico C ity/ S an Jose de l C abo services using U nited’s mainline designation , while freeing up a designation for S outhwest to

r eceive authority on the time frame it needs in order to operate in these markets

.

Respectfully submitted,

________________________________ Rachel B. T rinder ZUCKERT, SCOUTT & RASENBERGER, L.L.P. 888 Seventeenth Street, N.W. Washington, D.C. 20006

- 3309 (202) 973

- 7927 (202) 342

- 0683 (fax) rbtrinder@zsrlaw.com For the City of Houston Dated: January 8, 2015CERTIF ICATE OF SERVICE

I certify that on this 8 th day of January 2015 , a copy of the foregoing was served on the parties named below in accordance with the Department’s Rules of Practice.

Rachel B. Trinder

rsilve rberg@sgbdc.com , jjohnson@sgbdc.com , and mgoldman@sgbdc.com (Counsel for ABX Air) chuck.hill@airtransport.cc (Air Transpo rt International) msinick@ssd.com (Counsel for Alaska Airlines) agoerlich@ggh

- airlaw.com ( Counsel for Allegiant Air) robert.wi rick@aa.com , francis.heil@aa.com , and howard.kass@aa.com (American Airlines) jcanny@amerijet.com (Amerijet) jrichardson@johnlrichardson.com (Counsel for Amerijet) rpommer@atlasair.com (Atlas Air) john@mietuslaw.com (Counsel for Centurion Air Cargo) sascha.vanderbellen@delta.com and chris.walker@delta.com (Delta Air L ines) cefelts@fedex.com and nssparks@fedex.com (Federal Express) matwood@cozen.com and slachter@cozen.com (Counsel for Frontier) jhi ll@cooley.com and perkmann@cooley.com (Counsel for JetBlue Airways) robert.land@jetblue.com (JetBlue Airways) kevin.montgomery@polaraircargo.com and peter.beckett@polaraircargo.com (Polar Air Cargo) robert.cohn@hoganlovells.com and patrick.rizzi@hoganlovells.com (Counsel for Republic Airlines) ethan.blank@rjet.com (Republic Airlines) temerson@skywest.com mkraupp@skywest.com (SkyWest Airlines) bob.kneisley@wnco.com and leslie.abbott@wnco.com (Southwest Airlines)dkirstein@yklaw.com and

jyoung@yklaw.com (Counsel for Spirit Airlines) john.fredericksen@suncountry.com and thomas.ting@suncountry.com (Sun Country) dan.weiss@united.com , steve.morrissey@united.com , thomas. bolling@united.com , abby.bried@united.com , and james.conneely@united.com (United Airlines) sseiden@crowell.com and gmurphy@crowell.com (Counsel for United Airlines) anita.mosner@hklaw.com and jennifer.nowak@hklaw.com (Counsel for UPS) dsmalls@ups.com (UPS) john.varley@virginamerica.com and barbara.russell@virginamerica.com (Virgin America) paul.gretch@dot.gov , susan.kurland@dot.gov , brian.hedberg@dot.gov , brett.kruger @dot.gov , reese.davidson@dot.gov , todd.homan@dot.gov , peter.irvine@dot.gov , laura. remo@dot.gov , and robert.finamore@dot.gov (DOT) john.s.duncan@faa.gov (FAA) ronald.williams@ustranscom.mil (U STRANSCOM ) englets@state.gov and cristinasa@state.gov (State Department) info@airlineinfo.com pjackson@swapa.org (Southwest Airlines Pilots’ Association)