BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

_____________________________________

)

Applications of )

)

SOUTHWEST AIRLINES CO. )

JETBLUE AIRWAYS CORP. )

AMERICAN AIRLINES, INC. )

PEOPLE EXPRESS AIRLINES, INC. ) Docket DOT-OST-2000-7182

)

For exemptions from 14 C.F.R. Part 93, )

Subparts K and S, pursuant to 49 U.S.C. )

§ 41718(b) )

)

For service from Ronald Reagan )

Washington National Airport (within- )

perimeter slot exemptions) )

_____________________________________ )

CONTINGENT ANSWER OF SOUTHWEST AIRLINES CO. 

AND MOTION FOR LEAVE TO FILE

Communication with respect to this 

 document should be addressed to:

Ron Ricks Robert W. Kneisley

 Executive Vice President -- Associate General Counsel

 Chief Legal and Regulatory Officer Leslie C. Abbott

Mark Shaw Senior Attorney

 Vice President General Counsel & SOUTHWEST AIRLINES CO.

 Corporate Secretary 919 18th Street, NW

SOUTHWEST AIRLINES CO. Suite 600

2702 Love Field Drive Washington, DC 20006

Dallas, TX 75235-1611 bob.kneisley@wnco.com

 (202) 263-6284

April 14, 2014
1

BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

_____________________________________

)

Applications of )

)

SOUTHWEST AIRLINES CO. )

AMERICAN AIRLINES, INC. )

JETBLUE AIRWAYS CORP. )

PEOPLE EXPRESS AIRLINES, INC. ) Docket DOT-OST-2000-7182

)

For exemptions from 14 C.F.R. Part 93, )

Subparts K and S, pursuant to 49 U.S.C. )

§ 41718(b) )

)

For service from Ronald Reagan )

Washington National Airport (within- )

perimeter slot exemptions) )

_____________________________________ )

CONTINGENT ANSWER OF SOUTHWEST AIRLINES CO. 

AND MOTION FOR LEAVE TO FILE

Southwest Airlines files this Contingent Answer and Motion for Leave to File in 

response to the unauthorized “Consolidated Sur-Reply” filed by JetBlue Airways in this 

docket on April 9, 2014, more than a week after answers were filed in response to the 

applications of competing carriers.

1 JetBlue’s Sur-Reply - its third pleading in this 

proceeding - consists almost entirely of re-hash and regurgitation of arguments that 

JetBlue made (or could have made) in prior pleadings. The sur-reply therefore fails to 

demonstrate “good cause” as required by 14 CFR 302.6(c)(1) for the acceptance of 

unauthorized pleadings. Accordingly, we urge the Department to reject it. 

If, on the other hand, the Department accepts JetBlue’s Sur-Reply, Southwest 

seeks leave from the Department to file this Contingent Reply under Rule 6 of the Rules 

 1 Common names of airlines are used. Unless noted, US Airways and American Airlines are used 

interchangeably.
2

of Practice (14 CFR § 302.6) for good cause shown. Southwest’s Reply is narrowly 

tailored to address the inaccurate and misleading statements in JetBlue’s filing. It will 

therefore correct the record in important respects, contributing to a more accurate and 

informed basis for the Department’s decision.

CONTINGENT REPLY 

I. JetBlue Cherry-Picked Fare Comparisons to Hide the Fact that It Raised 

Fares by a Greater Percentage than Any Other Carrier Since 2010.

Throughout this proceeding JetBlue has burdened the record with misleading 

fare comparisons purporting to show that Southwest has raised fares in recent years 

more than JetBlue and other carriers. But the facts disprove JetBlue’s allegations. In 

order to compute a higher percentage fare increase for Southwest than others, JetBlue 

purposefully selected 2008 as the benchmark period. However, this was a year of 

severe recession and correspondingly tumultuous fuel prices, both external events 

impacting the airline industry and leading to non-predictive results.

Chart 1

Severe Volatility in 2008 Makes it Unsuitable as a Base 

Year for Fare Comparisons

Spot Price per Barrel

Source: U.S. Energy Information Administration.

U.S. Recessions

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14
3

As shown above, a more instructive baseline for fare comparisons is 2010, as jet 

fuel prices settled to a fairly consistent pattern around $125 per barrel for refined 

product since that time. Also in 2010 the economy was slowly recovering from the deep 

recession of 2008-2009. Thus the period 2010 through the latest quarter available 

(Year End Q3, 2013), with much less disruption from exogenous events, is more useful 

for airline fare comparisons. For this period, JetBlue increased its average domestic 

fare more than any other carrier, almost three percentage points more than Southwest 

as shown below. 

Chart 2

JetBlue’s fare increases since 2010 are even greater when examined on a fare per 

revenue-passenger-mile (yield) basis. As Chart 3 demonstrates, JetBlue’s average 

Since the End of the Last Recession, JetBlue Has Raised its Average 

Domestic Fares More than Any Other Airline

18.8%

17.8%

16.5% 15.9% 15.0% 14.0%

11.5%

4.1%

-10%

-5%

0%

5%

10%

15%

20%

25%

B6 UA DL WN US AS AA F9

Change in Average Domestic

Fare Since CY 2010

Note: Domestic markets only. Excludes baggage and cancellation/rebooking fees. Does not include an adjustment for inflation.

Source: U.S. DOT Origin-Passenger Survey, YE Q3 2013 compared to CY 2010, via Diio.

Average Fare

YE Q3 2013 $152 $221 $203 $144 $200 $181 $200 $132

B6 UA DL WN US AS AA F9
4

fare per revenue-passenger-mile has increased more than twice as much as 

Southwest’s since 2010: 

Chart 3

The above information not only places JetBlue’s claims in proper context but reveals 

that JetBlue has raised its fares significantly more than Southwest over the time frame

that is most relevant to this proceeding.

II. JetBlue's Attacks on Southwest's Competitive Impact are Baseless.

A. Contrary to JetBlue’s Overheated Rhetoric, Southwest’s Low-Fare DCAMCI Service Has Been Enthusiastically Received by the Local Market. 

The Department granted Southwest pendente lite authority to serve the DCAMCI market on Monday January 27, 2014.2

 Southwest started its service less than a 

 2 See Order 2014-1-16, Docket OST-2000-7182 (Jan. 27, 2014).
5

week later on Saturday February 1, the day after Frontier’s exit, in order to avoid any 

disruption in service to this important market. Yet without the benefit of any advance 

marketing or booking period, Southwest has succeeded in stimulating new traffic in the 

DCA-MCI market by increasing capacity while offering low fares. After only two months 

of service, Southwest’s load factor has grown to an extraordinary 91% for the most 

recent week (Chart 4). This is particularly significant since Southwest’s 143-seat 

Boeing 737 is by far the largest aircraft in the DCA-MCI market, 128% larger than US 

Airways’ average aircraft and 44% larger than the aircraft used by Frontier. In fact, 

Southwest’s single daily flight provides nearly 50% of the total seats in the DCA-MCI 

market. See Application of Southwest, p. 4 and Exhibit WN-5.

Chart 4

Southwest also offers low-fares in the DCA-MCI market with an average fare of 

Southwest's Service Has Been Strongly Supported by DCA-MCI Consumers

45%

49%

41%

64%

70%

85%

90% 91%

81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2/9 2/16 2/23 3/2 3/9 3/16 3/23 3/30 4/3

WN DCA-MCI

Load Factor

Note: Based on Southwest internal data for the period February 9, 2014 to April 9, 2014.

Source: Southwest Airlines.

Week Beginning
6

$139 for the most recent week. Contrary to JetBlue’s assertion, Southwest’s fare is 

slightly lower than the comparable Frontier fare for YE Q3 of $141. 3 Importantly, 

without competition from Southwest, fares in this market would undoubtedly increase to 

American’s DCA monopoly level of $207 for this distance, a 49% increase from 

Southwest’s average fare in the market today. See Southwest Application, p. 3 and 

Exhibit WN-2. In other words, a forced termination of Southwest’s DCA-MCI service -

due to reallocation of the slot exemptions elsewhere - would not only create a new 

monopoly for US Airways/American but cause many thousands of customers in that 

market to pay sharply higher airfares. 

Chart 5

As explained in Southwest’s Answer and unchallenged by JetBlue, the DCA-MCI 

 3 The Frontier fare is the total of its average fare for fare paying passengers of $132 plus $9 average bag

& cancellation/rebooking fees per O&D passenger. U.S. DOT O&D Passenger Survey. 
7

local O&D market is 29% larger than the local DCA-JAX market (Exhibit WN-R-101), 

and MCI serves a metropolitan population base that is 60% larger than the Jacksonville 

population (Exhibit WN-R-102). Moreover, JetBlue ignores the fact that the smaller JAX 

market is already well-served with five daily flights to DCA today, compared to only 

three American flights for the larger MCI. Yet, JetBlue demands that another two slots 

be dedicated to this much smaller market.4 Because of the much greater size of the 

DCA-MCI market as well as Southwest’s large-jet capacity and low fares, it is 

indisputable that Southwest’s service benefits far more consumers than would JetBlue’s 

proposal for the smaller DCA-JAX market. 

JetBlue must know this because its tepid service proposal with a 100-seat RJ 

shows its lack of confidence in the DCA-JAX market as well as its own traffic forecast. 

JetBlue’s post hoc suggestion in its Sur-Reply (p. 10) that it is “prepared to increase 

capacity” by using larger aircraft is not a commitment at all and should be accorded no 

weight in the Department’s comparison of the competing proposals in this case. 

B. Across its System, Southwest Competes Vigorously Against US 

Airways/American Airlines and Has Done So Throughout its Entire History.

JetBlue touts its competition against American at DCA (Sur-Reply, p. 2), even 

going so far as to claim that “In sharp contrast to Southwest, JetBlue chooses to use its 

limited slot portfolio [at DCA] to compete vigorously against American” (Consolidated 

Answer, at p. 14). JetBlue conveniently ignores the fact that Southwest’s thriving DCAMCI service is currently competing against American – which would otherwise be a 

monopoly carrier in a significantly larger market than DCA-JAX. And as shown above, 

 4 See Answer of Southwest, pp. 4-5 and Exhibits WN-R-106 and 107.. 
8

Southwest’s competition is keeping fares far below the level that American would 

charge on a monopoly basis. Furthermore, Southwest has competed, and continues to 

compete, successfully head-to-head with US Airways/American at six of their current 

and former hubs – Dallas, Chicago, Nashville, Raleigh/Durham, San Jose and St. Louis. 

It is indisputable that Southwest provides more competition against US 

Airways/American (and other legacy airlines for that matter) than any other LCC by a 

wide margin.

5

C. JetBlue’s Repeated References to the Flawed MIT Study are Entirely Rehash and Improper Sur-Reply Material. 

JetBlue’s discussion of the MIT paper in its Sur-Reply simply repeats arguments 

that JetBlue already made in its application and answer. As explained in detail in 

Southwest’s Answer, the MIT paper is based on a flawed methodology that produces 

untenable results and has no bearing on this proceeding. See Southwest Answer, pp. 6-

7 and Exhibits WN-R-110 through 116. JetBlue’s extraordinary reliance on such an 

irrelevant and inaccurate paper seems intended to divert attention from its own weak 

proposal in this proceeding. Regardless, regurgitating the same fallacious points in a 

third pleading does not make them any less fallacious. This discussion adds nothing to 

the record and should be completely disregarded. 

 5 Answer of Southwest Airlines, p.7 and Exhibit WN-R-111.
9

CONCLUSION

Nothing in JetBlue’s Sur-Reply changes the overriding facts that Southwest’s

proposal for DCA-MCI-OAK service will have by far the greatest impact on competition, 

generate the highest level of public benefits, and produce the most efficient use of 

scarce DCA slot exemptions of all applications in this proceeding. 

Respectfully submitted,

____________________

Robert W. Kneisley 

April 14, 2014
CERTIFICATE OF SERVICE

I hereby certify that on April 14, 2014, a copy of the foregoing was served via email on the following persons:

msinick@ssd.com (Alaska Airlines)

howard.kass@aa.com (American Airlines)

francis.heil@aa.com (American Airlines)

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

robert.cohn@hoganlovells.com (Republic Airways)

patrick.rizzi@hoganlovells.com (Republic Airways)

robert.land@jetblue.com (JetBlue Airways)

jhill@dowlohnes.com (JetBlue Airways)

perkmann@dowlohnes.com (JetBlue Airways)

shawn.voyles@flypex.com (People Express)

mike.morisi@flypex.com (People Express)

dkirstein@yklaw.com (Spirit Airlines)

jyoung@yklaw.com (Spirit Airlines)

John.Fredericksen@suncountry.com (Sun Country Airlines)

dan.weiss@united.com (United Air Lines)

pmurphy@lopmurphy.com (USA3000)

john.varley@virginamerica.com (Virgin America) 

susan.kurland@dot.gov

bob.goldner@dot.gov

todd.homan@dot.gov

peter.irvine@dot.gov

brian.ctr.meehan@faa.gov

Mark D. VanLoh, A.A.E.

Director of Aviation

Kansas City International Airport

Mark.VanLoh@kcmo.org

Deborah Ale Flint

Aviation Director for the Port of Oakland

Oakland International Airport

dale@portoakland.com

John E. Potter

President and Chief Executive Officer 

Metropolitan Washington Airports Authority

john.potter@mwaa.com

info@airlineinfo.com

__________________________

Leslie C. Abbott