BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC 20590

 )

Establishment of Slot Exemption Proceeding )

At Ronald Reagan Washington National Airport ) Docket 

Pursuant to 49 USC §41718 ) DOT-OST-2000-7182

)

Opposition Of JetBlue Airways Corporation

To Motions Of Southwest Airlines And The City of Houston

For Leave To File Unauthorized Pleading

Communications with respect to this document should be addressed to:

James Hnat Jonathan B. Hill

Executive Vice President for J. Parker Erkmann

Corporate Affairs & General Counsel Dow Lohnes PLLC

JetBlue Airways Corporation 1200 New Hampshire Ave., NW

27-01 Queens Plaza North Suite 800

Long Island City, NY 11101 Washington, D.C. 20036

(202) 776-2000

jhill@dowlohnes.com

perkmann@dowlohnes.com

Robert C. Land

Senior Vice President for Government Counsel for 

Affairs & Associate General Counsel JetBlue Airways Corporation

JetBlue Airways Corporation

P.O. Box 1927

Rockville, Maryland 20849-1927

(301) 279-9727

January 10, 2013
1

BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC 20590

________________________________________________

)

Establishment of Slot Exemption Proceeding )

At Ronald Reagan Washington National Airport ) Docket 

Pursuant to 49 USC §41718(b) ) DOT-OST-2000-7182

________________________________________________)

Opposition Of JetBlue Airways Corporation

To Motions Of Southwest Airlines And The City of Houston

For Leave To File Unauthorized Pleading

JetBlue Airways Corporation (“JetBlue”) respectfully files this Opposition to the 

Consolidated Reply of Southwest Airlines Co. and Motion for Leave to File (the “Unauthorized 

Southwest Reply”) and the Motion for Leave to File and Reply of the City of Houston and the 

Greater Houston Partnership (the “Unauthorized HOU Reply” and together with the 

“Unauthorized Southwest Reply” the “Unauthorized Replies”). In the Notice initiating this 

proceeding, the Department established a pleading schedule, requesting applications for the 

available pair of slot exemptions on December 5, 2012 and responses by December 19, 2012. 

See Notice, Establishment of Slot Exemption Proceeding Pursuant to 49 U.S.C. § 41718(b), 

Docket DOT-OST-2000-7182 (Nov. 13, 2012). The Department did not provide for reply 

comments, which it has done in other route proceedings. See, e.g., DOT-OST Order 2012-8-20 

(issued Aug. 17, 2012), at 5 (requesting reply briefs to answers in the 2010 U.S.-Haneda

Combination Services Allocation Proceeding). Accordingly, Southwest’s filing is 

“unauthorized” under the Department’s rules. See 14 CFR Part 302.6(b) (“Except as otherwise 

provided, a reply to an answer, reply to a reply, or any further responsive document is not 
2

authorized.”). “The Department will accept otherwise unauthorized documents for filing only if 

leave has been obtained from the [Department] . . . on written motion and for good cause 

shown.” See 14 CFR Part 302.6(c).

Southwest and Houston have failed to show good cause. The Unauthorized Replies do 

nothing more than recycle arguments made in the Southwest Application and the subsequent 

Answers and refute straw men created through Southwest’s distortion of JetBlue’s arguments. 

Indeed, JetBlue and Southwest are in substantial agreement on the issues in this proceeding. 

JetBlue agrees that the primary problem at Ronald Reagan National Airport (“DCA”) is US 

Airways’ dominance of the airport and the resulting high fares and artificially restrained 

capacity. See Answer of Southwest Airlines Co. at 8-11. But JetBlue and Southwest disagree on 

the solution to the problem. While Southwest proposes to fly to one of the largest U.S. markets 

in competition with United, JetBlue submits that the public interest is best-served by promoting 

competition against DCA’s dominant carrier, US Airways, while fulfilling the Congressional 

directive to serve medium-hub and smaller communities rather than just the largest cities. 

Because the issues have been adequately briefed, JetBlue does not believe further pleadings are 

necessary. Indeed, if past is prologue, Southwest will yet file additional unauthorized pleadings, 

seeming to insist on always having the last word. See DOT-OST-Order 2012-5-12 (issued May 

14, 2012), at 14 (noting that “Southwest filed a second response” after the close of the pleading 

cycle).

Accordingly, JetBlue respectfully requests that the Department promptly deny Houston’s 

and Southwest’s motions to file the Unauthorized Replies. If, however, the Department grants 

those motions and accepts the Unauthorized Replies, JetBlue requests leave to file its own 
3

response to the inaccuracies contained in the Answer and the Unauthorized Replies, which is 

attached hereto pursuant to Part 302.6(c)(2) of the Department’s Rules.

Dated: January 10, 2013 Respectfully submitted,

Jonathan B. Hill

J. Parker Erkmann

Counsel for JetBlue Airways Corporation
4

Certificate of Service

I, J. Parker Erkmann, hereby certify that a copy of the foregoing Opposition Of JetBlue 

Airways Corporation To The Motions Of Southwest Airlines And The City Of Houston For 

Leave To File Unauthorized Pleading was served this 10th day of January, 2013 via email 

transmission on the following persons:

dhainbach@ggh-airlaw.com

john.varley@virginamerica.com

jyoung@yklaw.com

bob.kneisley@wnco.com

leslie.abbott@wnco.com

howard.kass@usairways.com

robert.wirick@aa.com

francis.heil@aa.com

Karine.faden@united.com

dan.weiss@united.com

Sascha.vanderbellen@delta.com

john.fredericksen@suncoutry.com

robert.cohn@hoganlovells.com

marshall.sinick@squiresanders.com

charles.donley@squiresanders.com

quince.brinkley@mwaa.com

Susan.Kurland@dot.gov

Esta.Rosenberg@dot.gov

Todd.Homan@dot.gov

brian.ctr.meehan@faa.gov

fbavent@airlineinfo.com

steve.grossman@flyjacksonville.com

jegillick@zsrlaw.com

jhfoglia@zsrlaw.com

rbtrinder@zsrlaw.com

jasilversmith@zsrlaw.com

and via First Class Mail:

Arnaldo Deleo

General Manager Aviation Bureau

Port Authority

Government of Puerto Rico

PO Box 362829

San Juan, PR 00936-2829

s/ Parker Erkmann

J. Parker Erkmann
BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC 20590

 )

Establishment of Slot Exemption Proceeding )

At Ronald Reagan Washington National Airport ) Docket 

Pursuant to 49 USC §41718 ) DOT-OST-2000-7182

)

Consolidated Reply Of JetBlue Airways Corporation

Communications with respect to this document should be addressed to:

James Hnat Jonathan B. Hill

Executive Vice President for J. Parker Erkmann

Corporate Affairs & General Counsel Dow Lohnes PLLC

JetBlue Airways Corporation 1200 New Hampshire Ave., NW

27-01 Queens Plaza North Suite 800

Long Island City, NY 11101 Washington, D.C. 20036

(202) 776-2000

jhill@dowlohnes.com

perkmann@dowlohnes.com

Robert C. Land

Senior Vice President for Government Counsel for 

Affairs & Associate General Counsel JetBlue Airways Corporation

JetBlue Airways Corporation

P.O. Box 1927

Rockville, Maryland 20849-1927

(301) 279-9727

January 10, 2013
1

BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC 20590

________________________________________________

)

Establishment of Slot Exemption Proceeding )

At Ronald Reagan Washington National Airport ) Docket 

Pursuant to 49 USC §41718(b) ) DOT-OST-2000-7182

________________________________________________)

Consolidated Reply Of JetBlue Airways Corporation

In the Consolidated Reply of Southwest Airlines Co. (the “Unauthorized Southwest 

Reply”) and the Reply of the City of Houston and the Greater Houston Partnership (the 

“Unauthorized HOU Reply,” collectively the “Unauthorized Replies”), Southwest and Houston 

have constructed a straw man, asserting that JetBlue has argued that “Houston Hobby Airport is 

somehow ineligible because it serves a large metropolitan area.” Unauthorized Southwest Reply 

at 2; see also Unauthorized HOU Reply at 2.1 Southwest and Houston have wholly 

mischaracterized JetBlue’s argument and missed the point. 

JetBlue has not stated or even suggested that Southwest is categorically ineligible for the 

award of the available slot exemptions. To the contrary, JetBlue has argued that consideration of 

all the statutory factors demonstrates that JetBlue’s application best satisfies the intent of 

 1

 The mischaracterization of JetBlue’s argument in the Unauthorized HOU Reply is egregious 

because the quote in the heading of Houston’s primary argument is taken from the argument 

JetBlue made about US Airways’ application in JetBlue’s Consolidated Response. Compare

Unauthorized HOU Reply at 2 (“JETBLUE’S ASSERTION THAT SOUTHWEST’S HOBBY 

APPLICATION ‘CONTRAVENES CONGRESSIONAL INTENT AND EXCEEDS THE 

DEPARTMENT’S DISCRETION’ IS WHOLLY INCORRECT AND MISSTATES THE 

CONGRESSIONAL RECORD.”) to Consolidated Response of JetBlue Airways Corporation at 

2 (“First, because three of the statutory criteria are directed at fostering competitive service at 

DCA, an award of slot exemptions to US Airways, which is DCA’s dominant carrier, 

contravenes Congressional intent and exceeds the Department’s discretion.”) (emphasis added). 
2

Congress when it created these AIR-21 slot exemptions. It is undisputed that Congress directed 

the Department to consider five factors in awarding these exemptions. As restated in the 

Notice,2 these factors are:

the Secretary [shall] distribute within-perimeter slot exemptions 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 

DCA; (3) to small communities; (4) that will provide competitive nonstop air 

transportation on a monopoly nonstop route to DCA; or (5) that will produce the 

maximum competitive benefits, including low fares.

Notice at 1-2. Moreover, the Department recently has made clear that it retains discretion to 

weigh the importance of each of these factors on a case-by-case basis. See Order DOT-OST2012-7-26 (Jul. 24, 2012). As JetBlue stated in all of its authorized pleadings in this docket, an 

objective analysis of the merits of the competing applications in light of all these criteria, 

divorced from the unhinged rhetoric in the Unauthorized Replies,3 leads to the conclusion that 

JetBlue’s application best satisfies the Congressional intent. In an effort to cut through the 

 2

 Notice, Establishment of Slot Exemption Proceeding Pursuant to 49 U.S.C. § 41718(b), 

Docket DOT-OST-2000-7182 (Nov. 13, 2012) (the “Notice”).

3 Southwest makes much ado about the Department’s 2000 AIR-21 slot exemption decision in 

Order 2000-7-2, claiming that the order contradicts JetBlue’s supposed position that HOU is 

ineligible for an award of slot exemptions. Unauthorized Southwest Reply at 2. But the premise 

of Southwest’s argument is a mischaracterization of JetBlue’s position. Moreover, the award of 

slot exemptions to serve Chicago’s Midway Airport over the application of Atlantic Southeast 

Airline (“ASA”) to serve Jacksonville was not due solely “to the much greater size of the 

Chicago market.” Unauthorized Southwest Reply at 3. The Department relied on two key 

additional factors, concluding (1) that ASA was not a new entrant or limited incumbent and (2)

that ASA would not produce the competitive benefit of low fares because it was not a low-fare 

airline. DOT-OST Order 2000-7-2 at 21 (listing the market size point last in its analysis). 

Indeed, due to confusion over the Department’s discretion in making these awards, the 

Department specifically addressed the criteria and how they should or should not be weighted in 

a 2012 Order. See Order DOT-OST-2012-7-26 (Jul. 24, 2012) (relying on past precedent the 

Department concluded it “has the discretion to premise an award based upon satisfaction of less 

than the greatest number of criteria, or even one criteria, listed in Section 41718(b), based upon 

the Department’s analysis of the relative merits of each carrier’s proposal when evaluated under 

the Section 41718(b) criteria”). 
3

contrived outrage in the Unauthorized Replies, JetBlue offers the following synopsis of the 

reasons why its application best satisfies the statutory factors.4

1. JetBlue’s Application Provides The Maximum Competitive Benefits.

An objective examination of the arguments in this proceeding leads to the conclusion that 

JetBlue provides the most competitive benefits of all the applicants. First, because only JetBlue 

addresses DCA’s primary competitive problem, US Airways’ dominance of the airport, JetBlue’s 

application does the most to promote competition at DCA. Second, Southwest’s calculation of 

consumer benefits relies on dubious assumptions and must be heavily discounted. 

a. Only JetBlue’s Proposal Addresses DCA’s Chief Competitive Problem.

Although Southwest and JetBlue have identified the same competitive problem at DCA, 

only JetBlue has proposed service to address it. In its Answer, Southwest devoted nearly three 

of its eleven pages of text assailing US Airways’ inefficient use of its DCA slot portfolio, 

concluding that: “Given this severe (and growing) problem of underutilization of DCA slots, the 

Department should take whatever opportunities are available to rectify this unfortunate 

situation.” Southwest Answer at 11. JetBlue wholeheartedly agrees. But only JetBlue’s 

Jacksonville service addresses this core issue by proposing to compete against US Airways

directly. Indeed, because Southwest proposes to compete with United, it does not address the 

“unfortunate situation” at all. Southwest’s claim that it provides the “maximum competitive 

benefit” is contradicted by its own advocacy.

 4

 As has been noted, criteria 2 and 4 are mutually exclusive. 
4

b. Southwest’s Claim Of Consumer Benefit Is Overstated.

Southwest’s argument that it will provide maximum competitive benefit rests on a 

dubious assumption. Integral to Southwest’s argument is that it will purportedly generate $19.1 

million in consumer benefits. See Unauthorized Southwest Reply at 5, 8-9. The inputs to this 

calculation, however, are questionable, as stated in JetBlue’s Consolidated Response. See 

JetBlue Consolidated Response at 15. Southwest argues fervently that its entry into the DCAHOU* market will cause United to charge only a 16 percent premium over Southwest’s proposed 

fare. Given Southwest’s service proposal, this is unrealistic. Southwest only can initiate one 

DCA-HOU* flight, which will compete with 8 daily United DCA-IAH departures and 6 daily 

IAD-IAH departures.5

 See JetBlue Consolidated Response at 15. In contrast with BWI-HOU* 

where Southwest claims that United charges a 16 percent premium, Southwest’s 3 daily BWIHOU departures compete with 3 daily United departures. JetBlue submits that the disparity in 

frequencies, among other reasons, makes its calculation of a 38 percent United fare premium 

more accurate. See id. at 14, Exhibit B6-R-102. Indeed, JetBlue’s projection reflects the actual 

United fare premium in markets where only Southwest and United compete head-to-head. See 

Exhibit B6-R-102. Southwest does not even respond to these calculations, simply asserting that 

BWI-HOU* is “the most relevant predictor of Southwest’s probable impact” without accounting 

for the vast discrepancy in the number of flights. Unauthorized Southwest Reply at 7. 

Because the model Southwest used to calculate its purported consumer benefit is 

sensitive to the fare premium estimate used, Southwest’s calculation of total consumer benefit is 

overstated to the extent that its assumption of fare premiums is incorrect. Indeed, Southwest’s

 5 Just as the Department’s Bureau of Transportation Statistics considers IAH and HOU as one 

market, see Unauthorized Southwest Reply at 4, the Department considers IAD and DCA part of 

the same market.
5

purported $19.1 million in consumer benefits falls dramatically when more realistic estimates of 

the likely United fare premium are used. In the chart below, JetBlue used Southwest’s model to 

calculate the purported consumer benefit under different assumptions for the fare premium. 

Southwest’s Purported Consumer Benefits Slip Away

When More Realistic Fare Premium Estimates Are Used6

WN Estimated

UA Premium Midpoint

Actual Average UA 

Premium

16% premium 27% premium 38% premium

Consumer Benefit $19,133,324 $12,488,338 $5,939,164

Accordingly, Southwest’s argument that it provides the maximum competitive benefits is 

constructed on a weak foundation that does not withstand scrutiny. 

In contrast, JetBlue and Southwest submitted similar estimates of the consumer cost 

savings in their respective responses to the applications based on JetBlue’s estimate of the impact 

of its service on fares and traffic. Compare Southwest Answer at 2, WN-R-10 (estimating $10.4 

million) to JetBlue Consolidated Response at 9 (estimating $10.6 million). JetBlue’s estimate 

was made based on its track record of entering US Airways-dominated markets and lowering 

fares while increasing enplanements in those markets.

7

 See JetBlue Application at 4. 

 6 JetBlue calculated these values using the methodology described in Appendix 1 of Southwest’s 

Application.

7 Southwest dismisses JetBlue’s argument that its proposed service will have a larger per capita 

impact on a smaller market as “irrelevant,” Unauthorized Southwest Reply at 5, but doing so 

requires Southwest to read Congress’s direction to consider service to medium hub airports and 

small communities out of the statute. 
6

2. Southwest Does Not Propose To Serve A Small Community.

JetBlue’s application also is superior to Southwest’s because Southwest does not satisfy 

the statutory criteria that carriers serve “small communities.” Indeed, Southwest makes quite the 

opposite claim, trumpeting the fact that Houston is one of the largest markets in the country: 

“First, the Greater Houston region is huge, with a metropolitan population of 6.1 million 

residents – the 9th largest in the United States.” Southwest Answer at 5; see also Southwest 

Application at 1, 7; Unauthorized Southwest Reply at 3. Contrary to the claims in the 

Unauthorized HOU Reply, there is no question that Congress wanted service to smaller 

communities considered in the allocation of AIR-21 slot exemptions. It put the words “small 

communities” directly into the language of the statute. See 49 U.S.C. § 41718(b)(3).8

 In 

applying to serve Houston, Southwest has proposed exactly the opposite and therefore does not 

satisfy this fundamental criterion. 

In contrast to Southwest, US Airways and JetBlue propose to serve similarly-sized 

communities, and both satisfy this statutory factor better than Southwest’s application.

3. Both JetBlue And Southwest Are Limited Incumbent Carriers.

Southwest and JetBlue are both limited incumbent air carriers at DCA so both satisfy this 

statutory criterion. Despite this fact, Southwest’s pleadings incorrectly state that 36 DCA slots 

 8 Indeed, the AIR-21 within perimeter slot exemptions were created as a compromise to resolve 

competing concerns about DCA’s capacity and the possibility that carriers’ use of slot 

exemptions to serve beyond perimeter locations would deprive smaller communities of DCA 

service. 145 Cong. Rec. S11891-05 (comments of Sen. Byrd), 1999 WL 791277 (“The GortonRockefeller amendment will reduce by half the increased number of frequencies into [DCA] than 

was originally sought. It will also reserve half of the additional slots for flights serving cities 

within the 1,250 mile perimeter. Most importantly, Mr. President, these additional slots within 

the perimeter will be reserved for flights to small communities, flights to communities without 

existing service to Reagan National Airport, and flights provided by either a new entrant airline, 

or an established airline that will provide new competition to the dominant carriers at Reagan 

National.”). 
7

are “held” by JetBlue. See Southwest Answer at 2; Exhibit WN-R-6; see also Exhibit WN-100. 

JetBlue holds 20 DCA slots and operates 16 additional slots pursuant to a lease agreement with 

American, meaning that of all the applicants in this proceeding JetBlue is the holder of the 

fewest number of DCA slots. US Airways, on the other hand, is the dominant incumbent at 

DCA with slot holdings well above the statutory threshold for a limited incumbent. See JetBlue 

Consolidated Response at 4-5.

4. JetBlue Provides More Direct Competition On A Nonstop Monopoly Route.

The Unauthorized Southwest Reply also takes issue with JetBlue’s argument that because 

Southwest serves Houston Hobby rather than Houston’s George Bush Intercontinental Airport it 

does not truly provide competing nonstop service on a monopoly route. See Unauthorized 

Southwest Reply at 3. Again, Southwest has missed JetBlue’s point. Even if Southwest is 

correct that HOU and IAH “serve the same economic market,” Unauthorized Southwest Reply at 

4, it is axiomatic that the two airports are not perfect substitutes for one another. As Southwest 

pointed out in its Application, HOU and IAH are more convenient to different portions of the 

population of Houston. See Exhibit WN-108. As a result, some consumers will select flights 

based in part on the appeal of the airport and not the price competition between United and 

Southwest. In contrast, JetBlue’s proposed Jacksonville service will compete head-to-head 

against US Airways on the exact same airport pair, providing the more vigorous price and 

service competition. Indeed, JetBlue submitted data demonstrating that in markets where only 

US Airways and JetBlue compete, fares are lower relative to the domestic average fare curve 

than in markets where only United and Southwest compete out of Houston. See JetBlue 

Consolidated Response at 13. While both JetBlue and Southwest both technically satisfy the 
8

statutory criterion of competing on a monopoly nonstop route, JetBlue proposes to compete 

directly against DCA’s dominant carrier.

Conclusion

In consideration of the pleadings in this proceeding, JetBlue respectfully requests that the 

Department award the single pair of available within-perimeter slot exemptions to its application 

to serve Jacksonville

Dated: January 10, 2013 Respectfully submitted,

Jonathan B. Hill

J. Parker Erkmann

Counsel for JetBlue Airways Corporation
9

Certificate of Service

I, J. Parker Erkmann, hereby certify that a copy of the foregoing Consolidated Reply Of 

JetBlue Airways Corporation was served this 10th day of January, 2013 via email transmission 

on the following persons:

dhainbach@ggh-airlaw.com

john.varley@virginamerica.com

jyoung@yklaw.com

bob.kneisley@wnco.com

leslie.abbott@wnco.com

howard.kass@usairways.com

robert.wirick@aa.com

francis.heil@aa.com

Karine.faden@united.com

dan.weiss@united.com

Sascha.vanderbellen@delta.com

john.fredericksen@suncoutry.com

robert.cohn@hoganlovells.com

marshall.sinick@squiresanders.com

charles.donley@squiresanders.com

quince.brinkley@mwaa.com

Susan.Kurland@dot.gov

Esta.Rosenberg@dot.gov

Todd.Homan@dot.gov

brian.ctr.meehan@faa.gov

fbavent@airlineinfo.com

steve.grossman@flyjacksonville.com

jegillick@zsrlaw.com

jhfoglia@zsrlaw.com

rbtrinder@zsrlaw.com

jasilversmith@zsrlaw.com

and via First Class Mail:

Arnaldo Deleo

General Manager Aviation Bureau

Port Authority

Government of Puerto Rico

PO Box 362829

San Juan, PR 00936-2829

s/ Parker Erkmann

J. Parker Erkmann