II 

[I 

! 

BEFORE THE 

OFFICE OF THE SECRETARY 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

Applications of 

US AIRWAYS, INC. 

REPUBLIC AIRLINES INC. 

MN AIRLINES, LLC 

d/b/a SUN COUNTRY AIRLINES 

AIRTRAN AIRWAYS INC. 

SOUTHWEST AIRLINES CO. 

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 (withinperimeter slot exemptions) 

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Docket DOT -OST -2000-7182 

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CONSOLIDATED ANSWER OF 

SOUTHWEST AIRLINES CO. 

Bob Jordan 

Executive Vice President --

Strategy and Planning 

SOUTHWEST AIRLINES CO. 

2702 Love Field Drive 

Dallas, TX 75235-1611 

Ron Ricks 

Executive Vice President --

Corporate Services 

SOUTHWEST AIRLINES CO. 

2702 Love Field Drive 

Dallas, TX 75235-1611 

October 15, 2010 

Communication with respect to this 

document should be addressed to: 

Robert W. Kneisley 

Associate General Counsel 

Leslie C. Abbott 

Attorney 

SOUTHWEST AIRLINES CO. 

1901 L Street, NW 

Suite 640 

Washington, DC 20036 

bob. kneisley@wnco.com 

(202) 263-6284 
BEFORE THE 

OFFICE OF THE SECRETARY 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

Applications of 

US AIRWAYS, INC. 

REPUBLIC AIRLINES INC. 

MN AIRLINES, LLC 

d/b/a SUN COUNTRY AIRLINES 

AIRTRAN AIRWAYS INC. 

SOUTHWEST AIRLINES CO. 

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 (withinperimeter slot exemptions) 

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) 

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Docket DOT -OST -2000-7182 

CONSOLIDATED ANSWER OF 

SOUTHWEST AIRLINES CO. 

On September 2, 2010, the Department of Transportation ("DOT" or 

"Departm,ent") established a slot exemption proceeding pursuant to 49 U.S.C. 

§ 41718(b) to allocate two within perimeter "Vision-100 slot exemptions" for service at 

Ronald Reagan Washington National Airport ("Washington National Airport" or "DCA") 

pursuant to Title 49 U.S.C. § 49109. 

Five airlines, including Southwest Airlines Co. ("Southwest"), filed responsive 

applications. Southwest proposes to initiate its first-ever service at Washington National 

Airport and provide large jet, low-fare competition to Kansas City, Missouri. A review of 

the applications makes clear that Southwest's proposal is superior to each of the other 

applicants based on the major statutory decisional factors. Specifically, unlike most of 

1 
the other applicants, Southwest is a true new entrant, with zero slots at DCA (Exhibit 

WN-R-5). By awarding these two slot exemptions to Southwest, the Department would 

facilitate entry by the nation's leading low-fare carrier at one of the highest fare airports 

in the country. Consistent with Southwest's 40-year history of providing low fares, 

Southwest will reduce fares in the DCA-MCI market by over 25%, more than any other 

applicant in any market, and will save consumers over $10 million annually (Exhibits 

WN-R-2 and WN-R-3).1 Southwest's service will benefit over 60,000 local DCA-MCI 

passengers each year, the highest number of any applicant (Exhibit WN-R-1) and would 

also serve the largest population of any applicant city (Exhibit WN-R-8). Finally, 

Southwest proposes to utilize the slots via large 137-seat jet aircraft, far above the DCA 

airport-wide average of 93 seats, and offering many more seats than applicants 

proposing to use using regional jets (RJs) (Exhibit WN-R-6). Accordingly, Southwest 

urges the Department to grant its Application for the two slot exemptions at issue. 

I. Southwest's Proposal Will Produce Maximum Competitive Benefits and 

Fare Savings to Consumers 

As a true new entrant to DCA, Southwest would provide robust low-fare 

competition, fulfilling the objectives of AIR-21 and Vision 100. As noted in its 

Application, Southwest has long desired to serve Washington, DC via National Airport 

but has been prevented from doing so due to a lack of available slots. An award of the 

two slot exemptions at issue in this proceeding would enable Southwest to initiate 

service to DCA for the first time, and to integrate that service into its extensive route 

network thereby generating substantial benefits to the public. Moreover, once it has 

established a position at DCA, Southwest would look to grow and expand its presence 

1 Included in this Consolidated Answer is a statement of Dr. Brian Campbell and corresponding exhibits prepared by 

the Campbell-Hill Aviation Group on behalf of Southwest Airlines. 

2 
over time, opening the possibility of generating low-fare competition on a broader scale 

to an airport which sorely needs it. 

Consistent with Southwest's low-fare philosophy, it will offer DCA-MCI 

consumers the lowest fare per mile and the largest fare savings per passenger of any 

applicant (Exhibits WN-R-2 and WN-R-4). Moreover, Southwest will provide over $10 

million in annual fare savings to nonstop DCA passengers, dwarfing the projected 

consumer benefits of every other applicant (Exhibit WN-R-3). 

II. US Airways, Already the Largest Slot Holder at DCA, Proposes High-Fare, 

Inefficient RJ Service that it Could Easily Provide with its Existing Slots 

If awarded the slot exemptions, US Airways proposes to provide nonstop service 

to Pensacola, Florida (PNS) using RJ aircraft. However, US Airways currently operates 

almost 50% of the slots at Washington National Airport, more than two and a half times 

as many as Delta, the next largest airline (Exhibit WN-R-10). With access to 205 slot 

pairs at DCA, US Airways could certainly shift one daily roundtrip flight to serve the PNS 

market if it desires to do so. 

Moreover, US Airways proposes to use equipment averaging only 81 seats for its 

D9A-PNS service.2 Slots (and slot exemptions) at DCA are valuable and scarce public 

assets that should be put to their most efficient use by the carriers that have been given 

the rights to operate them. Southwest proposes service with 137 -seat 737 aircraft, 

almost 60% larger than the RJ aircraft proposed by US Airways. 

Southwest's low-fare proposal in the DCA-MCI market would also benefit 

significantly more local DCA passengers and would serve a much larger market than 

US Airways' proposal. The DCA-MCI local O&D market is 149% larger than the entire 

2 us Airways proposes to use 76 seat RJs for the winter season and 86 seat RJs for the summer season, for an 

average of 81 seats. Application of US Airways, pg. 2. 

3 
Gulf Coast and 5.4 times the size of the DCA-PNS market which attracted only 33,070 

passengers for the 12 months ended March 31, 2010 (Exhibit WN-R-11). Similarly, the 

Kansas City MSA population is twice the size of US Airways' claimed service region (the 

"Gulf Coast") and it is 4.5 times the size of Pensacola by itself (Exhibit WN-R-17). Due 

to the small size of US Airway's proposed aircraft, its high fares, and the fact that it 

would allocate a significant portion of its capacity to non-Washington passengers 

(34.9%) who would only connect at DCA,3 US Airways forecasts carrying just 28,000 

annual DCA local passengers (Exhibit WN-R-13). By comparison, all of Southwest's 

capacity would be dedicated to DCA local passengers. Southwest's first year forecast 

of 83,300 DCA passengers is three times the number projected by US Airways (Exhibit 

WN-R-14). 

Finally, US Airways' average fares at DCA are significantly higher than 

Southwest's system fares. While US Airways does not forecast an average fare for the 

PNS market, Campbell-Hill performed a regression analysis incorporating all nonstop 

markets as data points to determine a representative "yield curve" for US Airways at 

DCA and Southwest's system (Exhibit WN-R-15).4 From these equations it is 

reasonable to predict that US Airways' average DCA-PNS local fare would be 

approximately $206. The comparable fare for a distance of 816 miles on Southwest 

would be $126, or 39% less (Exhibit WN-R-16). US Airways would actually offer 

negative fare "savings" to consumers because its projected nonstop fare exceeds its 

average fare for connecting service in the market (Exhibit WN-R-4). Clearly Southwest's 

3 Application of US Airways, pg. 2. 

4 Campbell-Hill included the average fees paid per passenger for checked baggage and reservations cancellations or 

re-booking for both carriers. In 01, 2010 the domestic system average amount paid by US Airways passengers was 

$15.76, and for Southwest passengers it was $.037. 

4 
11 

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low-fare proposal will provide significantly greater competitive benefits for a larger 

number of consumers than allocating even more scare slot resources to the largest slot 

holder at DCA to offer high-fare RJ service. 

III. Republic Holds Over 140 Slots at DCA and Proposes High-Fare RJ Service 

in a Market Where it Already Offers Two Daily Flights 

Republic's application proposes to continue its current RJ service in the DCAMCI market. However, Republic already has two daily roundtrips in this market aside 

from the slot exemption service at issue in this proceeding. A third roundtrip by 

Republic would simply maintain the high-fare duopoly between Republic and US 

Airways that exists today in this market. It would not provide close to the level of 

competitive benefits that new low-fare competition from Southwest, using large jet 

aircraft, would bring to this market. Despite Republic's claim that it would "provide 

passengers with the substantial benefit of low fares,,,5 its average one-way fare plus 

average per-passenger checked baggage and cancellation fees was a very high $174 

per passenger for the period year ending March 2010. Based on Campbell-Hill's 

analysis, Southwest's average fare would be approximately $132,6 for the same time 

period, 24% lower than Republic's (Exhibit WN-R-21). On a fare-per-mile basis the 

difference is even more striking. Republic's current fare in the DCA-MCI market 

amounts to 18.3 cents/mile whereas Southwest's would be only 13.9 cents/mile (Exhibit 

WN-R-2). As noted in Southwest's Application, the potential consumer savings 

generated by Southwest's low-fare service in the DCA-MCI local market alone would be 

$10.5 million annually (Exhibit WN-R-3). Southwest would clearly offer robust low-fare 

competition in this market where none exists today. 

5 Application of Republic Airline Inc., pg. 9 (internal quotation marks omitted). 

6 Including average per-passenger checked baggage and cancellation fees of $0.37. 

5 
In addition, Republic's service proposal contemplates the use of 99-seat ERJ190 aircraft. While this aircraft is larger than the 76 seat aircraft that Republic uses 

today, Southwest's Boeing 737-700NG proposal would provide 27,000, or 38%, more 

seats per year than Republic (Exhibit WN-R-18). It is also curious that Republic is only 

proposing to up-gauge its equipment in the DCA-MCI market if and when it is awarded 

the slots at issue here. If Republic really believes that this market warrants larger 

aircraft, it is certainly free to up-gauge the aircraft in its current service but has chosen 

not to do so. 

Southwest would also provide convenient one-stop service from DCA to 11 

points beyond MCI. 7 Republic's proposal would only serve five connecting markets 

beyond MCI (Exhibit WN-R-19).8 There are 1.7 million DCA O&D passengers in the 11 

Southwest beyond markets and only 0.9 million in the five Republic beyond markets. 

Southwest's low-fare proposal would therefore serve nearly twice as many connecting 

passengers as Republic. 

Republic also erroneously characterizes Southwest's BWI-MCI service as part of 

the DCA-Kansas City market. However, the DOT reached a contrary conclusion in the 

recent DLIUS Slot Swap proceeding where it found, supported by the Department of 

Justice, that DCA is a separate competitive market from BWI. 9 In analyzing both 

overlap and all markets at DCA and BWI, the DOT found that the average yield in all 

markets at BWI is 48% below that at DCA.1o DOJ concurred with this finding and stated 

in its Reply Comments in the same docket that flights at DCA provide closer competition 

7 This forecast is conservatively limited to routings with less than 25% circuity. 

8 Republic's application states that it will provide one-stop connecting service to eight cities but if the 25% circuity filter 

is applied, only five one-stop connections are possible. Application of Republic Airlines Inc., pg 8. 

9 See, DOT Grant of Waiver with Conditions, 75 FR 26322, 26323-24, Docket No. FM-201 0-01 09 (May 11, 2010). 

10 lQ. at 26331. 

6 
to other flights at DCA than do flights at BWI or lAD. Thus DOJ concluded that market 

power can be exercised at DCA despite the presence of competition from the other two 

nearbyairports. 11 

Southwest's experience is consistent with these findings. Southwest's fares at 

BWI have not effectively disciplined the fares of major carriers at DCA as they would be 

expected to if the Baltimore/Washington area were a single competitive market (Exhibit 

WN-R-23). In addition, as Campbell-Hill's analysis demonstrates, there are 31 

destinations that carriers serve from both DCAIIAD and BWI. If DCA, lAD and BWI all 

served the same competitive market, carriers would be able to reach all passengers 

through service to a single airport as they do in the Chicago (ORD/MDW) and Houston 

(IAH/HOU) markets (Exhibit WN-R-22). Therefore, Southwest's service from BWI to 

Kansas City is not relevant to this proceeding. Based on every legitimate measurement 

available, Southwest's service proposal provides much greater consumer benefits than 

a continuation of Republic's high-fare RJ service. 

Finally, while Republic asserts in its application that it only operates 22 slots at 

DCA, FAA records show that Republic holds a total of 141 DCA slots. Although 

Republic's application states that it does not have "the right to control" 113 of the slots it 

holds, Republic has offered no documentation for that assertion. Thus, on its face, it 

appears that Republic is a very large holder of DCA slots and cannot credibly argue that 

it is either a new entrant or limited incumbent that will inject new competition at DCA. 

11 Reply Comments of DOJ, pgs. 9-11, FAA-2010-0109. 

7 
IV. Sun Country's Service Would Benefit Far Fewer Passengers than 

Southwest's Proposal 

Sun Country proposes to serve the Washington-Lansing, Michigan (LAN) market 

with continuing one-stop service to MSP. With an average 147-seat airplane,12 Sun 

Country projects that it will carry 31,390 local DCA-LAN passengers and 51,100 DCAMSP passengers one-stop over LAN.13 

Assuming that Sun Country's local passenger projections are accurate, it would 

still carry less than half of the local 63,306 passengers that Southwest estimates it will 

carry in the MCI-DCA market (Exhibit WN-R-24). However, Sun Country's local DCALAN passenger projection appears to be greatly overstated. The base year total 0&0 

passengers in the market were only 17,290 and so the applicant is projecting that it will 

carry 82% more passengers than the entire market for the latest 12 months 14 (Exhibit 

WN-R-25). With only one roundtrip per day and a reduction in fare of just 21%,15 it 

seems unlikely that the market would increase by 82% and that Sun Country would get 

100% of the market. It also seems unlikely that Sun Country will be able to attract 

51,100 one-stop passengers from DCA to MSP when Delta Airlines already provides 

seven nonstop flights in this market. 

Finally, Sun Country's service would provide only one connection beyond 

Lansing to MSP, a city that already has ample nonstop service from DCA. By 

comparison, Southwest would provide connecting service to 11 cities beyond MCI in 

markets that have extremely limited nonstop service to DCA, and a total of 1.7 million 

0&0 passengers. 

12 OAG schedule analysis for the week of September 20,2010. 

13 Application of Sun Country Airlines, Exhibits SY-2 and SY-4. 

14YE Q1, 2010. 

15 Application of Sun Country Airlines, Exhibit SY-2. 

8 
In sum, Sun Country's application falls far short of providing the competitive 

benefits, fare-savings, and additional one-stop service options that Southwest Airlines 

would provide in the DCA-MCI market. 

V. AirTran Proposes to Serve Markets Much Smaller than Kansas City. Each 

With EXisting Nonstop or One-stop Flight Options 

AirTran proposes to serve either the DCA-RSW or DCA-SRQ market if awarded 

the slot pair at issue in this proceeding. AirTran, while referencing its low fares 

generally, provides no information on the fares it would charge or potential fare savings 

to consumers in these particular markets. One can only assume from this omission that 

any fare savings will be negligible and should not be considered by the Department. 

In addition, each of these communities is relatively modest in size, ensuring that 

only a small number of consumers would benefit from AirTran's service. By 

comparison, the Kansas City MSA population is over 200% larger than the population of 

the two alternative markets proposed by AirTran (Exhibit WN-R-2S). While AirTran 

does not project how many passengers it would carry, clearly a much greater number of 

consumers would benefit from Southwest's low-fare service to Kansas City since the 

population as well as the 0&0 traffic are so much larger (Exhibits WN-R-S and 

WN-R-7). 

Furthermore, both of AirTran's proposed markets already have nonstop service, 

as well as numerous conveniently timed single-connection flights, from DCA. AirTran 

currently provides one roundtrip nonstop flight along with additional connecting flights 

via Atlanta in the DCA-RSW market and US Airways serves the DCA-SRQ market on a 

nonstop basis (Exhibits WN-R-29 and WN-R-30). AirTran also serves the DCA-SRQ 

market with connections via Atlanta and other carriers provide convenient connecting 

9 
service as well. Thus, for markets their size, both RSW and SRQ have reasonable 

service options to Washington National Airport today. 

Finally, from AirTran's application it does not appear that either of these cities 

would provide any additional one-stop options for travelers, in contrast to Southwest's 

11 one-stop connections beyond Kansas City. Taken as a whole, AirTran's application 

plainly does not provide the same level of consumer benefits as Southwest's proposal. 

Conclusion 

The information given above demonstrates conclusively that Southwest Airlines 

will provide far greater benefits to the public than any competing application for the slot 

exemptions at issue here. We therefore urge the Department to grant the two slot 

exemptions to Southwest to enable it to initiate its first-ever service to Washington 

National Airport and provide low-fare competition on the DCA-MCI route. 

Sincerely, 

Robert ~~ W. Kn€:ey 

October 15, 2010 

10 
CERTIFICATE OF SERVICE 

I hereby certify that I have this 15th day of October 2010, served a copy of the 

foregoing Consolidated Answer of Southwest Airlines Co. by email upon those persons 

listed below: 

susan.kurland@dot.gov (U.S. Department of Transportation) 

todd.Homan@dot.gov (U.S. Department of Transportation) 

carl.nelson@aa.com (American) 

hkamen@coair.com (Continental) 

dan.weiss@coair.com (Continental) 

rbkeiner@crowell.com (Counsel for Continental) 

recohn@hhlaw.com (Counsel for Republic) 

prrizzi@hhlaw.com (Counsel for Republic) 

sascha. vanderbellen@delta.com (Delta) 

jeff.morgan@delta.com (Delta) 

msinick@ssd.com (Counsel for Alaska) 

jyoung@yklaw.com (Counsel for Spirit) 

dkirstein'@Yklaw.com (Counsel for Spirit) 

jeffrey.manley@united.com (United) 

howard.kass@usairways.com (US Airways) 

benjamin.slocum@usairways.com (US Airways) 

robert.land@jetblue.com (JetBlue) 

jhill@dlalaw.com (Counsel for JetBlue) 

efaberman@wileyrein.com (Counsel for AirTran) 

John.Fredericksen@suncountry.com (Sun Country) 

mlbenge@zsrlaw.com (Counsel for Sun Country) 

jh~oglia@zsrlaw.com (Counsel for Sun Country) 
Rebuttal Statement of Dr. Brian M. Campbell 

1.0 Overview 

Southwest Airlines is the largest and most successful low-fare airline in the world, yet 

has no presence at all at Reagan National Airport (DCA). Southwest has attempted on previous 

occasions to acquire competitively timed DCA slots but has not been able to do so. This 

proceeding offers Southwest a new and unique opportunity to gain access to DCA and bring its 

low-fare service directly to the nation's capitol for the first time. 

If awarded the slot pair in this case Southwest would be a true new entrant at DCA, 

bringing its consistently low-fare/high value service to the close-in Washington DC market. In 

fact, Southwest's service proposal in this proceeding is superior to the proposal of every other 

applicant. This is demonstrated clearly by a comparison of the competing proposals in terms of 

the Department's key decisional criteria as shown in the attached exhibits and Table 1. 

1 
Table 1 

Service Proposal Comparison: Key Decisional Factors 

US 

Service Feature Southwest Airways 

1. DCA local 

passengers 

a. Nonstop 68,306 28,000 

b. Downline 

connections 14,994 Q 

c. Total 83,800 28,000 

2. Low-Fare Proposal 

Yes No 

3. Fare per milel 13.9¢ 25.5¢ 

4. Total consumer 

savings(loss) for 

nonstop DCA 

passengers(millions )2 $10.5 $(0.4) 

5. Aircraft B737-700NG RJ 

6. Seats 137 81 3 

7. Total one-way 

seats to/from 

DCA 100,010 59,130 

-Southwest 

Percent 69.1% 

Greater(Less) 

8. Current slots 

operated 0 410 

NS = Not Supplied. 

1 Including checked baggage and cancellation fees (Exhibit WN-R-2). 

2 Exhibit WN-R-3. 

3 Average of EMB-170 and EMB-I 75. 

4 Average seats per departure, week of September 20, 2010. 

2 

Republic AirTran 

NS NS 

NS NS 

NS NS 

No Yes 

18.3¢ NS 

$0 NS 

RJ B717 

99 117 

72,270 85,410 

38.4% 17.1% 

22 24 

Sun 

Country 

31,390 

51,100 

82,490 

No 

29.9¢ 

$0.4 

B737 

1474 

107,300 

(6.8%) 

0 
As shown in Table 1, Southwest has by far the lowest fare proposal in this case; it will 

carry more than twice as many nonstop DCA passengers than any other applicant; it will save 

consumers more money than any other applicant; it is the only applicant that permits the first two 

bags to "ride free" and it does not charge for reservation changes; and Southwest Airlines is one 

of only two applicants that have no access to DCA today. 

2.0 Rebuttal To US Airways 

Based on current FAA slot data, US Airways and its affiliates operate 410 daily slots at 

DCA. This represents almost 50% of all slots at DCA and is 2.65 times the slots operated by 

Delta, the second largest DCA operator. If the Pensacola-Washington DC market is so important 

to US Airways, as it now suggests that it is,s then US Airways could easily shift one of its 205 

daily roundtrip DCA flights to PNS. However, it has not done so. Instead it seeks an award of 

yet two more slots to add to its overwhelmingly dominant DCA share and thereby deprive 

Southwest Airlines from obtaining even a toehold in this critical airport. (Exhibit WN-R-10). 

US Airways has a history of inefficient slot utilization at DCA. While some of its slots 

are restricted to commuter-sized planes, the carrier also operates many of its mainline slots with 

commuter aircraft. This practice, also known as "slot sitting", works to the disbenefit of 

Washington travelers, the airport's financial interests, and would-be new entrants like Southwest 

Airlines that could provide much more efficient and convenient low-fare competition at DCA. 6 

Exhibit WN-R-9 shows the history of US Airway's average seats per departure at DCA since 

2000. In the years 2000 and 2001 it operated 97-98 seat aircraft, on average. Since then US 

Airways' average aircraft size became significantly smaller, and currently it is only 87 seats per 

departure. 

Southwest's low-fare proposal in the DCA-MCI market would benefit significantly more 

local DCA passengers and would serve a much larger market than US Airways. The DCA-MCI 

local O&D market is 149% larger than the entire Gulf Coast and 5.4 times the size of the DCAPNS market which was only 33,070 passengers for the 12 months ended March 31, 2010 

(Exhibit WN-R-11). The DCA-PNS market has over 10 convenient connecting services in both 

5 US Application, at page 2. 

6 See Exhibit WN-l. 

3 
directions on both US Airways and other carriers (Exhibit WN-R-12). This market is reasonably 

well served today without the allocation of extremely scarce DCA slot exemptions. 

Due to the small size of US Airway's proposed flight equipment (81 seats on average), its 

high fares, and the fact that it would allocate a significant portion of its capacity to nonWashington passengers (34.9%) who only connect at DCA, US Airways' forecasts carrying just 

28,000 annual DCA local passengers.7 By comparison, all of Southwest's capacity would be 

dedicated to DCA local passengers. Its first year forecast of 83,300 DCA passengers8 is three 

times the number projected by US Airways.9 

US Airways' average fares at DCA are significantly higher than Southwest's system 

fares. To compare the two, Campbell-Hill used regression analysis incorporating all nonstop 

markets as data points to determine a representative "yield curve" for each airline (Exhibit WNR-15). From these equations it is reasonable to predict that US Airways' average DCA-PNS 

local fare would be approximately $206. The comparable fare for the DCA-PNS distance of 816 

miles on Southwest would be $126, or 38.8% less (Exhibits WN-R-15 and WN-R-16).10 In both 

instances, Campbell-Hill has added the average fees paid per passenger for checked baggage and 

reservations cancellations or re-booking. In Q 1, 2010 the domestic system average fee amount 

paid by US Airways passengers was $15.76, and for Southwest passengers it was only $.037. 

This striking difference is due to the fact that Southwest does not charge for the first or second 

checked bag, nor does it charge for reservations cancellation and re-booking. 

Finally, it is important to note that the Kansas City MSA population is twice the size of 

US Airways' claimed service region of the "Gulf Coast;" and it is 4.5 times the size of Pensacola 

by itself (Exhibit WN-R-17). Regardless of the relevant market definition for US Airways' 

proposal it is much smaller than Kansas City. 

3.0 Rebuttal to Republic Airlines 

Replacement of one Republic RJ roundtrip with another Republic RJ roundtrip would add 

nothing new to the DCA-MCI market. This market is served by two high-fare carriers (Republic 

7 Exhibit WN-R-13. 

g Exhibit WN-7. 

9 Exhibit WN-R-14. 

10 The high r2 values for each yield curve (regression equation) is indicative of the excellent representation of the 

individual market fares by the calibrated equations. 

4 
and US Airways) today and that would not change if this slot pair is granted to Republic. On the 

other hand, an award to Southwest would inject sorely-needed low-fare competition in the 

market. The larger benefit to Washington DC is that entry by Southwest at DCA would bring the 

Southwest brand and its low-fare/high value product to the D.C. market for the first time through 

convenient DCA. 

According to the FAA, Republic currently operates 22 DCA slots. On the other hand, 

FAA records show that Republic holds a total of 141 DCA slots. Although Republic's 

application states that it does not have "the right to control" 113 of the slots it holds, Republic 

has offered no documentation for that assertion. Thus it appears that Republic is a very large 

holder of DCA slots and cannot credibly argue that it is either a new entrant or limited incumbent 

that will inject new competition at DCA. 

Republic's service proposal contemplates the use of 99-seat ERJ -190 aircraft. On the 

other hand Southwest's B-737-700NG proposal would provide 27,000, or 38%, more seats per 

year than Republic (Exhibit WN-R-18). 

In addition, Southwest would provide convenient one-stop service from DCA to 11 

points beyond MCI with less than 25% circuity. Conversely, Republic's proposal would serve 

only five connecting markets beyond MCI using the same circuity filter (Exhibit WN-R-19). 

There are 1.7 million DCA O&D passengers in the 11 Southwest beyond markets and only 0.9 

million in the 5 Republic beyond markets (Exhibit WN-R-20). Southwest's low-fare proposal 

would therefore serve nearly twice as many connecting passengers as Republic. 

From Campbell-Hill's analysis (Exhibit WN-9 and WN-R-15) Southwest's average fare 

in the DCA - MCI market will be approximately $132. 11 For the same time period (YE March, 

2010) Republic's average fare plus its average per-passenger checked baggage and cancellation 

fees was $174. Southwest's fare would therefore be 24% lower than Republic's (Exhibit WN-R21). Republic's proposal does not come close to being a "low-fare option," notwithstanding its 

unsubstantiated claims to that effect. 12 

Republic improperly characterizes Southwest's BWI-MCI service as being part of the 

Washington-Kansas City market. Empirical evidence demonstrates convincingly that for the 

most part BWI and DCA serve separate markets, and this has been Southwest's experience and 

II Including average checked baggage and cancellation fees of $0.37 per passenger. 

12 See, for example, Republic's Application at page 7. 

5 
that of other carriers as well. Campbell-Hill demonstrates this point two ways. First, an analysis 

of the OAG schedules shows that 31 destinations are served by the same airline from both 

Washington (DCA, lAD, or both) and BWI (Exhibit WN-R-22). If BWI and DCAIIAD were 

truly substitutable, carriers would not split their operations among these airports but would 

instead serve the region from only one airport. 13 However, this is not the case as the OAG data 

show. Therefore Southwest must have access to DCA to effectively serve the Washington, D.C. 

market. 

Further evidence that the Washington DC and Baltimore airports are not substitutable is 

shown by comparing Southwest's fares at BWI to the fares of major incumbent carriers at DCA 

and lAD. This analysis is presented in Exhibit WN-R-23 in terms of comparative yield curves. 

The curves in Exhibit WN-R-23 were constructed by regression analysis in the same manner as 

all other yield curves in these exhibits. Exhibit WN-R-23 makes clear that Southwest's fares at 

BWI have not equalized the fares at DCA or lAD in the same O&D markets. If the airports were 

substitutes for each other, one would expect to see the DCA and lAD yield curves much closer to 

Southwest's yield curve at BWI. 

4.0 Rebuttal To Sun Country Airlines 

Sun Country proposes to serve the Lansing-Washington nonstop market as a by-product 

of serving MSP-DCA on a one-stop basis. With an average 147-seat airplane14 Sun Country 

projects that it will carry 31,390 local LAN-DCA passengers and 51,100 MSP-DCA passengers 

one-stop over LAN. 

It is doubtful that the carrier can obtain 51,100 one-stop passengers in the MSP-DCA 

market that is already well served with nonstops. However, the main issue for this case is the 

fact that Sun Country would carry only 31,390 local LAN-DCA passengers whereas Southwest 

will carry 63,306 local MCI-DCA passengers (Exhibit WN-R-24). Even Sun Country's local 

LAN-DCA projection is suspect. The base year total O&D passengers in the market was only 

17,290, and so the applicant is projecting that it will carry 82% more passengers than the entire 

13 By contrast, United and American serve the greater Chicago market only through O'Hare and Southwest serves it 

only through Midway. DFW IDAL is another example of a single market served by two airports. 

14 OAG schedule analysis for the week of September 20, 20 I O. 

6 
market for the latest 12 months 15 (Exhibit WN-R-25). With only one roundtrip per day and a 

reduction in fare of just 21 % (Exhibit SY-2) it defies economic logic that the market would 

increase by 82% and that Sun Country would get 100% of that market. Under favorable 

assumptions Southwest projects a total LAN-DCA market of 29,391 passengers with Sun 

Country's proposed service (Exhibit WN-R-31, page 1), but Sun Country would not obtain 100% 

of this market. 

One reason why Southwest would carry many more local passenger in the MCI-DCA 

market than Sun Country would in the LAN-DCA market is that Kansas City is simply a much 

larger market. The population of Kansas City is over 4.5 times the population of Lansing 

(Exhibit WN-R-26). Furthermore, Southwest's equivalent fare for a market with the LAN-DCA 

mileage would be 24% lower than the fares proposed by Sun Country (Exhibit WN-R-27). 

5.0 Rebuttal to AirTran 

AirTran proposes to serve either the DCA-RSW or DCA-SRQ market if awarded the slot 

pair in this case. The carrier's Application states that it will operate either B717 or B737 aircraft. 

Campbell-Hill believes AirTran is more likely to operate the B717 given the relatively small size 

and seasonality of its proposed markets. Southwest's proposal would serve a market that is more 

than three times the population of either Ft. Meyers or Sarasota (Exhibit WN-R-28). 

There is an abundance of conveniently timed single-connection service in both the DCARSW and DCA-SRQ markets (Exhibits WN-R-29 and WN-R-30). In fact, in the DCA-RSW 

market AirTran already provides one roundtrip nonstop flight along with some connecting flights 

via Atlanta. AirTran also serves the DCA-SRQ market with connections via Atlanta, and other 

carriers provide convenient connecting service as well. 

AirTran charges passengers for all checked baggage as well as for reservation 

cancellations/re-booking. Southwest charges only if three or more bags are checked. For the 

first quarter of 2010 AirTran's average baggage/reservation fees were $11.43 per passenger 

while Southwest's were only $0.37 per passenger.

16 If Southwest is awarded this pair of DCA 

15 YE Q1, 2010. 

16 Derived from DOT Form 41 and O&D databases. 

7 
slots, its system-wide policy of no baggage fees and no change/cancellation fees would be 

applied. 

6.0 Conclusion 

Southwest Airlines' low-fare proposal would benefit the highest number of DCA 

passengers, especially in the nonstop market. It would generate by far the greatest amount of 

consumer savings and traffic stimulation. Southwest's proposal with 137-seat mainline aircraft 

would utilize scarce DCA slot resources more efficiently than other applicants, especially US 

Airways and Republic. 17 

Southwest Airlines has no access to DCA today. An award of the exemption slots in this 

proceeding would, for the first time, bring Southwest's low-fare/high value service to the 

nation's capital through the close-in preferred airport. In my opinion no competing proposal 

comes close to offering the public benefits and competitive advantages as the Southwest service 

proposal. Southwest Airlines should be awarded the pair of slots available in this case. 

17 Both carriers propose to use RJ equipment with less than 100 seats. 

8 
Southwest Will Carry More DCA Nonstop 

Passengers Than Any Other Applicant 

(Based on Each Applicant's Forecast) 

DCA Nonstop 

Passengers 

(First Year) 

80,000 

70,000 68,306 

60,000 

50,000 

40,000 

30,000 

20,000 

10,000 

o 

31,390 

28,000 

Southwest Sun Country US Airways 

MCI LAN PNS 

Sources: Exhibit WN-7, US Airways Application at page 2, Sun Country Corrected Exhibits SY-2-3. 

No 

Forecast 

Republic 

MCI 

No 

AirTran 

SRQ/RSW 

Exhibit WN-R-l 
Southwest Will Offer the Lowest 

Fare Per Mile of All Applicants 

Average 

Fare per Mile 

and Fees1 

35.0¢ 

30.0¢ 

25.0¢ 

20.0¢ 

15.0¢ 

10.0¢ 

5.0¢ 

O.O¢ 

13.9¢ 

Southwest 

MCI 

DCA Nonstop Mileage 950 

Fare per Mile 13.9¢ 

% Southwest Lower 

18.3¢ 

Republic 

MCI 

950 

18.3¢ 

24% 

1/ All fare data includes derived cancellation and baggage fees for Q1 2010. 

Sources: Exhibits WN-3-4. Exhibit WN-R-21 . Exhibit WN-R-27. and carrier applications. 

29.9¢ 

25.2¢ 

US Airways Sun Country 

PNS LAN 

816 478 

25.2¢ 29.9¢ 

45% 54% 

Exhibit WN-R-2 

No Fare 

Proposal 

AirTran 

SRQ/RSW 
Southwest Will Provide the Largest Annual 

Consumer Fare Savings to Nonstop DCA Passengers 

Consumer Fare 

Savings 

(Millions) 

$13.00 

$11.00 $10.50 

$9.00 

$7.00 

$5.00 

$3.00 

$1.00 

-$1.00 

$0.37 $0.00 

Southwest Sun Country Republic 

Sources: Exhibit WN-6, WN-R-31 and WN-R-32. 

-$0.45 

US Airways 

No Fare 

Proposal 

AirTran 

Exhibit WN-R-3 
Fare Savings 

perOne-Way 

Passenger 

$50 

$40 

$30 

$20 

$10 

$0 

-$10 

-$20 

Southwest Will Provide the Largest 

Fare Savings per Passenger of Any Applicant 

$46 

$15 

$0 

-$16 

No Fare 

Proposal 

Southwest Sun Country Republic US Airways AirTran 

Sources: Exhibit WN-R-32. 

Exhibit WN-R-4 
DCA Slots Held 

By Applicant 

300 

250 2431 

200 

. 150 

100 

50 

o 

US Airways 

Southwest Holds No Slots At DCA 

. 1412 

18 

I I 0 0 

l 

Republic AirTran Southwest Sun Country 

11 US Airways total includes slots held by its wholly-owned subsidiaries Piedmont and PSA, but does not include the 167 slots operated for US Airways by other carriers. 

21 Republic includes slots held by Chautauqua and Frontier. 

Source: FAA Slot Reports As of October 12, 2010 (Current and Future). 

Exhibit WN-R-5 
Seats per 

Departure 

By Applicant 

160 

140 

120 

Southwest Will Operate Much Larger Aircraft 

At DCA Than the Airport Average 

1471 

137 

99 

Exhibit WN-R-6 

100 8717 DCA Average = 93 Seats 

---------- -- - --

ERJ-190 

80 

60 

40 

20 

0 

Sun Country Southwest AirTran Republic 

11 Average seats per departure according to Sun Country OAG schedules for the week of September 20, 2010. 

21 AirTran's Application states that it will operate either 8717 or 8737 aircraft. Campbell-Hill believes AirTran is more 

likely to operate the 8717 aircraft given the relatively small size and seasonality of its proposed markets. 

31 Average of six months with each aircraft. 

Sources: Exhibit WN-7, AirTran Application at page 6, US Airways Application at page 2, Republic Application at page 3, 

Sun Country OAG schedules for week of September 20, 2010. 

----------813---------

EMB-170/17 

US Airways 
DCAO&D 

Passengers 

(YE Q1 2010) 

200,000 

180,000 

160,000 

140,000 

120,000 

100",000 

80,000 

60,000 

40,000 

20,000 

0 

Kansas City Has More DCA O&D Passengers 

Than All Other Proposed Cities 

179,980 

128,750 

39,180 

33,070 

17,290 

Mel RSW SRQ PNS LAN 

Applicant Carrier Southwest, Republic AirTran AirTran US Airways Sun Country 

Note: Includes Fared Passengers. 

Sources: U.S. DOT, Origin-Destination Passenger Survey, via Data Base Products. 

Exhibit WN-R-7 
Kansas City Has A Larger Population 

Than All Other Proposed Cities 

2009 MSA 

Population 

2,500,000 

2,000,000 

1,500,000 

1,000,000 

500,000 

o 

2,066,732 

Kansas City 

Applicant Carrier Southwest, Republic 

Source: u.s. Census, American Community Survey. 

688,126 

586,908 

455,102 

Sarasota Ft. Myers Pensacola 

AirTran AirTran US Airways 

Exhibit WN-R-8 

453,603 

Lansing 

Sun Country 
Exhibit WN-R-9 

Southwest Would Operate the 8737NG at DCA With 560/0 

More Seats per Departure Than US Airways, the Largest Carrier at DCA 

Average Aircraft Size (Seats) 

140 

130 

-- --------- - ",- - -- --- --- - ----- ~ ----- - -- - - -- - - "-

Southwest Average Aircraft Size 

120 

110 

-- '\ 

\ ~ "/' . -- US Airways Average Aircraft Size at DCA 

100 

90 

80 

70 

in Markets Over 250 Miles 

60 

50 v 

01 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 

Year 

us Average 

Aircraft Size at DCA 97 98 73 79 88 90 87 85 85 86 87 

Southwest Average 

Aircraft Size 134 134 135 135 136 136 136 136 136 136 136 

Note: Includes nonstop markets over 250 miles. 

Source: OAG Schedules for mid·September 2000 - 2009 and the week of September 20, 2010. (September 2000 - 2010 Max editions). 
US Airways Operates Over Twice As Many Slots 

As the Second Largest Airline at DCA and Southwest Has None 

No. of DCA 

Slots 

Total = 830 

450 

410 

400 

350 

300 

250 

200 

150 

100 

50 

0 

Percent of Total 49% 19% 14% 8% 3% 3% 

1/ Republic (F9/YX) is listed by the FAA as the "holder" of 141 slots, including those held by Chautauqua and Frontier. 

Note: Combines United and Continental slots. 

6 AS 

2% 1% 

Sources: FAA Slot Reports As of October 12, 2010 (Current and Future). Slots of regional affiliates that operated for multiple airlines were allocated using the OAG. 

Exhibit WN-R-l0 

6 NK 

1% 
The DCA-MCI Market Is Nearly 150% Larger Than The 

DCA-Gulf Coast Market and Over 440% Larger than DCA-PNS 

Fared 0&0 Passengers 

YE Q1 2010 

200,000 

180,000 

160,000 

140,000 

120,000 

100,000 

80,000 

60,000 

40,000 

20,000 

0+---

179,980 

DCA-MCI 

Source: u.s. DOT, Origin-Destination Passenger Survey, YE 01 2010, via Data Base Products. 

+149% 

72,220 

25,230 VPS 

MOB 

PNS 

DCA-Gulf Coast Region 

Exhibit WN-R-ll 
Exhibit WN-R-12 

There Are Many Convenient Connecting 

Services Between DCA and PNS 

SOUTHBOUND 

Connect PNS 

DCADe~Time Carrier Flight Numbers Hub Time Arrival Time Ela~sed 

1 7:45:00 US US2401-/US2681- CLT 1 :12:00 10:25:00 3:40:00 

2 12:00:00 DL DL2339IDL1666 ATL 1 :07:00 15:07:00 4:07:00 

3 8:00:00 DL DL2739IDL1308 ATL 0:46:00 11 :09:00 4:09:00 

4 20:06:00 US US2421-/US2657- CLT 0:59:00 23:16:00 4:10:00 

5 19:00:00 DL DL 1839/DL 1977 ATL 0:56:00 22:20:00 4:20:00 

6 12:10:00 US US 1459/US2650- CLT 1:24:00 15:36:00 4:26:00 

7 9:00:00 DL DL2639/DL 1270 ATL 1:14:00 12:29:00 4:29:00 

8 17:20:00 DL DL 1631/DL3951- MEM 0:45:00 20:57:00 4:37:00 

9 16:00:00 DL DL 1539/DL2643 ATL 1 :16:00 19:39:00 4:39:00 

10 18:59:00 FL 174/455 ATL 1 :27:00 22:40:00 4:41 :00 

11 14:00:00 DL DL 1639/DL2141 ATL 1:20:00 17:43:00 4:43:00 

NORTHBOUND 

Connect 

PNS De~Time Carrier Flight Numbers Hub Time DCA Arrival Time Ela~sed 

1 11 :06:00 FL 439/179 ATL 0:40:00 15:42:00 3:36:00 

2 9:15:00 DL DL2694/DL2338 ATL 0:55:00 13:59:00 3:44:00 

3 17:56:00 FL 426/187 ATL 0:45:00 22:40:00 3:44:00 

4 13:09:00 DL DL327IDL1938 ATL 0:55:00 17:59:00 3:50:00 

5 18:23:00 DL DL 1912/DL 1438 ATL 0:51 :00 23:15:00 3:52:00 

6 16:10:00 US 2760/1060 CLT 1 :02:00 21:04:00 3:54:00 

7 6:10:00 DL DL2298/DL2638 ATL 0:47:00 11:08:00 3:58:00 

8 6:00:00 US 2618/1440 CLT 1:06:00 11 :02:00 4:02:00 

9 6:25:00 DL DL3815-IDL2782 MEM 0:32:00 11 :28:00 4:03:00 

10 11 :05:00 US 2640/1766 CLT 1:08:00 16:12:00 4:07:00 

11 11 :49:00 DL DL1530IDL2038 ATL 1 :21 :00 17:09:00 4:20:00 

12 15:47:00 DL DL2031IDL 1638 ATL 1 :16:00 21 :14:00 4:27:00 

13 16:25:00 DL DL4268-/DL2020 MEM 1 :07:00 22:03:00 4:38:00 

14 7:30:00 DL DL 1174IDL2438 ATL 1 :30:00 13:09:00 4:39:00 

Source: Oneworld, SkyTeam, and Star Alliance booking tools; airtran.com, frontier.com for October 11, 2010. 
US Airways Would Only Carry 28,000 Local DCA-PNS 

Passengers With Its High-Fare Small Aircraft Proposal 

11 US Airways Application at page 2. 

21 From Exhibit WN-R-16. 

Total Annual Onboard Passengers 

-Local DCA-PNS 

-Connections at DCA 

Estimated Average One-Way 

US Airways Fare2 

(Incl. baggage and cancellation 

US Airways Forecast1 

Number % 

43,000 100.0% 

28,000 65.1% 

15,000 34.9% 

fees) $206 

Exhibit WN-R-13 
Southwest's Forecast of Local DCA Passengers 

Is Three Times the Number Projected by US Airways 

Local Onboard 

Passengers 

90,000 

80,000 

70,000 

60,000 

50,000 

40,000 

30,000 

20,000 

10,000 

0+---

83,300 

DCA-Beyond MCI 

14,994 

Southwest Estimated DCA·MCI Local and 

Beyond MCI Passengers 

Source: Southwest Exhibit WN-7 and Application of US Airways, page 2. 

+198% 

28,000 

US Airways Estimated DCA·PNS Local 

Passengers 

Exhibit WN-R-14 
Southwest's Average System Fares Are 

Significantly Lower Than US Airways' Fares at DCA 

(Fare Curves Derived by Regression Analysis) 

YE Q1 2010 Nonstop 

Market Yield1 

100.0¢ 

Exhibit WN-R-1S 

90.0¢ 

- WN's System Yield Curve y= 1,659 X-O.6979 R2 = 0.91 

80.0¢ - US at DCA Yield Curve y= 16,881 X-O.9699 R2 = 0.91 

70.0¢ 

60.0¢ 

50.0¢. 

40.0¢ 

30.0¢ 25.3¢ 

20.0¢ 

10.0¢ : 15.4¢ , 

, 

, 

, O.O¢+-------~----~------~------~------~----~------_.------~------~----_. 

o 

Average Fare 

Savings 

100 

$127 

200 300 

$116 $107 

400 500 600 

Nonstop Miles 

$101 $95 $90 

1 Average fare include an average checked baggage/cancellation fee based on Q1 2010 Form 41 fees and traffic statistics. 

For US Airways this amount is $15.76 and for Southwest it is $0.37. 

, 

700 80d 900 

'PNS 

(816) 

$86 $81 $78 

Note: Includes airport pairs for which the "fare curve" carrier handled more than 20 one-way passengers per day based on YE Q1 2010 0&0 passenger traffic. 

Source: OAG (May, Aug. and Nov. 2009 and Feb. 2010 Max editions) and U.S. DOT, Origin-Destination Passenger Survey, via Data Base Products) 

1000 

$74 
Southwest's System Fare Levels Are 39% Lower 

Than the Projected Average DCA-PNS Fare on US Airways 

YE Q1 2010 

Average Fare 

and Fees 

$250 

$200 

$150 

$100 

$50 

$206 

$0+1 ---

Average US Airways Fare Plus Fees 

Source: Exhibit WN-R-15. 

-39% 

$126 

Fare and Fees Using Southwest's Yield 

Curve 

Exhibit WN-R-16 
The Kansas City MSA Population is 98% Larger 

Than US Airways' Gulf Coast Market 

and 354% Larger than the Pensacola MSA 

2009 Population 

2,500,000 

2,066,732 

2,000,000 

+98% 

1,500,000 

1,045,296 

Exhibit WN-R-17 

1,000,000 Fort Walton Beach MSA 

Mobile MSA 

500,000 

455,102 Pensacola MSA 

o +1-----' 

Kansas City MSA Population US Airways' Gulf Coast Definition 

Source: u.s. Census, American Community Survey and Application of US Airways, page 5. 
Southwest Would Offer 27,000 or 38% More 

Seat Capacity For DCA-MCI Service Than Republic 

DCA-MCI Seats 

for 1 Daily Roundtrip 

120,000 

100,000 

80,000 

60,000 

40,000 

20,000 

o +1------' 

1/99 seats x 365 days x 98% completion factor 

2/ 137 seats x 365 days x 98% completion factor 

70,825 

Republic Annual Seats/1 

Source: Exhibit WN-7 and Application of Republic Airline, Inc, page 3. 

98,000 

+27,175 

+38% 

Proposed WN Annual Seats/2 

Exhibit WN-R-18 
Southwest Would Serve Many More Beyond 

Mel Markets and Passengers Than Republic 

Southwest 

~', 

Annual DCA·MCI Local 

O&D Passengers: 

. Southwest 11 8eyonds: 

. Republic 5 8eyonds: 

179,980 

1,726,820 

871,000 

Republic 

Note: Includes all online beyond markets that have less than 25% Circuity. Also includes announced Republic AUS Service. Includes fared passengers only. 

Source: U.S. DOT, Origin-Destination Passenger Survey, via Data Base Products ; OAG, schedules for the week of September 20, 2010, and Southwest Exhibit WN-8. 

Exhibit WN-R-19 
There Are 980/0 More 0&0 Passengers in Southwest's 

Beyond MCI Markets than Republic's Beyond MCI Markets 

Fared O&D Passengers 

to Points Beyond MCI 

2,000,000 

1,800,000 1,726,820 

1,600,000 

1,400,000 

1,200,000 

1,000,000 

800,000 

600,000 

400,000 

200,000 

o +1 __ -----l 

WN Beyond MCI 

ABQ, DAL, DEN, LAS, LAX, OAK, 

OKC,PDX,PHX,SAN,SEA 

+98% 

871,000 

Republic Beyond MCI 

LAX,SFO,DEN,SEA,AUS 

Note: Includes all online beyond markets that have less than 25% Circuity. Also includes announced Republic AUS Service. 

Source: U.S. DOT, Origin-Destination Passenger Survey, via Data Base Products ; OAG, schedules for the week of September 20, 2010, and Southwest Exhibit WN-8. 

Exhibit WN-R-20 
Southwest's Average DCA-MCI Fare Would 

Be Approximately 24% Lower than Republic's Fare 

YE 01 2010 

Weighted Average 

Fare and Fees 

$200 

$180 

$160 

$140 

$120 

$100 

$80 

$60 

$40 

$20 

$0 +1--------' 

$174 

YE 01 2010 Republic Fare and Fees 

-24% 

$132 

Southwest Proposed Fare and Fees 

Note: Average fares includes checked baggage/cancellation fees estimated by Campbell-Hill Aviation Group from U.S. DOT airline data (Q1 2010). 

Fares based on fared passengers. 

Source: U.S. DOT Origin & Destination Survey, via Database Products 

Exhibit WN-R-21 
Example: 

There Are 31 Destinations Served by the 

Same Carrier From Both WAS and BWI 

American serves DFW from 

BWI, DCA and lAD. The 

American-DFW market is 

counted as 1 of 31 carrierdestinations. 

Note: Includes only domestic and Canada routes. WAS = DCA and lAD combined. 

Source: OAG, Schedules for the week of September 20, 2010 (September 2010 OAG Max Edition) 

Exhibit WN-R-22 
Fare Per Mile 

(YE Q1 2010)1 

120¢ 

100¢ 

80¢ 

60¢ 

40¢ 

Southwest's Fares at BWI Have Not Equalized 

Legacy Carrier Fares at DCA or lAD in Domestic Markets 

UAat lAD 

DL, US, AA at DCA 

20¢ WN atBWI 

Exhibit WN-R-23 

O¢+I---------------r---------------r---------------.--------------~--------------~------------~ 

o 250 500 750 1,000 1,250 

Nonstop Distance (miles) 

1 Average fare include an average checked baggage/cancellation fee based on 01 2010 Form 41 fees and traffic statistics. 

Note: Includes airport pairs for which the "fare curve" carrier handled more than 20 one-way passengers per day based on YE 01 2010 0&0 passenger traffic. 

Source: OAG (May, Aug. and Nov. 2009 and Feb. 2010 Max editions) and U.S. DOT, Origin-Destination Passenger Survey, via Data Base Products) 

1,500 
Passengers 

80,000 

70,000 

60,000 

50,000 

40,000 

30,000 

20,000 

10,000 

Southwest Would Provide Nonstop Service for 

118% More DCA Passengers Than Sun Country 

68,306 

+118% 

31,390 

0+1-----' 

Sun Country Projected DCA-LAN Local 

Passengers Onboard 

Source: Exhibit WN-7 and Exhibit Corrected SY-2. 

Southwest DCA-MCI Projected Local 

Onboard Passengers 

Exhibit WN-R-24 
Passengers 

35,000 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

Sun Country's Local Forecast For DCA-LAN 

is Over 80% Greater than The Total O&D Market 

(12 Months Ended March 31,2010) 

31,390 

+82% 

17,290 

o +1----' 

YE Q1 2010 Total DCA-LAN Fared 

Passengers 

Source: u.s. DOT, Origin-Destination Passenger Survey, via Data Base Products and Corrected SY-2. 

SY Local O&D Forecast 

Exhibit WN-R-2S 
2009 

Population 

2,500,000 

2,000,000 

1,500,000 

1,000,000 

500,000 

The Population in Kansas City is Over 4.5 

Times the Population of Lansing 

2,066,732 

+356% 

453,603 

o +1----' 

Kansas City MSA Population Lansing MSA Population 

Source: u.s. Census, American Community Survey. 

Exhibit WN-R-26 
Southwest's Equivalent Fare Level is 24% 

Lower than Sun Country's Proposed Average Fare 

One-Way Fares 

and Fees 

$160 

$140 

$120 

$100 

$80 

$60 

$40 

$20 

$0 +1----' 

$143 

-24% 

$109 

Sun Country Proposed LAN-DCA Fare and Southwest Fare and Fees at LAN-DCA Stage 

Fees Length 

Note: Fare for Southwest derived from its system yield curve. See Exhibit WN-1 O. Both include derived fares and fees. 

SY fees estimated at $13 based Q1 2010 DOT, Form 41 Data and Origin-Destination Passenger Survey Data. 

Source: U.S. DOT, Origin-Destination Passenger Survey, via Data Base Products and Corrected Exhibit SY-2. 

Exhibit WN-R-27 
2009 

Population 

2,500,000 

2,000,000 

1,500,000 

1,000,000 

500,000 

The Kansas City MSA Population is Over 200% 

Larger Than the Population of the Two 

Alternative Markets Proposed By AirTran 

2,066,732 

+200% +252% 

688,126 

586,908 

o +1-----' 

Kansas City MSA Sarasota MSA Ft. Myers MSA 

Source: u.s. Census, American Community Survey. 

Exhibit WN-R-28 
There Are Many Convenient Single Connection 

Options Between DCA and RSW 

SOUTHBOUND 

Connect 

DCA De~Time Carrier Flight Numbers Hub Time RSW Arrival Time Ela~sed 

1 8:00:00 FL 1181 Nonstop 0:00:00 10:30:00 2:30:00 

2 5:45:00 US US1423/US1987 CLT 0:40:00 9:37:00 3:52:00 

3 11:00:00 DL DL2439/DL 1701 ATL 0:35:00 15:04:00 4:04:00 

4 17:55:00 AA 735/4969 MIA 0:40:00 22:01:00 4:06:00 

5 6:00:00 DL DL2939IDL 1223 ATL 0:41 :00 10:15:00 4:15:00 

6 12:10:00 US US1459/US1695 CLT 1:04:00 16:29:00 4:19:00 

7 6:59:00 US US926/US1989 CLT 1:00:00 11:19:00 4:20:00 

8 9:25:00 US US1967/US1809 CLT 1:05:00 13:49:00 4:24:00 

9 7:20:00 AA 1269/4915 MIA 1:00:00 11 :50:00 4:30:00 

NORTHBOUND 

Connect 

RSWDe~Time Carrier Flight Numbers Hub Time DCA Arrival Time Ela~sed 

1 11 :59:00 FL 1180 Nonstop 0:00:00 14:10:00 2:11 :00 

2 17:15:00 US US948/US1060 CLT 0:40:00 21:04:00 3:49:00 

3 10:20:00 US US1988/US1712 CLT 0:54:00 14:20:00 4:00:00 

4 15:10:00 US US1529/US1764 CLT 0:55:00 19:12:00 4:02:00 

5 12:05:00 US US1126/US1766 CLT 0:54:00 16:12:00 4:07:00 

6 19:15:00 US US1704/US1780 CLT 1:04:00 23:22:00 4:07:00 

7 7:35:00 AA 4978/1068 MIA 1:00:00 11 :45:00 4:10:00 

8 18:27:00 FL 162/187 ATL 0:40:00 22:40:00 4:13:00 

9 19:01:00 DL DL 1 096/DL 1438 ATL 0:44:00 23:15:00 4:14:00 

10 8:30:00 US US1789/US1701 CLT 1:13:00 12:50:00 4:20:00 

11 17:05:00 AA 4914/868 MIA 1:18:00 21:30:00 4:25:00 

12 7:30:00 FL 178/186 ATL 0:59:00 12:00:00 4:30:00 

Source: Oneworld, SkyTeam, and Star Alliance booking tools; airtran.com, frontier.com for October 11, 2010 . 

... ~---.-r~;---------;-------.~.--- .--~----

Exhibit WN-R-29 
Exhibit WN-R-30 

There Are Many Convenient 

Single Connection Options Between DCA and SRQ 

SOUTHBOUND 

Connect SRQ 

DCA De~ Time Carrier Flight Numbers Hub Time Arrival Time Ela~sed 

1 8:45:00 US US3407- Nonstop 0:00:00 11:15:00 2:30:00 

2 6:59:00 US US926/US3167 - CLT 0:59:00 11 :07:00 4:08:00 

3 12:10:00 US US1459/US2283- CLT 1:09:00 16:27:00 4:17:00 

4 11:00:00 DL DL2439IDL 1101 ATL 0:58:00 15:20:00 4:20:00 

5 6:00:00 DL DL2939/DL 1227 ATL 0:51:00 10:27:00 4:27:00 

6 17:15:00 US US1773/US3235- CLT 1:19:00 21 :48:00 4:33:00 

7 16:00:00 DL DL 1539IDL689 ATL 0:51 :00 20:33:00 4:33:00 

NORTHBOUND 

Connect 

SRQ De~ Time Carrier Flight Numbers Hub Time DCA Arrival Time Ela~sed 

1 12:09:00 US US3342- Nonstop 0:00:00 14:24:00 2:15:00 

2 11 :08:00 DL DL2174/DL2238 ATL 0:35:00 14:57:00 3:49:00 

3 18:44:00 FL 695/187 ATL 0:35:00 22:40:00 3:56:00 

4 7:01:00 US US3115-/US1440 CLT 0:59:00 11 :02:00 4:01:00 

5 17:00:00 US US2222-/US1060 CLT 1:02:00 21 :04:00 4:04:00 

6 16:00:00 DL DL 1138IDL 1738 ATL 0:42:00 20:04:00 4:04:00 

7 13:34:00 DL DL 1678/DL 1938 ATL 1 :06:00 17:59:00 4:25:00 

8 11:11:00 FL 691/179 ATL 1:10:00 15:42:00 4:31 :00 

Source: Oneworld, SkyTeam, and Star Alliance booking tools; airtran.com, frontier.com for October 11, 2010. 

'I~"",.-_~,.,",,,,~--·; ,,~ -:r-'.--:-:-;-----~.-.-.-----.-~--
(A) 

DCA Markets 

Airport Miles ---

LAN 478 

Estimated Consumer Savings from 

Exhibit WN-R-31 

Page 1 of 2 

Sun Country's Proposed DCA - LAN Nonstop Service 

(8) (C) (0) (E) (F) (G) (H) (I) (J) (K) (L) (M) (N) (0) 

Fare Stimulation Annual Passengers -Total Market Consumer Surplus -Total Market 

Estimated A;erage Fare Before SY SY Change Fare Before After Annual Existing New 

Sen,;ce Stimulation Base Fare Fees Total Fare Absolute % Stimulation Stimulation New Stimulation Passengers Passengers Total 

50% $140.13 $18.21 $158.34 $142.67 -$15.67 -10% 13% 17,290 12,101 29,391 $270,936 $94,814 
Estimated Consumer Savings from 

Sun Country's Proposed DCA - LAN Nonstop Service 

(A) Nonstop Miles 

(8) Service Stimulation estimated by Campbell-Hill Aviation Group at 50% for first nonstop (one frequency) 

Exhibit WN-R-31 

Page 2 of 2 

(C) Average Fare for Fared Passengers (excludes passengers using frequent flier miles). Includes nonstop and connecting passengers. 

Uses YE March 2010 U.S. DOT Origin-Destination Passenger Survey data via Data Base Products. Exhibit WN-R-32. 

(D) Average Fees per passenger derived by Campbell-Hill Aviation Group using DOT Form-41 and DOT data (Q1 2010). 

(E) Column C + Column D 

(F) Sun Country's propose fare of $130 plus Q1 2010 average Sun Country baggage and cancellation fees per passengers ($12.67) 

derived from U.S. DOT Form 41 data. Assumes that incumbent carriers match Sun Country's Fares. 

(G) Column F - Column E 

(H) Column G / Column E 

(I) Calculated using a price elasticity coefficient of -1.2 (See Southwest Direct Exhibits, Appendix 1, page 3). 

The arc elasticity formula is: Arc Ep = [(Q2-Q1)/((Q1+Q2)/2)] / [(P2-P1)/((P1+P2)/2)] , where Q1 = passengers before WN service, 

Q2 = Passengers after WN service, P1=Fare Before WN service, P2 = Fare After WN service. 

(J) Fared passengers for YE March 2010 U.S. DOT Origin-Destination Passenger Survey data via Data Base Products. 

(K) Increases Column J by Column I fare stimulation percentage and Column B QSI stimulation percentage. 

(L) Column J + Column K 

(M) Column J x Column G 

(N) Column K x Column G x 0.5. This is the triangle area in Southwest Direct Exhibits, Appendix 1, page 4. 

(0) Column M + Column N 
Southwest Will Provide Greater Consumer Savings In 

the DCA Nonstop Markets Than Any Other Applicant 

US Sun 

Exhibit WN-R-32 

Southwest Airways Republic Country AirTran 

Forecast One-Way DCA N 

Nonstop Passengers 63,306 28,000 N/A 31,390 0 

Average Market Fare (YE Q1 2010) $178 $190 1 $1741 $158 2 F 

0 

Estimated First Year Fare $132 $206 $174 $143 3 R 

E 

. C 

Fare Savings per Passenger $46 -$16 $0 $15 A 

s 

T 

Note: All fares include derived cancellation and baggage fees based on U.S. DOT Form 41 data (Q1 2010), and Origin-Destination Passenger Survey data (YE Q1 2010). 

1/ Carrier's average fare in the base year 

2/ This fare is based on U.S. DOT Origin Destination Passenger Survey fared passenger data for all carriers between DCA and LAN plus a weighted 

average bag/cancellation fee of $18. 

3/ $130 fare from Exhibit Corrected SY-2 plus derived baggage and cancellation fees of $13. 

Sources: Exhibit WN-R-1, Exhibit WN-4, U.S. DOT, Origin-Destination Passenger Survey, via Data Base Products, Exhibit WN-R-21, Exhibit WN-R-15, Exhibit WN-R-28.