# jetBlue·

27-01 Queens Plaza North Long Island City, NY 11101 jetblue.com January 9, 2014

VIA HAND DELIVERY 

### &OVERNIGHT

Mr. Marc L. Warren
, Esq. Acting ChiefCounsel FederalAviation Administration 800 IndependenceAvenue, S.W. Washington, D.C. 20591

Re: Request ofJetBiueAirwaysforaWaiver

Dear Mr. Warren:

JetBiue Airways Corporation ("JetBiue") requests a waiver from certain restrictions in the JFK Order Limiting Scheduled Operations at John F. Kennedy International Airport, 1 so that it can permanently transfer, via a mutual slot purchase agreement, 24 JFK operating authorizations ("slots") to American Airlines, Inc. ("American") in exchange for the permanent transfer of 16 DCA slots from American to JetBiue. Granting the waiver will make permanent an arrangement that has been in place since 2010 ("2010 Slot Exchange"), will
assure the continued presence of JetBiue, a low cost carrier, at DCA, and will allowAmerican to complywith theterms ofa proposed settlement announced by United States DepartmentofJustice ("DOJ") on November 12, 2013.2
The transfer ofthese slots is required underthe terms of a proposed final judgment ("PFJ") between DOJ and the States of Arizona, Florida, Tennessee, and Michigan, the Commonwealths of Pennsylvania and Virginia, the District of Columbia, American and US Airways requiring that American offer to divest the 16 DCA slots currently operated by JetBiue by making permanent the 2010 Slot Exchange.3 See PFJ at IV.F.1, UnitedStates, eta/. v. USAirways Group, Inc., et

1 73 Fed. Reg. 3510 (January 18, 2008), as amended; hereinafter, "JFK Order". 2 The proposed settlement specifically refersto, and requires American to divest, the slots currently operated at DCA by JetBiue. See Proposed Final Judgment, UnitedStates, eta/. v. USAirways Group, Inc., eta/., No. 1:13-cv-01236 (D.D.C. Nov. 12, 2013), 1J1JII.E, II.F 

### &IV.F.1. 3 While JetBiue hasthe option ofrefusing to make the 2010 Slot Exchange permanent, American is required to offerthe permanenttransferofslots and, if rejected by JetBiue, mustthen includethe slots in the largerpool ofslots to be divested on the open market. While JetBiue could refuse to exchange its JFK slots for DCA slots and instead tryto negotiate a cash transaction, it could only do so atgreat riskto its continued operations because the settlement agreementMr. Marc L. Warren, Esq. January 9, 2014 Page 2

a/., No. 1:13-cv-01236 (D.D.C. Nov. 12, 2013), ECF No. 147-2. The DOJ believes that this divestiture, along with the others required by the terms of the settlement agreement, will "allow [LCCs and other carriers] to provide greatly expanded service on numerous routes, including new nonstop and connecting service to points throughout the country." Competitive Impact Statement United States, eta/. v. USAirways Group, Inc., eta/., No. 1:13-cv-01236 (D.D.C. Nov. 12, 2013), ECF No. 148 ("CIS"), at 9. The JFK Order was issued in 2008 as a temporary measure to address the growing congestion at JFK airport thatwas, in part, a result ofthe January 1, 2007 expiration of the High Density Rule4 at JFK under the Wendell H. Ford Aviation Investment and Reform Act for the 21 51 Century.5 The JFK Order was initially scheduled to expire October24, 20096 and specifically prohibited the sale of slots, instead permitting only the lease of slots, and then only through the end ofthe term ofthe JFK Order. 7 However, on May 21, 2008, the FAA published a notice of proposed rulemaking that was intended to replace the JFK Order.8 Both the High Density Rule and the NPRM contemplated the sale of slots, and there is no reason to believe that the FAA intended to restrict the sale of slots at JFK over the long-term. The JFK Order has been extended without change several times, and the final rule addressing operations at JFK is unlikely to be issued in time to address the proposed settlement's requirement that American offer to make permanent the 2010 Slot Exchange by offering JetBiue 16 DCA slots in exchangeforthe 24 slots currently held by JetBiue atJFK.9
The FAA has the statutory authority to grant the requested waiver. Section 40109 of the Transportation code authorizes the FAA to grant an exemption when the Administrator "decides the exemption is in the public interest." 49 U.S.C. 

### § 40109(b). The FAA will grant waivers when they are consistent with the public interest and will provide an equivalent or greater level

only gives JetBiue prioritywith respectto making the existing agreement permanent and provides no preferenceforJetBiue in the eventthatthe DCA slots are offered to multiple carriers. 4 14 C.F.R. 93.221. 5 49 U.S.C. 41715(a)(2)(2000). 6The FAA has continued to extend The JFK Order, which is nowsetto expire October 24, 2014. 78 Fed. Reg. 28,276 (May 14, 2013). 7 73 Fed. Reg. 3510, 3516. 873 Fed. Reg. 29,626 (May 21, 2008), finalized on October 10, 2008 (73 Fed. Reg. 60,544) and rescinded October9, 2009 (74 Fed. Reg. 52,134). 9A notice ofproposed rulemaking has been pending review atthe Office of Managementand Budget since March 9, 2013 http://reginfo.gov/public/do/eAgendaViewRule?publd=201304&RIN=2120-AJ89.Mr. Marc L. Warren, Esq. January 9, 2014 Page 3

of safetyw Indeed, the FAA has previously granted a waiver of the analogous Operating Limitations at New York LaGuardia Airport in connection with the 2011 slot swap transaction between Delta Air Lines and US Airways 11 and in connection with similar divestitures required by the PFJ. 12 As explained more fully below, we believe a waiver from the JFK Order's restriction on the sale of slots is warranted in this instance. Here, the FAA's objective of safely and efficiently managing air traffic at JFK is preserved, and the public policy goal of promoting competition in air commerce and improved service to the traveling public continues to be enhanced. In addition, DOJ has called for the permanent exchange ofthe JetBiue slots atJFK and the American slots at DCA, noting that JetBiue offers service on a limited number ofroutes at DCA "through use ofslots leased from American on terms that could be renegotiated or cancelled by the NewAmerican. Through the remedy

...JetBiuewill have the opportunityto obtain permanent access to the slots [it is] currently leasing from American, and

... will havethe opportunityto acquire more slots at DCA

... aswell." CIS at 8-9. By approving this waiver, the FAA will allow American to fulfill a requirement under the PFJ that settles the litigation between the DOJ and American. More significantly for JetBiue, the waiver will allow it to make permanent an existing slot exchange that allows itto serve DCA The 2010 Slot Exchange has resulted in considerable consumer benefits. Indeed, in the Complaint that initiated the litigation to enjoin the US Airways/American merger, the DOJ alleged that JetBiue's entry into DCA "generated stiff price competition" and fares on the "Reagan National to Boston

. . . route [in particular] have dropped dramatically."13 Moreover, in granting a priorwaiver, the FAA recognized

10The slot rules were adopted to improve efficiencyand notfor reasons of aviation safety. Thus, there is no need in this instance to demonstrate an equivalent or greater level ofsafety. In any case, it is clearthattransferring slots from one scheduled air carrierto another, both ofwhich are regulated underthe
same operational rules in 14 CFR part 121, will not have an adverse effect on safety. 11 Petition forWaiverofthe Terms ofthe Order Limiting Scheduled Operations at LaGuardiaAirport, 76 Fed. Reg. 63,702 (Oct. 13, 2011) ("granting thejoint waiver request of DeltaAir Lines, Inc. (Delta) and US Airways, Inc. (US Airways) (together, the JointApplicants orthe carriers) from the prohibition on purchasing operating authorizations (slots) at LaGuardiaAirport (LGA)."). 12 GrantofWaiverat 3, In re the Petition of AmericanAirlines, Inc.·fora Waiver from the OrderLimiting Operations atLaGuardiaAirport, No. FAA-2013-1011- 0002 (December2, 2013). 13 Amended Complaintat**~88** UnitedStates, eta/. v. USAirways Group, Inc., et a!., No. 1:13-cv-01236 (D.D.C. Sep. 5, 2013), ECF No. 73.Mr. Marc L. Warren, Esq. January 9, 2014 Page4

the competitive benefits and pncmg discipline resulting from low cost carrier competition-and competition from JetBiue specifically-at DCA. 14
At JFK, American uses the JetBiue slots for a combination of domestic and international routes, competing with other large domestic and international carriers serving global markets. By expanding its international outreach at JFK with large, wide-body aircraft, American has been able to increase passenger throughput internationallywithout increasing the burden on airtraffic control. Likewise, JetBJue anticipates thatthe impactto the traveling public at DCA will be positive. After execution of the 2010 Slot Exchange, American significantly reduced the number offlights at DCA using smaller, regional aircraft. By removing those regional aircraft and replacing them with larger E-190 and A320 aircraft,15 JetBiue increased the average seats per arrival and departure at DCA.
The permanent exchange of these slots does not pose any operational
concerns atJFK or DCA, having been implemented at both airports in 2010. The aircraft do not require any special handling by airtraffic control thatwould require additional spacing orotherwise introduce delay atthe airports.
Nor does the requested waiver prejudice any long-term FAA policy decisions relating to congestion management at DCA or JFK. Transfer of the JFK slots to American in exchange forthe DCA slots held byAmerican but used by JetBiue will give JetBiue and American the same rights that each carrier currently has as the slot holderatthe respective airports

- no more and no less.
A waiver is needed as soon as possible so that American can satisfy its obligations under the terms ofthe PFJ. The public policy considerations have been well explored by all parties to the litigation, including DOJ. In addition, granting the waiver will have no practical impact on the current operational makeup ofthe respective airports; rather, it will merelyfinalize an agreement that is currently temporary by virtue of the JFK Order. As such, JetBJue believes there is good causeto forgo a notice and comment period.

1476 Fed. Reg. at63,705 ("We believethe transaction's promised benefits forthe public-particularly in lightofthe increased penetration oflowcost carriers atthe airports since the time ofour last review-are sufficientfor us to conclude that wantofthe requested waiverwith specified remedies is in the public interest.").

5 JetBiue's E-190 aircraftseat 100 passengers, and its A-320 aircraft seat 150 passengers.Mr. Marc L. Warren, Esq. January 9, 2014 Page 5

In conclusion, the waiver is welljustified and in the public interest. JetBiue respectfully urges the FAA to grant the requested relief as soon as possible, so thatthe parties can close theirtransaction.

Sincerely,

Robert C. Land SeniorVice Presidentfor Government Affairs 

### &Associate General Counsel, JetBiueAirways Corporation

cc: Howard Kass, Vice President of RegulatoryAffairs, AmericanAirlines