• 

BEFORE THE 

OFFICE OF THE SECRETARY 

U.S. DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

Application of 

FRONTIER AIRLINES, INC. 

For an exemption under 49 U.S.C. § 40109 

(Chicago (ORD), Illinois- Cancun, Mexico) 

) 

) 

) 

) DocketDOT·OST-2011·0214 

) 

) 

) 

) __________________________ ) 

Appl!cation of 

AIRTRAN AIRWAYS, INC • 

For an exemption under 49 U.S.C. § 40109 

(Chicago (MDW), Illinois- Cancun, Mexico) 

) 

) 

) 

) DocketDOT·OST-2011·0225 

) . 

) 

) 

) __________________________ ) 

BRIEF IN SUPPORT OF 

APPLICATION OF AIRTRAN AIRWAYS, INC. 

BY THE SOUTHWEST AIRLINES PILOTS' ASSOCIATION ("SWAP A") 

Communications with respect to this document should be addressed to: 

Teri Merrick 

General Counsel 

Southwest Airlines Pilots Association 

14-SO.Empire Central 

Dallas, TX 75247 

December 23, 2011 
BRIEF SUBMITTED BY SOUTHWEST AIRLINES PILOTS' ASSOCIATION 

IN SUPPORT OF AIRTRAN AIRWAYS, INC.1 

I. INTRODUCTION 

Southwest Airlines Pilots' Association ("SWAP A") is the exclusive bargaining 

representative for the more than 6000 pilots of Southwest Airlines. Although SWAP A does 

not currently represent any AirTran Airways, Inc. ("AirTran") pilots, SW APA has a vested 

in teres~ In the decision before the Department of Transportation because of the March 

201.1 Southwest Airlines Co. ("Southwest") acquisition of AirTran. Together Southwest/ 

AirTran provide extensive service in Chicago, and AirTran's proposed service between 

Midway ("MDW") and Cancun ("CUN") should be viewed as part of Southwest's overall 

system. 

Although Southwest currently enjoys a strong domestic presence at Chicago's 

Midway Airport ("MDW'), the expansion of AirTran service from MDW to Cancun ("CUN") 

will strengthen the Southwest franchise in Chicago and offer excellent international flying 

opportunities to customers. As detailed in the following analysis, SWAP A submits this 

answer in support of Air'l'ran's application for an exemption pursuant to 49 U.S.C. § 40109 

to engage in foreign scheduled air transportation between Chicago, Illinois (MDW) and 

Cancun, Mexico (CUN), and in opposition to Frontier Airline's application for a similar 

exemption to fly between Chicago (ORD) and CUN. 

1 To the extent necessary, SWAP A requests leave from the Department to file this brief. Good cause exists for 

granting this request as SWAP A bas an important interest in tbe outcome of this proceeding and tbe materials 

it submits will provide the Department with a more complete and accurate record upon which to base its 

decision. 

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II. ANALYS1SQJ1CJ;IICAGO MARKET 

A. FRONTIER APPLICATION 

The exemption sought by Frontier Airlines (''Frontier") to fly between Chicago 

O'Hare International Airport (ORD) and Cancun, Mexico will primarily benefit Apple 

Vacations, not the traveling public. It is our understanding that Apple Vacations intends to 

contract or utilize nearly all available seats from Frontier, which will have the effect of 

restricting seats from general sale. The current partner airline for Apple Vacations (under 

the current exemption), USA3000, makes only a small fraction, ~or fewer based on 

2010 O&D data) of seats available to the general public. Apple Vacations withholds the 

remainder of seats to sell as part of "package" vacations.z In August 2011, Apple 

announced a similar business relationship with Frontier. If Frontier is granted its 

exemption request, it is expected that they will operate the Chicago (ORD) to Cancun route 

in the same manner as USA3000.In our opinion, this does not meet the "public good" 

standard for a§ 401.09 exception, because the traveling pubic would be forced to purchase 

a package vacation In approximately-of cases to take advantage of this exemption for 

travel from Chicago to Cancun. 

Press releases from both Apple Vacations and Frontier suggest that Frontier does 

not intend to serve ORD-CUN market as a common passenger carrier, but instead will 

primarily serve as a contracted "lift provider", which is not in the public interest. (Frontier 

press release dated August, 201 t) If the Department wishes to accommodate the 

continuing Apple Vacations travel packages from ORD to CUN, SWAP A would not object to 

2 Unless otherwise noted, all data referenced in this document is from the 2010 Airline 

Origin and Destination Survey {DB.1A). 

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the Department issuing Frontier a limited charter designation in addition to granting 

AirTran's exemption application. However, the greatest value to the flying public would 

result in the Department granting the AirTran application for exemption regardless of the 

Department's decision regarding Charter service. 

B. AIRTRAN APPLICATION 

Unlike Frontier, it is expected that AirTran will make available- for general sale to 

the general public- seats between Chicago (MDW) and Cancun in traditional, competitive 

airline service. AirTran will not require the purchase of "packages" in order to travel. 

If AirTran is granted the exemption, the traveling public will have far more fare options and 

choices of travel days. 

AirTran Airways, recently acquired by Southwest Airlines, can pmvide MDW-CUN 

service to connecting passengers from Chicago as well as dozens of cities served by AirTran 

and Southwest Frontier, on the other hand, has no connecting service to ORD and thus will 

only.serve passengers who reside within driving distance of ORD. Frontier's current 

Chicago area service is to and from MDW, and Frontier has made no indication of an intent 

. to change its Chicago service in the future. 

Despite its own presence at MDW, Frontier has argued that Chicago passengers 

prefer O'Hare over Midway. We view this arguments as pure conjecture and counterintuitive to the desires of airline passengers. Consider, for example, Volaris Airlines' 

recently added and successful Guadalajara service to MDW. In January of 2011 Volaris 

began nonstop service to Guadalajara from MDW. Prior to Volaris's entry the market had 

not had nonstop service since ATA Airlines ceased flying this route in 2008. In the first six 

months of 2010, one year prior to Volaris's entry, Travel Port Illuminate O&D data indicated 

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that over a period of time, ORD had 12 to 17 times as many Guadalajara O&D passengers as 

Midway. Prior to Volaris, the only way a MDW passenger could get to Guadalajara was 

through a connection on Delta Airlines. In the first six months of 2011, after Volaris had 

entered the market, that gap had closed. ORD now serves only 1.8 to 1.5 times as many 

passengers, which is in-line with the number of seats offered in both cities. If AirTran Is 

allowed to begin service from MDW to CUN we expect a similar result 

Passengers choose convenient, low-fare travel out of Chicago, regardless of the 

originating airport In the instant matter, the "public good" will be better served by 

allowing traditional, competitive air service to CUN from Chicago. This will a.llow the flying 

public more competitive options, rather than reserving the exemption to primarily benefit 

one private tour operator. 

C. IMPACT ON BEST INTEREST OF FLYING PUBLIC 

The exemptions under 49 U.S.C. § 40109 best serve the public good if granted for 

common, public transportation, rather than for private companies to use between city 

pairs. When viewed from "the public interest" instead of from Apple Vacation's interest, an 

exemption consideration should examine the general ability for the traveling public to 

purchase tickets without paying what could be described as a "package vacation tax". 

The public interest in an exemption to provide air service from Chicago to the beach 

resort Cancun would lie in expanded service and schedules, the ability for passengers to 

connect from neighboring cities and the flexibility allowed in making and changing travel 

plans. Under the current exemption, and presumably under the new contract between 

Frontier and Apple Vacations, nearly all (if not all) seats on Frontier's flights to the beach 

resort of Cancun would be pre-sold to package vacation purchasers who obtain their air 

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·-
transportation only as part of a "package deal" where vacationers purchase hotel 

accommodations and receive air transportation with the tour. 

An examination of ticketing data shows that approximately-passengers- out 

of almos-total- on Apple Vacation's current airline of choice, USA3000, paid an 

identical fare in the ORD- CUN bi-directional market in 2010. 

••••• There does not 

appear to be a normal distribution of ticket fares. The number of customers who 

purchased airfare absent a package deal, appears to b~or fewer; it also is possible this 

number approaches zero on many flights. 

The fact that Frontier will serve the market with a larger aircraft than USA3000 is 

negated by the fact that the majority of tickets will be spoken for by Apple Vacations. 

Based on O&D data, SWAP A argues that the Apple Vacation relationship will have the effect 

of offering the equivalent of only a 26-seat aircraft to the general public. This is far fewer 

than the 137 seats AirTran can offer the general public.i 

6 
It can be argued that the current exemption used by Apple Vacations through 

USA3000 results in a provider that isn't "low fare" in this market. Apple Vacations' partner 

airline has an average fare that is onl-lower than American. Airlines and-lower. 

than United Airlines. However, unlike USA3000, both American and United offer a first 

• class product. The distribution in the chart above indicates that United Airlines offered a ~ 

;,significant number of fares below -whereas USA3000 did not. There is no reason to 

believe this distribution and lack of discounting will change because approximatel~of 

the tickets appear to be sold at a bulk rate. Unless this bulk rate is reduced, Frontier's 

exemption will not stimulate new demand for the market. In contrast, we believe that 

AirTran may significantly lower average fares to CUN in both the local markets and in the 

various connecting markets served in coordination with Southwest. 

7 
An Examination Of Ability To Boo!{ Fares to tbe Resort Town of Cancun 

While examining "the public interest", we made an attempt to book a fare as a nonpackage vacation purchaser (i.e. as a. c~ttom,er searching for airfare only), not a~·ail. Apple 

Vacations tour customer. While the current Apple Vacations contractor purports to list 

fares to Mexico on its booking website, usa3000.com, it appears to be very difficult for the 

average customer to purchase a ticket. ·We argue that there is no evidence that this practice 

will change materially if Frontier becomes the contracted operator.3 

Scenario One: In an attempt to book a holiday vacation returned only one available flight to 

Cancun and only three available return flights from Cancun: 

3 Search for airfares on usa3000.com was conducted on December 16, 2011. 

8 
When attempting to book a non-package fare more than one month into the future, only 

could be booked, and zero return flights could be booked. 

SWAP A fully supports the AirTran application for exemption under 49 U.S.C. § 

40109 to engage in foreign scheduled air transportation between Chicago, Illinois (MDW) 

and Cancun, Mc:Xico (CUN). In contrast with providing charter lift, AirTran will be provide 

the flying public with choices of connections from cities served by MDW. As the integration 

with Southwest continues, passengers in cities such as Columbus, Ohio, Detroit, Michigan, 

Indianapolis, Indiana, Oklahoma City, Oklahoma, Omaha, Nebraska, Minneapolis, Minnesota 

and many other llastCoast passengers will have the opportunity to book flights to Cancun. 

Frontier cannot make the same assertion. By contracting with Apple Vacations, the 

passengers flo~ by Frontier will be a tiny subset of customers: those who Jive in the 

9 
Chicago area and want to purchase pacl<age vacations. Therefore, the exemption to AirTran 

should be granted for the greater good of the flying public. If the Department wishes to 

grant Frontier a limited Charter-only exemption, this should not be done at the exclusion of 

AirTran from the Chicago - Cancun market. 

10 
CERTIF:ICA.J'lt OF SERVICE 

I HEREBY CERTIFY THAT ON December 23, 2011, a copy of the foregoing was served 

via e-mail on the following persons: 

l~~lig_,!!hh!:!tt.@wn~;g.cQID (Southwest Airlines) 

lui!!,lU!t:i~ley@:wnc.Q,!;jUU (Southwest Airlines) 

bob.jordan@wuco.com (AirTran Airlines) 

ID.!!t!!l~@.:s!!!:I&9J!I (Alasl<a Airlines) 

!!.!l!'l·!l!ll~.Q!l.@.!l!!A;m.n (American Airlines) 

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

jgff.mq_rg!ln.@Jlg!tl!&!lm {Delta Air Lines) 

!:l!lb .• C.Qb.!!Ji!!.l!!!ga_nlo.x~U,~;gm (Frontier Airline) 

patrick.rizzi.@horumi.!!Y!lU.cQID (Frontier Airline) 

jhill@dowlobn!l1!.c9m (J etBlue Airways) 

g_~lr.!!J:.t:in@y:kl!!:W&QID (Spirit Airlines) 

jyoung@yklaw.com (Spirit Airlines) 

John.Fredericksen.@suncouno:y.com (Sun Country Airlines) 

dan.:W!li!!!!.@Y!lit_g{i~~,;Q.!!I (United Air Lines) 

howard lrnss@usairways.com (US Airways) 

pmurphy@lopmurphy.com (USA30000) 

ha.rhl!!:!!Lr1!1!l!!l!l@yjrgj_namg_ric!l.cQm {Virgin America) 

susan.kurland.@dot.ggy 

tQ!ld.llo!!!nn.@Mt.g!)Jr 

~~t.!l.r.Q£1[@..erg@dqJ,gmt 

brian.hedberg.@dot.gov 

brett.kmger@dot.go~~: 

Pa!!l.gretch@!Jg.t,gg:v. 

john.allen@ (aa.gov 

ursk@dos.gov . 

Rosemarie S. Andolino 

Commissioner. 

City of Chicago Department of Aviation 

RQ!!~J!lll!:l~~nd!llJ!I..9_@.!;i.ty_Q.fcbJ.ca,g.(M!rg 

Erin O'Donnell 

Managing Deputy Commissioner 

City of Chicago Department of Aviation, Midway Airport. 

:!IDJ!@~cityofchicago.QI:g · . . m;- - A~::e~==-_... 

~ck 

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