# • 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 ) ) ) )


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Appl!cation of AIRTRAN AIRWAYS, INC• For an exemption under 49 U.S.C. § 40109 (Chicago (MDW), Illinois- Cancun, Mexico) ) ) ) ) DocketDOT·OST-2011·0225 )

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BRIEF IN SUPPORT OF APPLICATION OF AIRTRAN AIRWAYS, INC. BY THE SOUTHWEST AIRLINES PILOTS' ASSOCIATION ("SWAPA") Communications with respectto this document should be addressed to: Teri Merrick General Counsel SouthwestAirlines Pilots Association 14-SO.Empire Central Dallas, TX 75247 December 23, 2011BRIEF SUBMITTED BY SOUTHWEST AIRLINES PILOTS' ASSOCIATION IN SUPPORT OF AIRTRAN AIRWAYS, INC.1 I. INTRODUCTION SouthwestAirlines Pilots' Association ("SWAP A") is the exclusive bargaining representative for the more than 6000 pilots ofSouthwestAirlines. Although SWAPA does not currently represent any AirTran Airways, Inc. ("AirTran") pilots, SWAPA has a vested in**teres~** In the decision beforethe Department ofTransportation because ofthe March 201.1 Southwest Airlines Co. ("Southwest") acquisition ofAirTran. Together Southwest/ AirTran provide extensive service in Chicago, and AirTran's proposed service between Midway ("MDW") and Cancun ("CUN") should be viewed as part ofSouthwest's overall system. Although Southwest currently enjoys a strong domestic presence atChicago's Midway Airport ("MDW'), the expansion ofAirTran 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, SWAPAsubmits this
answer in support ofAir'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.

1To the extent necessary, SWAPArequests leave from the Departmentto file this brief. Good cause exists for granting this request as SWAPAbas animportantinterestintbe outcome ofthis proceeding and tbe materials it submits will provide the Department with a more complete and accurate recordupon which to base its decision.
2II. ANALYS1SQJ1CJ;IICAGO MARKET A. FRONTIER APPLICATION The exemption soughtby Frontier Airlines (''Frontier") to fly between Chicago O'Hare International Airport (ORD) and Cancun, Mexico will primarily benefitApple Vacations, not the traveling public. It is our understanding thatApple 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) ofseats available to the generalpublic. Apple Vacations withholds the remainder ofseats to sell as part of"package" vacations.z In August 2011, Apple announced a similar business relationship with Frontier. IfFrontier is granted its exemption request, itis expected thatthey 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-ofcases to take advantage ofthis 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, butinstead will primarily serve as a contracted "lift provider", which is not in the public interest. (Frontier press release dated August, 201 t) Ifthe Department wishes to accommodate the continuing Apple Vacations travel packages from ORD to CUN, SWAPAwould not object to

2 Unless otherwise noted, all data referenced in this document is from the 2010Airline Origin and Destination Survey{DB.1A).

3the Departmentissuing 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 ofthe Department's decision regarding Charter service. B. AIRTRAN APPLICATION Unlike Frontier, itis 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. IfAirTranis granted the exemption, the traveling public will have far more fare options and choices oftravel days. AirTran Airways, recently acquired by SouthwestAirlines, can pmvide MDW-CUN service to connecting passengers from Chicago as well as dozens ofcities servedby AirTran and Southwest Frontier, on the otherhand, has no connecting service to ORD and thus will only.serve passengers who reside within driving distance ofORD. Frontier's current Chicago area service is to and from MDW, and Frontierhas made no indication ofan intent

. to change its Chicago service in the future. Despite its own presence at MDW, Frontier has argued that Chicago passengers prefer O'Hare overMidway. We view this arguments as pure conjecture and counterintuitive to the desires ofairline passengers. Consider, for example, Volaris Airlines' recently addedand successful Guadalajara service to MDW. In January of2011 Volaris began nonstop service to Guadalajara from MDW. Prior to Volaris's entrythe markethad not had nonstop service since ATA Airlines ceased flying this route in 2008. In the first six months of2010, one year prior to Volaris's entry, TravelPortIlluminate O&D data indicated

4that over a period oftime, ORD had 12 to 17times as many Guadalajara O&D passengers as Midway. Prior to Volaris, the only way a MDW passenger could getto Guadalajara was through a connection on Delta Airlines. In the first six months of2011, 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 ofseats offered in both cities. IfAirTran Is allowed to begin service from MDW to CUN we expect a similar result Passengers choose convenient, low-fare travel out ofChicago, regardless ofthe originating airport In the instantmatter, 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 primarilybenefit
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 ifgranted for common, public transportation, rather than for private companies to use between city pairs. When viewed from "the public interest" instead offrom 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 (ifnot all) seats on Frontier's flights to the beach resort ofCancun would be pre-sold to package vacation purchasers who obtain their air

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### ·-transportation only as part ofa "package deal" where vacationers purchase hotel accommodations and receive air transportation with the tour. An examination ofticketing datashows that approximately-passengers- out ofalmos-total- on Apple Vacation's currentairline ofchoice, USA3000, paid an identical fare in the ORD- CUN bi-directional market in 2010.

•••••There does not appear to be a normal distribution ofticket fares. The number ofcustomers 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 thatFrontier will serve the marketwith a larger aircraftthan USA3000 is negated by the fact thatthe majority oftickets will be spoken for byApple Vacations. Based on O&D data, SWAPAargues thatthe Apple Vacation relationship will have the effect ofoffering the equivalent ofonly a 26-seat aircraft to the general public. This is far fewer than the 137 seats AirTran can offer the general public.i

6It can be argued thatthe current exemption used byApple Vacations through USA3000 results in a provider thatisn't "low fare" in this market. Apple Vacations' partner airline has an average fare thatis onl-lowerthan 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 offares below -whereas USA3000 did not. There is no reason to believe this distributionand lack ofdiscounting will change because**approximatel~of** the tickets appearto be sold at a bulk rate. Unless this bulkrate 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 inboth the local markets and in the various connecting markets served in coordination with Southwest.

7An Examination OfAbility To Boo!{ Fares to tbe Resort Town ofCancun 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 currentApple 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 thatthis practice will change materially ifFrontier becomes the contracted operator.3 Scenario One: In an attemptto 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. 8When 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.

SWAPAfully 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 ofconnections 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 opportunityto book flightsto Cancun. Frontier cannotmake the same assertion. By contracting with Apple Vacations, the passengers**flo~** by Frontier will be atiny subset ofcustomers: those who Jive in the
9Chicago area and want to purchase pacl<age vacations. Therefore, the exemption to AirTran should be granted for the greater good ofthe flying public. Ifthe Departmentwishes to grant Frontier a limited Charter-only exemption, this should not be done atthe exclusion of AirTran from the Chicago

- Cancun market.



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### CERTIF:ICA.J'ltOF SERVICE I HEREBY CERTIFY THAT ON December 23, 2011, a copy ofthe foregoing was served via e-mail onthe following persons:**l~~lig_,!!hh!:!tt.@wn~;g.cQID** (SouthwestAirlines)**lui!!,lU!t:i~ley@:wnc.Q,!;jUU** (SouthwestAirlines) bob.jordan@wuco.com (AirTranAirlines)**ID.!!t!!l~@.:s!!!:I&9J!I** (Alasl<a Airlines)**!!.!l!'l·!l!ll~.Q!l.@.!l!!A;m.n** (AmericanAirlines) sascha.vanderbellen.@delta.com (Delta Air Lines) jgff.mq_rg!ln.@Jlg!tl!&!lm {DeltaAir Lines) 

### !:l!lb .•**C.Qb.!!Ji!!.l!!!ga_nlo.x~U,~;gm** (FrontierAirline) patrick.rizzi.@horumi.!!Y!lU.cQID (FrontierAirline) jhill@dowlobn!l1!.c9m (JetBlueAirways)**g_~lr.!!J:.t:in@y:kl!!:W&QID** (SpiritAirlines) jyoung@yklaw.com (SpiritAirlines) John.Fredericksen.@suncouno:y.com (Sun CountryAirlines)**dan.:W!li!!!!.@Y!lit_g{i~~,;Q.!!I** (UnitedAir 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 ofChicago Department ofAviation**RQ!!~J!lll!:l~~nd!llJ!I..9_@.!;i.ty_Q.fcbJ.ca,g.(M!rg** Erin O'Donnell Managing DeputyCommissioner City ofChicago DepartmentofAviation, Midway Airport.

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