BEFORE THE

OFFICE OF THE SECRETARY

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON D.C.

__________________________________________

)

Joint Application of )

) 

UNITED AIRLINES, INC. and ) Docket DOT-OST-2014-0158

SKYWEST AIRLINES, INC. ) and

) Docket DOT-OST-2014-0159

for exemption pursuant to 49 U.S.C § 40109 and )

designations (Houston-Monterrey, Mexico) )

__________________________________________ )

ANSWER OF SOUTHWEST AIRLINES CO.

Communications with respect to this 

 document should be addressed to:

Ron Ricks Robert W. Kneisley

 Executive Vice President -- Associate General Counsel

 Chief Legal and Regulatory Officer Leslie C. Abbott

Mark Shaw Senior Attorney

 Vice President General Counsel & SOUTHWEST AIRLINES CO.

 Corporate Secretary 919 18th Street, NW

SOUTHWEST AIRLINES CO. Suite 600

2702 Love Field Drive Washington, DC 20006

Dallas, TX 75235-1611 bob.kneisley@wnco.com

(202) 263-6284

September 25, 2014
1

BEFORE THE

OFFICE OF THE SECRETARY

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON D.C.

__________________________________________

)

Joint Application of )

) 

UNITED AIRLINES, INC. and ) Docket DOT-OST-2014-0158

SKYWEST AIRLINES, INC. ) and

) Docket DOT-OST-2014-0159

for exemption pursuant to 49 U.S.C § 40109 and )

designations (Houston-Monterrey, Mexico) )

__________________________________________ )

ANSWER OF SOUTHWEST AIRLINES CO.

On September 10, 2014, United Airlines and SkyWest Airlines (d/b/a United 

Express) (the “Joint Applicants”) filed an application, pursuant to 49 U.S.C. § 40109 and 

Subpart C of the Department’s Rules of Practice, for an exemption from 49 U.S.C. § 

41101 authorizing SkyWest to provide scheduled foreign air transportation between 

Houston (IAH), on the one hand, and Monterrey, Mexico (MTY) on the other hand, 

beginning on or about March 5, 2015. SkyWest proposes to operate the IAH-MTY

service under the United Express brand pursuant to a capacity purchase agreement 

with United.

Under the terms of the U.S. – Mexico Air Transport Services Agreement (“U.S. –

Mexico Agreement”), as amended, the United States may designate up to three airlines 

to provide scheduled service on this route. United and its partner carrier, ExpressJet 

(d/b/a United Express), currently hold two of the three available U.S. carrier 

designations. In the Joint Application, United proposes to substitute SkyWest’s United 
Answer of Southwest Airlines

2

Express service for the United mainline service on this route. However, judging from 

the language of the Joint Application, the timing of United’s return of its designation is

not entirely clear, and solely within United’s discretion. The Joint Application states in a 

footnote as follows: 

United will retain its operating designation until the Department has taken 

action on the Joint Application, the Joint Applicants have begun providing 

the service requested herein, and United has given notice to the 

Department that its operating designation is no longer required.1

Thus, United appears to contemplate that it and its partner carriers may hold or control 

all three designations for an unspecified period of time while it decides, in its discretion, 

when to return its designation to the DOT. Southwest does not oppose the grant of the 

Joint Application at this time, as Southwest is not currently seeking authority to serve 

the Houston-MTY market,

2

but we do request that the Department make clear that 

United and its affiliated carriers may not control all three designations for any period of 

time, as this would leave no designations available for new entry and competing 

service. 

Southwest’s request is entirely consistent with the Department’s recent actions to 

promote competition on limited-entry U.S. - Mexico routes. Less than three months 

ago, the Department addressed a similar issue in the IAH-Puerto Vallarta (PVR) and 

IAH-San Jose del Cabo (SJD) markets when United and SkyWest filed a similar joint 

application proposing to substitute SkyWest’s United Express service for the United 

 

1

 Joint Application of United Airlines, Inc. and SkyWest Airlines, Inc., p. 3, n.4, filed in this docket.

2 Construction of an international terminal at Houston Hobby, which will enable Southwest to offer a 

broad range of competitive U.S. carrier services from Houston to points in Mexico as well as destinations 

in the Caribbean and South America, is well underway. The facility is projected to open in the beginning 

of fourth quarter 2015. 
Answer of Southwest Airlines

3

Express service being provided by ExpressJet.

3

 As in this case, United-affiliated 

carriers already held two of the three available designations in each market and the joint 

application did not provide a firm date by which United would return the third 

designation on each route. Southwest answered that application in a similar manner as 

here. DOT granted United’s joint application but noted Southwest’s answer and stated 

that: 

[w]e will withdraw the designations of ExpressJet effective upon the 

departure of its last scheduled flights in the Houston-Puerto Vallarta and 

Houston-San Jose del Cabo markets respectively but in no case effective 

later than 11:59 PM on October 31, 2014, and designate SkyWest for the 

Houston-Puerto Vallarta and Houston-San Jose del Cabo services 

effective November 1, 2014.4

Thus the DOT recognized the issue that Southwest raised and took concrete 

steps to ensure that one designation remained available for a new entrant carrier.

Southwest requests that the Department take a similar pro-competitive approach in this 

proceeding by ensuring that the Joint Applicants do not occupy all three designations for 

any period of time so that one designation remains open for entry by a competing 

carrier. 

The issue presented in this case is similar to the problem raised in several recent 

applications filed by United for Houston-Mexico route authority, namely the request to 

occupy or control more than one U.S. carrier designation per route in order to 

accommodate both United’s own service and that of its partner/affiliate carriers.

5

 This is 

problematic and anti-competitive because the holding of multiple designations in the 

 

3

Joint Application of United Airlines, Inc. and SkyWest Airlines, Inc., June 10, 2014, Dockets DOT-OST2014-0100 and 2014-0101.

4 Notice of Action Taken, July 29, 2014, Dockets DOT-OST-2014-0100 and 2014-0101, p. 2.

5

See, e.g., Answer of Southwest Airlines, filed Aug. 27, 2014 in Dockets DOT-OST-2014-0129 and -0130 

(IAH-MEX); Answer of Southwest Airlines, filed June 24, 2014 in Dockets DOT-OST-2014-0100 and 

-0101 (IAH-PVR/SJD); Answer of Southwest Airlines, filed May 5, 2014 in Dockets DOT-OST-2014-0058

and -0059 (IAH-BJX).
Answer of Southwest Airlines

4

currently restricted U.S.-Mexico trans-border market has the potential to block new entry 

and competition from other U.S. carriers, including Southwest. 

We believe that the guiding principle for the Department should be that no single 

airline should be permitted to hold or control more than one designation per route when 

a competing application is filed for service on that route. In the present case, United 

and its partner carriers propose to hold two of the maximum three U.S. designations on 

the Houston–MTY route in question – and possibly even all three for an unspecified 

period of time. This clearly is an unacceptable situation in a restricted-entry market. 

For the reasons given above, Southwest requests that the Department make clear that 

(1) United and its partner carriers will not be permitted to occupy more than one 

designation if doing so would block a competing U.S. carrier application, and (2) United 

and its partner carriers may not occupy all three U.S. carrier designations for any period 

of time on this route. 

Southwest is of course aware that the U.S. and Mexican governments are 

currently in discussions over a possible easing of restrictions on trans-border air 

service. If these discussions are successful, the measures discussed above might 

become unnecessary. At present, however, there is no agreement in place for 

liberalization of current regime, and thus the Department must take steps to protect the 

limited opportunities that are currently available for new entry and competition in these 

important markets.

Respectfully submitted,

______________________

Robert W. Kneisley
1

CERTIFICATE OF SERVICE

I hereby certify that on September 25, 2014, a copy of the foregoing was served 

via e-mail on the following persons:

msinick@ssd.com (Alaska Airlines)

howard.kass@aa.com (American Airlines)

robert.wirick@aa.com (American Airlines)

chris.walker@delta.com (Delta Air Lines)

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

robert.cohn@hoganlovells.com (Republic Airways)

patrick.rizzi@hoganlovells.com (Republic Airways)

robert.land@jetblue.com (JetBlue Airways)

jhill@dowlohnes.com (JetBlue Airways)

perkmann@dowlohnes.com (JetBlue Airways)

dkirstein@yklaw.com (Spirit Airlines)

jyoung@yklaw.com (Spirit Airlines)

thomas.ting@suncountry.com (Sun Country Airlines)

dan.weiss@united.com (United Airlines)

john.varley@virginamerica.com (Virgin America) 

susan.kurland@dot.gov

brian.hedberg@dot.gov

brett.kruger@dot.gov

reese.davidson@dot.gov

todd.homan@dot.gov

peter.irvine@dot.gov

cristinasa@state.gov

info@airlineinfo.com

__________________________

Leslie C. Abbott