BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC

__________________________________________

)

Application of )

)

VIRGIN AMERICA INC. )

) Docket No. OST-2012-0029

for four beyond perimeter slot exemptions )

pursuant to 49 U.S.C. § 41718, as amended )

)

(Washington, DC (DCA) – San Francisco, CA )

(SFO)) )

)

APPLICATION OF VIRGIN AMERICA INC. 

FOR SLOT EXEMPTIONS

Communications with respect to this document should be sent to:

John Varley

Senior Vice President &

 General Counsel 

Virgin America Inc.

555 Airport Boulevard, Suite 500

Burlingame, CA 94010

(650) 762-7108

john.varley@virginamerica.com

John E. Gillick

Jonathon H. Foglia

Zuckert, Scoutt & Rasenberger, L.L.P.

888 Seventeenth Street, N.W., Suite 700

Washington, DC 20006

Tel: (202) 973-7939

Fax: (202) 342-0683

jegillick@zsrlaw.com

jhfoglia@zsrlaw.com

Counsel for 

Virgin America Inc.

March 12, 2012
BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC

__________________________________________

)

Application of )

)

VIRGIN AMERICA INC. )

) Docket No. OST-2012-0029

for four beyond-perimeter slot exemptions )

pursuant to 49 U.S.C. § 41718, as amended )

)

(Washington, DC (DCA) – San Francisco, CA )

(SFO)) )

)

APPLICATION OF VIRGIN AMERICA INC. 

FOR SLOT EXEMPTIONS

San Francisco is – far and away – the largest metropolitan area in the country with the 

greatest number of passengers without current nonstop service to Ronald Reagan Washington 

National Airport (“DCA”).1 Virgin America Inc. (“Virgin America”), which does not operate a 

single within-perimeter or beyond-perimeter flight at DCA, hereby applies, as a new entrant 

pursuant to 49 U.S.C. § 41718(g), for four beyond-perimeter slot exemptions to operate two 

nonstop daily roundtrip flights between DCA and San Francisco International Airport, California 

(“SFO”). Virgin America’s proposed service will offer DCA-SFO passengers the choice of both 

morning and afternoon/evening flights in each direction and permit Virgin America to provide 

effective competition to United Air Lines, Inc. (“United”), a carrier that operates dominant hub 

airports in both the Washington, D.C. and San Francisco metropolitan markets.

 1 United Air Lines, Inc. has announced plans to begin operating one daily nonstop roundtrip flight in the DCA-SFO

market on May 14, 2012, pursuant to the FAA Reorganization and Reform Act of 2012, Pub L. No. 112-95, 126 

Stat. 11 (Feb. 14, 2012). See Notice of Intent in Docket OST-2012-0029 (filed February 27, 2012).
2

Introduction

This proceeding offers the Department a long overdue and critically important 

opportunity to correct a serious inequity in previous allocations of 24 beyond-perimeter 

exemptions awarded in accordance with the standards established in the Wendell H. Ford 

Aviation Investment and Reform Act for the 21st Century (“AIR-21”) and Vision 100—Century 

of Aviation Reauthorization Act (“Vision 100”).2 Those Congressionally-mandated allocations 

were driven by the requirement to demonstrate “domestic network benefits” and “increasing 

competition in multiple markets” to meet the criteria set forth in AIR-21 and Vision 100 rather

than the needs of the largest beyond-perimeter communities. As a result (and as reflected in 

Exhibit VX-8) the previously granted exemptions were almost exclusively focused on the 

happenstance of airports where carriers had established hubs beyond the perimeter (Phoenix, Las 

Vegas, Denver, Salt Lake City, and Seattle) rather than the markets with the greatest traffic to 

and from Washington, D.C., in general, and DCA, in particular. This single minded hub-driven 

allocation has resulted in the State of California, which accounts for 12 percent of the U. S. 

population3 and 13 percent of the U.S. GDP,4 being virtually ignored in previous allocation 

proceedings, with only a single roundtrip flight being awarded to a California destination. The 

number of daily passengers traveling between Washington, D.C. (DCA and IAD) and SFO is 

significantly larger than all but one of the markets previously awarded beyond-perimeter 

exemptions. VX-11; VX-13. More to the point, SFO – with no prior award in those proceedings 

- is more than twice the size of nearly all of these beyond-perimeter markets. Id.

 2 Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, Pub. L. No. 106-181, 114 Stat. 198 

(Apr. 5, 2000); and Vision 100 – Century of Aviation Reauthorization Act, Pub. L. No. 108-176, 117 Stat. 2599 

(Dec. 12, 2003).

3 U.S. Census Bureau, “State and Country QuickFacts,” available at quickfacts.census.gov.

4 Bureau of Economic Analysis, “Gross Domestic Product by State,” available at www.bea.gov/regional/gdpmap. 
3

Congress, having tipped the scales in the prior awards to large carriers demonstrating 

domestic network benefits at interior hubs, has now, pursuant to the FAA Reorganization and 

Reform Act of 2012, Pub L. No. 112-95, 126 Stat. 11 (Feb. 14, 2012) (“FAA 2012”), made 

available for immediate allocation a new set of 16 slot exemptions. Eight of those exemptions 

are available to the four largest DCA incumbent carriers to be used at any beyond-perimeter 

airport of their choosing – with no need to show network benefits. Congress similarly revised 

the allocation criteria for the award of the remaining slot exemptions for new entrant and limited 

incumbent carriers emphasizing the importance of nonstop service, competition and public 

benefits, thereby remedying prior AIR-21 and Vision 100 allocations to large network carriers, 

with new entrant Virgin America’s application providing the best opportunity to address a 

glaring deficiency in the prior allocations—the lack of adequate nonstop flights to SFO, which is 

the largest beyond-perimeter Washington, D.C. market without such service. Importantly, 

Virgin America is petitioning the Department for four exemptions under FAA 2012 to ensure 

that San Francisco customers have competitive flight choices at DCA (where Virgin America 

currently has no presence at all), sustain a long-term and viable service pattern and offer travelers 

meaningful nonstop and connecting travel options. As discussed herein, the award of four 

exemptions would maximize the public benefits of Virgin America’s proposal and is justified by 

the large size of the Washington, D.C.—San Francisco market as well as barriers to entry faced 

by a new entrant airline seeking to offer a competitive service pattern in direct nonstop 

competition with a hub airline. 
4

I. CONGRESS HAS SIGNIFICANTLY MODIFIED THE STANDARDS TO BE 

USED BY THE SECRETARY TO AWARD EIGHT SLOT EXEMPTIONS TO 

NEW ENTRANTS AND LIMITED INCUMBENTS.

Congress has, in FAA 2012, directed the Secretary to grant 16 exemptions for additional 

DCA beyond-perimeter flights of which eight are set aside for new entrant and limited 

incumbent air carriers, using standards significantly revised from those previously applicable to 

the allocation of beyond-perimeter exemptions under 49 U.S.C. § 41718. 

Under AIR-21 and Vision 100, the Secretary’s authority was focused upon “domestic 

network benefits” and “increasing competition in multiple markets,” and the awards were 

predictably made to carriers with hubs located beyond the perimeter. VX-8. Under the 

reformulated standards for the award of exemptions to new entrants and limited incumbents, 

however, these factors are now only two of several considerations, with Congress now directing 

the Secretary to focus on (i) enhancing options for nonstop travel to and from the beyondperimeter airports that will be served as a result of the grant of these exemptions, (ii) the positive 

impact that the grant of these exemptions will have on the overall level of competition in the new 

markets served with these exemptions, and (iii) the public benefits that will result from the grant 

of exemptions, including the likelihood that the service to airports located beyond the DCA 

perimeter will result in lower fares, higher capacity and a variety of service options. This should, 

in turn, result in new service offerings based not on network airlines operating at hub locations as 

under the previous legislation but instead upon new entrants and limited incumbents operating 

nonstop service in point-to-point markets where the greatest demand exists.
5

II. VIRGIN AMERICA’S PROPOSAL WILL EXPAND AWARD WINNING 

SERVICE OFFERINGS AND INCREASE CONSUMER CHOICE, BUILDING 

UPON THE AIRLINE’S ALREADY SUBSTANTIAL COMMITMENT TO BOTH 

WASHINGTON, D.C. AND WEST COAST TRAVELERS. 

Virgin America will offer passengers attractive departure times at DCA with a flight at 

8:25 a.m. and a second at 6:15 p.m. Passengers choosing Virgin America’s morning DCA 

departure will arrive in San Francisco at 11:05 a.m., providing nearly a full day for a business 

meeting as well as leisure activities. Similarly, Virgin America’s evening departure will provide 

passengers with the ability to spend a full day in Washington with the assurance of arriving in 

San Francisco at 8:55 p.m. Virgin American’s 9:05 a.m. departure from San Francisco will 

enable travelers to arrive in downtown Washington at 5:10 p.m. in time for a full evening of 

activities. Passengers preferring to work in San Francisco (or other West Coast connecting 

cities) for the morning will be able to take the 1:35 p.m. departure and arrive in Washington at 

9:40 p.m. in time for a good night’s rest before the business day begins. 

Virgin America’s service proposal will use Airbus A319 aircraft configured with 119 

seats in three service classes, First Class, Main Cabin Select and Main Cabin.5

 The A319 

aircraft is a modern, quiet and efficient aircraft that is well suited to the DCA-SFO market. 

Virgin America, named the “Most Eco-Friendly Airline” by Smarter Traveler in 2010, will 

provide beyond-perimeter service using aircraft that are up to 25% more fuel and carbon efficient 

than other domestic airline fleets.

Virgin America’s A319 aircraft is “right-sized” for this important new market, allowing 

the airline, through the strategic deployment of an optimal number of seats, to provide much 

needed competition and award-winning service on a long-haul route when fuel costs are steadily 

 5 Virgin America’s A319 aircraft is configured with 8 First Class seats, 12 Main Cabin Select seats and 99 Main 

Cabin Select seats.
6

increasing for all carriers. The size of the A319, combined with Virgin America’s proposal to 

serve the route with two nonstop daily roundtrip flights, will allow Virgin America to be an 

effective, economically successful competitor against legacy network airlines, all of which 

operate to DCA from various intermediate hubs east of San Francisco. Virgin America's target 

base of value conscious business and leisure customers, who have responded enthusiastically to 

the price, service, and quality options of its product offering, need the schedule flexibility that 

can only be offered by multiple daily flights at DCA. Fundamentally, the ability to provide 

meaningful and effective competition to a dominant hub carrier hinges on a viable service pattern 

involving at least two nonstop daily roundtrip flights in this large market, which will easily 

support multiple DCA frequencies. VX-4; VX-11.

Ever since Virgin America inaugurated operations in 2007, Washington, D.C., has been a 

cornerstone of the airline’s long haul strategy and success. Virgin America currently operates up 

to seven daily roundtrip flights from Dulles International Airport (IAD), including four daily 

SFO roundtrips. Virgin America’s proposed DCA-SFO service will complement its existing 

IAD-SFO service. VX-5. Continuing to grow in the Washington, D.C.—San Francisco market 

is an important part of Virgin America’s natural, low-fare evolution, directly linking the seat of 

the Federal Government from close-in DCA to the San Francisco Bay Area, home to 10 of the 

100 largest American corporations, accounting for a combined $770 billion in annual revenue.6

 

VX-14. 

Of course, existing service at IAD is not, by any means, an effective substitute for 

maximizing competitive benefits at DCA, particularly in the context of new entrant access. As 

 6 CNN, Fortune & Money, “Fortune 500: Our Annual Ranking of America’s Largest Corporations,” May 23, 2011.
7

the Department wrote when reviewing and imposing conditions on an initial transaction between 

Delta and US Airways involving the transfer of slots at DCA:

The Department also considered whether . . . the three [airports] in the 

Washington area effectively constitute the same market for all passengers, such 

that if fares are perceived to be rising too high at one airport, the harm would be 

mitigated by consumers simply shifting to the other two. Department analysts, 

evaluating passenger ticket data that contained actual fare information, looked at 

whether . . . the three [airports] in Washington were effective substitutes for each 

other, and concluded that they were not. In analyzing both overlap and all markets 

at the airports, they found that yields (i.e., revenue per passenger mile) were 

substantially different among the airports. Specifically, they found that the 

average yield in all markets at BWI is 48 percent less than DCA, and the average 

yield in all markets at Dulles is 37 percent less than DCA. (Yield at DCA is 27 

cents per mile, vs. 17 cents at Dulles and 14 cents at BWI.) . . . If the airports 

were effective economic substitutes for all passengers, we would expect to see a 

greater self-equalizing of yields and the yield spreads would not differ so 

significantly.

75 Fed. Reg. 7306, 7310 (Feb. 18, 2010) (emphasis added).

Virgin America’s proposed service will leverage the airline’s large SFO operation, the 

sixth largest U.S. airport7 and where most of the airline’s 2,500 teammates are based. Indeed, in 

less than five years, Virgin America’s nonstop SFO destinations have grown from only four (4) 

to 16, VX-1, and in April 2011, Virgin America moved into its “new home” in SFO’s Terminal 

2. VX-19.

Virgin America’s remarkable growth, from a handful of aircraft in 2007 to nearly 50 

today (with plans to grow to 80 aircraft in the next three years), is the result of its award-winning 

product, with service consistently focused on improving guests’ in-flight experiences. Included 

among the important features of that service are fleet wide in-flight WiFi, interactive Google 

maps, seat-to-seat chat, power outlets and USB jacks at every seat, movies, satellite TV, 

premium TV, music videos, radio and games as well as on-demand food and beverage ordering. 

 7 01DB database, year ending 3Q2011. 
8

VX-16. Virgin America’s very high service quality has been recognized on numerous occasions, 

including the following:

• “Best Domestic Airline” for the fourth year running in Travel & Leisure Annual 

World’s Best Awards Reader’s Survey, 

• “Best Business/First Class” among domestic airlines in Conde Nast Traveler’s 

2008, 2009, 2010 and 2011 Business Travel Poll, 

• “Best Domestic Airline” among U.S. carriers in the Conde Nast Traveler’s 2008, 

2009, 2010 and 2011 Reader’s Choice Awards and 

• “No. 1 in First/Business Class” among mid-sized domestic carriers, and No. 1 in 

the Economy cabin among mid-sized domestic carriers as well as highest overall 

individual score in 2010 in Zagat’s Global Airlines Survey. 

A more complete list of awards won by Virgin America is set forth in Exhibit VX-18.

Equally important to Virgin America’s success has been its impact on fares. For 

example, in SFO, immediately prior to Virgin America’s launch, fare levels enjoyed a 16% 

premium over national averages. Today, that premium is largely non-existent.8

 As discussed in 

Section III.B.2, infra, Virgin America’s entry into several long-haul routes has seen fares fall, a 

benefit the Department has long documented. As far back as 2002, the Department examined the 

impact of low-fare carriers on long-haul markets, observing:

Over the last few years, low-fare carriers have demonstrated an increasing 

tendency toward exploiting unmet demand for lower priced service in long-haul 

markets . . . the average fare declined by a larger percentage in the . . . long-haul 

markets with low-fare entry . . . than it did in the . . . long-haul markets that did 

not have low-fare competition.9

 8 DOT, Office of Aviation Analysis, Domestic Airline Fares Consumer Report (Second Quarter 2007 and Third 

Quarter 2011), at Table 7.

9 DOT, Office of Aviation Analysis, Domestic Aviation Competition Issue Brief: The Low-Fare Evolution, Part II –

Third Quarter 2002.
9

Ultimately, and as discussed below, Virgin America’s proposed twice-daily nonstop 

roundtrip service in the DCA-SFO market will best promote competition and provide the revised 

service patterns sought by Congress in FAA 2012.

III. VIRGIN AMERICA’S PROPOSED DCA-SFO SERVICE BEST MEETS THE 

REVISED STANDARDS ESTABLISHED FOR THE GRANT OF SLOT 

EXEMPTIONS TO NEW ENTRANTS AND LIMITED INCUMBENTS AT DCA 

AND WILL MAXIMIZE CONSUMER BENEFITS.

A. The Department Must Seize This Unique Opportunity to Remedy Prior 

Awards to Large Network Airlines, Enhance New Entrant Access and 

Spur Competitive Growth In California and at San Francisco, One of the 

Largest Beyond-Perimeter O&Ds.

In awarding previous exemptions for DCA beyond-perimeter flights, the Department was 

unavoidably limited by the statutory selection criteria enacted by Congress, including, among 

other factors, a mandatory focus on “domestic network benefits” and an increase in competition 

by new entrant air carriers or in multiple markets. As a practical consequence, these prior 

awards overwhelmingly resulted in service patterns between DCA and large carrier connecting 

complexes, i.e., traditional hub-and-spoke service patterns, to the detriment of large population 

centers beyond the perimeter with pent up demand for nonstop DCA service. For example, 

under AIR-21 and, later, Vision 100, the Department awarded a combined eight beyondperimeter exemptions for service to Denver (including six to Frontier Airlines), and six beyondperimeter exemptions for service to Phoenix (all to America West Airlines)—concentrating 

nearly 60% of the then-current beyond-perimeter exemptions among those two hubs alone. On 

the other hand, California, already at that time the most populous state and home to the largest 

gross state product in the country, received only a single daily roundtrip operation.

However, as a result of FAA 2012, the Department may now consider, either in isolation 

or in combination, a number of new criteria, including the extent to which the award of 
10

exemptions will enhance options for nonstop travel to and from beyond-perimeter airports, the 

overall level of competition in online markets and the likelihood that the nonstop service will 

result in lower fares, higher capacity, and a variety of service options. As a consequence, the 

Department has been presented with an historic opportunity to ensure an appropriate rebalancing 

of beyond-perimeter awards is made for new entrants/limited incumbents for service on routes 

between DCA and large metropolitan areas where the local market traffic has been forced to 

connect given the previous absence of nonstop service. 

Service to the most populous city centers in general, and California in particular, had long 

been emphasized by Congressional leaders. For example, over ten years ago, Senator Dianne 

Feinstein of California was seeking assurances that beyond-perimeter fights would be available 

for the largest California cities when she remarked, “We would like to see the highest level of 

service provided to the most number of passengers.” And as Senator Barbara Boxer of 

California tellingly said, nonstop DCA service was a matter, “which affects the people of our 

state . . .” Continuing, she pointedly asked the then-Chairman of the Senate Committee on 

Commerce, Science, and Transportation, “Specifically, would carriers be prevented from 

competing on routes from National Airport to . . . California airports under this bill?” 145 

Congressional Record, daily ed., S19946 (Sep. 25, 1998). 

Yet, under AIR-21 and Vision 100, 24 DCA beyond-perimeter exemptions were awarded 

for nonstop service to Denver (eight exemptions), Phoenix (six exemptions), Seattle (four 

exemptions), Las Vegas (two exemptions), and Salt Lake City (two exemptions), with only one 

award—Los Angeles (two exemptions)—allocated to California. As here relevant, other than 

Los Angeles, each of the other markets previously awarded beyond-perimeter exemptions under 
11

AIR-21 and Vision 100 is much smaller than San Francisco. And, when compared to Los 

Angeles, the SFO-Washington market is comparable in size:

Market Annual O&D10

LAX-WAS 1,121,930

SFO-WAS 1,002,840

DEN-WAS 676,740

SEA-WAS 434,070

LAS-WAS 422,650

PHX-WAS 274,430

SLC-WAS 218,340

At bottom, Virgin America’s proposal to serve San Francisco, the largest city in the 

United States currently without nonstop access to DCA, will benefit more local passengers than 

will any other application for the eight beyond-perimeter exemptions set aside for new entrants 

and limited incumbents under FAA 2012. Moreover, from an O&D perceptive, Washington, 

D.C.-SFO is larger than any other beyond-perimeter O&D that is served on a nonstop basis, with 

the exception of Los Angeles, and then by only a very small margin. VX-11. Finally, over the 

last five years, passenger traffic at SFO has significantly outpaced passenger traffic at other West 

Coast airports. VX-12.

B. Virgin America’s DCA-SFO Service Proposal Most Effectively Meets the New 

Statutory Criteria for the Award of These Eight Exemptions to New Entrants 

and Limited Incumbents.

As stated in Order 2102-2-21, FAA 2012 directs the Department to, among other things, 

grant a total of eight additional beyond-perimeter exemptions to new entrant and limited 

incumbent carriers. Virgin America’s proposed nonstop DCA-SFO service meets each of these 

 10 Exhibit VX-11.
12

statutory criteria. Virgin America will provide its award-winning excellent service with fuel 

efficient A319 aircraft and offer strong competition in the very large and currently un-served 

DCA-SFO nonstop market that links San Francisco, California and the Nation’s capital, an 

overall market with which Virgin America is very familiar, having served it via IAD since 2007. 

Virgin America’s service also will provide additional competitive, one-stop access to passengers 

in other cities in California and the Western United States traveling to close-in DCA, without 

reducing travel opportunities for small and medium hub airports or increasing travel delays. 

Virgin America and SFO should, therefore, be awarded four of the additional beyond-perimeter 

exemptions that Congress has made available in FAA 2012.

1. Virgin America’s Nonstop DCA-SFO Service Will Enhance Options for 

Nonstop Travel to and from SFO.

Virgin America’s proposal to provide two daily nonstop roundtrip flights between DCA 

and SFO will enhance options for nonstop travel in several important ways.

First, as discussed in Section II, supra, Virgin America will offer passengers attractive 

departure and arrival times. Second, the capacity provided by Virgin America’s two roundtrip 

flights will permit the significant demand in the local DCA-SFO market to be met with nonstop 

rather than one-stop service as is currently the case. As set forth in Exhibit VX-11, the local 

DCA-SFO market is very large, but today travelers in this city-pair are forced to travel on onestop or connecting services. Finally, Virgin America has had a long-standing commitment to the 

Washington, D.C.—San Francisco market, having inaugurated service in this market in the Fall 

of 2007. An award of four exemptions to Virgin America will allow the airline to reinforce and 

expand upon that commitment as well as assure that a range of options are provided for nonstop 

travel between Washington, D.C. and San Francisco, a large, nonstop market whose needs have 
13

not been addressed in the twelve years that beyond-perimeter exemptions have been made 

available by Congress.

2. Virgin America’s Nonstop DCA-SFO Service Will Have an Extremely

Favorable Impact on the Overall Level of Competition in the Washington, 

DC,-San Francisco Market.

The Department has long recognized the critically important role that new entrants play 

in improving the level of price and service competition in airline markets, a role that Virgin 

America has consistently played since it began operations and will certainly play if awarded the 

necessary slot exemptions to begin twice daily DCA-SFO service.

Since its August 2007 launch, Virgin America has lowered fares and provided a unique 

new high-quality service option for travelers. Indeed, The Wall Street Journal, shortly after 

Virgin America began service, described the competitive effect that the emergence of a new 

airline can have on fares as “the Virgin effect.”11 Virgin America has had the following effect 

on fares within the first year of launching nonstop service in a market:

• average fares between Dallas/Forth Worth International Airport and each of SFO 

and Los Angeles International Airport (LAX) fell 30% and 22%, respectively; 

• average fares between Boston Logan International Airport and each of SFO and 

LAX fell 26% and 32%, respectively;

• average fares between New York John F. Kennedy International Airport (JFK) 

and SFO fell 16%;

• average fares between Las Vegas McCarran International Airport (LAS) and SFO 

fell 16%;

• average fares between JFK and LAS fell 13%; and

• average fares between Chicago O’Hare International Airport and each of SFO and 

LAX fell 12% and 15%, respectively.12

Initiation of nonstop service by Virgin America in the DCA-SFO market can also have a 

 11 “The Virgin Effect: Lower Cross-Country Fares,” Wall Street Journal, October 30, 2007.

12 U.S. DOT O&D Survey via diio.net.
14

significant effect on competition against the well-entrenched incumbents at DCA. With their 

multiple hub flights, incumbent carriers have a tremendous competitive advantage over carriers 

with no or only limited access to DCA. This within-perimeter service allows the incumbent 

carriers to offer far more daily one-stop connections to Western destinations than new entrants 

and limited incumbents. Looking at United, in particular, it today offers a total of three one-stop, 

single-plane flights and 37 one-stop connecting flights in the DCA-SFO market. VX-9. 

3. Virgin America’s DCA-SFO Service Will Produce Important Public Benefits, 

Including Lower Fares, Higher Capacity and a Variety of Price, Service and 

Quality Options.

The initiation of two daily, roundtrip, nonstop flights by Virgin America will provide 

several important public benefits, including lower fares, a wide variety of price, service and 

quality options and greater capacity in the DCA-SFO market.

As we have demonstrated in section III.B.2, supra, Virgin America’s entry into new 

markets has resulted in a significant reduction in the average level of fares in those markets as it 

competes wingtip-to-wingtip with much larger incumbent carriers that have previously 

dominated those markets, often with very high fares. And, and previously discussed, Virgin

America has reduced fares by over 30 percent in some markets, by over 20 percent in others and 

has reduced fares by over 10 percent in several others, clearly demonstrating its ability to have a 

favorable impact on fares.

Moreover, Virgin America has had this significant impact on average fare levels while 

offering a very high quality of service to its passengers. As discussed in Exhibits VX-15, Virgin 

America offers three cabins of service—First Class, Main Cabin Select and Main Cabin. 

Additionally, Virgin America provides several in-flight services and conveniences for use by its 

passengers. VX-16. 
15

Virgin America’s proposed two daily roundtrip nonstop flights will be provided with a 

new fleet of A319 aircraft that are up to 25 percent more fuel and carbon efficient than the 

average fleet domestically, VX-17, particularly, for example, older B757 aircraft that have a far 

less desirable carbon footprint and greater noise level than Virgin America’s quiet A319 aircraft, 

a consideration that is particularly important at noise and environmentally sensitive DCA. 

Moreover, the addition of Virgin America’s two roundtrip flights help to accommodate the 

demand for nonstop service in the DCA-SFO market, which, as noted previously, is the largest 

beyond-perimeter DCA market currently without any nonstop service.

4. Virgin America’s DCA-SFO Service Will Increase Competition in Multiple 

Markets and Produce Important Domestic Network Benefits in Areas Beyond 

the Perimeter.

As may be seen from Exhibit VX-3, the Virgin America system consists of long-, 

medium- and short-haul services, including nonstop service from San Francisco to Seattle, Las 

Vegas, Los Angeles, Palm Springs (seasonal) and San Diego in the Western United States, as 

well as nonstop service from San Francisco to the limited-entry Mexican markets of Cabo San 

Lucas, Puerto Vallerta and Cancun. Virgin America’s proposed DCA-SFO service will offer 

convenient online connections to San Diego, Las Vegas, Seattle and Los Angeles, in both 

directions. As a consequence, there will be many opportunities for passengers wishing to travel 

to DCA from these other cities in the West to connect with Virgin America’s flights between 

SFO and DCA. Similarly, passengers wishing to work in these West Coast cities during the 

business day can make use of the morning DCA departure to reach their West Coast destinations 

in the afternoon. VX-4. Thus, Virgin America’s DCA-SFO service will provide important 

benefits to passengers traveling to and from those other Western destinations and will provide a 

competitive alternative in several markets to other DCA services.
16

5. Virgin America’s Nonstop DCA-SFO Service Will Not Reduce Travel 

Options.

Virgin America does not currently hold any DCA slots or exemptions, and, therefore, its 

proposed service will not reduce travel options for communities served by small hub airports and 

medium hub airports within the perimeter of National Airport. Nor does Virgin America 

anticipate that its proposed service would result in other carriers reducing service to cities within 

the DCA perimeter. Indeed, Virgin America’s new service will actually enhance service and 

competition to the benefit of the traveling public, and, significantly, will grow the DCA-SFO 

market.

6. Virgin America’s DCA-SFO Service Will Not Increase Travel Delays.

Virgin America’s new nonstop DCA-SFO service is fully in accordance with the 

statutory requirements and will not increase travel delays. The statute requires that no more than 

two additional DCA slots be allocated in any one hour period. Virgin America’s proposal is 

consistent with that requirement. Additionally, new entrant and limited incumbent carriers are 

afforded a scheduling priority under the statute. See 49 U.S.C. § 41718(h). The slot exemptions 

requested by Virgin America will not, therefore, have any impact on congestion or delays at 

DCA or elsewhere in the national air transportation system.

C. Virgin America’s DCA-SFO Service is Clearly in the Public Interest.

Throughout the history of the Department’s slot program, it has been guided by the procompetitive policies of the Airline Deregulation Act as set forth in 49 U.S.C. § 40101(a),13

including—

• The availability of a variety of adequate, economic, efficient and lowpriced services;

 13 Northwest Airlines v. Goldschmidt, 645 F.2d 1309, 1315 (8th Cir. 1980).
17

• Avoiding unreasonable industry concentration, excessive market 

domination, monopoly power, and other conditions that would tend to 

allow at least one carrier or foreign air carrier unreasonably to increase 

prices, reduce services or exclude competition in transportation;

• Encouraging, developing and maintaining an air transportation system 

relying on actual and potential competition to provide efficiency, 

innovation and low prices and to determine the variety and quality of, and 

determine prices for, air transportation services; and 

• Encouraging entry into air transportation markets by new and existing air 

carriers and the continued strengthening of small air carriers to ensure a 

more effective and competitive airline industry.

Virgin America’s application for four slot exemptions in the DCA-SFO market advances 

each of these pro-competitive, public interest objectives as well as meets each of the criteria in 

FAA 2012 and the slot exemptions should, therefore, be awarded forthwith.

Conclusion

WHEREFORE, for the foregoing reasons, Virgin America’s application for four beyondperimeter exemptions at Ronald Reagan Washington National Airport to operate two daily 

nonstop roundtrip flights to San Francisco International Airport should be granted.

Respectfully submitted,

John E. Gillick

Jonathon H. Foglia

Zuckert, Scoutt & Rasenberger, L.L.P.

888 Seventeenth Street, NW, Suite 700

Washington, DC 20006

Tel: (202) 973-7939

jegillick@zsrlaw.com

jhfoglia@zsrlaw.com

Counsel for 

Virgin America Inc.

March 12, 2012
CERTIFICATE OF SERVICE 

I hereby certify that a copy of the foregoing Application of Virgin America Inc. was 

served this 12th day of March, 2012, via email transmission on the following persons: 

carl.nelson@aa.com 

sascha.vanderbellen@delta.com 

jhill@dlalaw .com 

scott.mcclain@delta.com 

steve.morrissey@united.com 

sam etta. c. bamett@delta. com 

mgoldman@sgbdc.com 

kquinn@pillsburywinthrop. com 

rsilverberg@sgbdc.com 

rbkeiner@crowell.com 

dhainbach@ggh-airlaw.com 

esahr@eckertseamons.com 

mcmillin@woa.com 

bruce.rabinovitz@wilmerhale.com 

eskraft@j amhoff.com 

jonathan.linde@united.com 

dpdean@jamhoff.com 

bob.kneisley@wnco.com 

dkirstein@yklaw.com 

robert.land@j etb lue. com 

jyoung@yklaw.com 

msinick@ssd.com 

william.stallings@usdoj .gov 

cdonley@ssd.com 

dwight.moore@ustranscom.mil 

john.martin@flysfo.com 

gbleopard@fedex.com 

j ohn.allen@faa. gov 

david.heffeman@wilmerhale.com 

kevin.montgomery@polaraircargo.com 

recohn@hoganlovells.com 

jrichardson@j ohnlrichardson. com 

cjsimpson@zsrlaw .com 

lhalloway@crowell.com 

pmurphy@lopmurphy.com 

efaberman@wileyrein.com 

lachter@starpower.net 

mroller@rollerbauer.com 

anita.mosner@hklaw.com 

howard.kass@usairways.com 

jennifer.nowak@hklaw.com 

benjamin.slocum@usairways.com 

gmurphy@crowell.com 

dan. weiss@united.com 

russell. bailey@alpa.org 

susan.kurland@dot. gov 

todd.homan@dot.gov 

james.dann@dot.gov 

peter .irvine@dot. gov 

dennis.devany@dot.gov 

Bryant H. Templeton 
Table of Direct Exhibits

Direct Exhibit Exhibit No.

Virgin America: Total Cities Served (By Year) VX-1

Virgin America: Historic and Projected Fleet Growth VX-2

Virgin America Route Map VX-3

Virgin America’s Proposed DCA-SFO Schedule VX-4

Virgin America’s Nonstop DCA-SFO Service Strongly Complements its 

Existing IAD Service

VX-5

Virgin America Qualifies as a “New Entrant” at DCA VX-6

Existing Slots and Slot Exemptions at DCA VX-7

Previously Granted Beyond-Perimeter Slot Exemptions at DCA VX-8

United Offers Multiple DCA-SFO Flight Options Throughout the Day VX-9

Map of United’s DCA-SFO Service VX-10

SFO Exceeds Nearly All Other AIR-21/Vision 100 Beyond-Perimeter Markets VX-11

SFO Has Out-Performed Other West Coast Airports: Change in Passenger 

Growth (2006-2011)

VX-12

California Exceeds All AIR-21/Vision 100 Beyond-Perimeter Markets

Combined

VX-13

The San Francisco Bay Area is Headquarters to 10 of the 100 Largest 

American Companies

VX-14

Virgin America Interior Cabin Views VX-15

Virgin America’s Onboard Services and Amenities VX-16

Virgin America and Environmental Sustainability VX-17

Virgin America Awards for Outstanding Service VX-18

Virgin America’s New SFO Terminal 2 Facilities VX-19
EXHIBIT VX-1

Page 1 of 1

Source: Company Records.
EXHIBIT VX-2

Page 1 of 1 

Note: Years 2012 and beyond reflect firm orders.

Source: Company Records.
EXHIBIT VX-3

Page 1 of 1 

Virgin America Route Map

Source: Company Records.
EXHIBIT VX-4

Page 1 of 1 

Virgin America’s Proposed DCA-SFO Schedule

Airbus A319 Aircraft

All flights operate daily.

DCA

8:25 AM 6:15 PM 5:10 PM 9:40 PM

DPT DPT ARR ARR

2442 Miles

ARR ARR DPT DPT

11:05 AM 8:55 PM 9:05 AM 1:35 PM

SFO

Source: Company Records.
EXHIBIT VX-5

Page 1 of 1 

Virgin America’s Nonstop DCA-SFO Service Strongly Complements its Existing IAD Service

WESTBOUND 

1 DEPARTS IAD 7:05 AM ARRIVES SFO 10:05 AM

2 DEPARTS DCA 8:25 AM ARRIVES SFO 11:05 AM

3 DEPARTS IAD 10:25 AM ARRIVES SFO 1:25 PM

4 DEPARTS IAD 5:05 PM ARRIVES SFO 8:05 PM

5 DEPARTS DCA 6:15 PM ARRIVES SFO 8:55 PM

6 DEPARTS IAD 7:50 PM ARRIVES SFO 10:50 PM

EASTBOUND

1 DEPARTS SFO 8:00 AM ARRIVES IAD 4:10 PM

2 DEPARTS SFO 9:05 AM ARRIVES DCA 5:10 PM

3 DEPARTS SFO 10:50 AM ARRIVES IAD 7:00 PM

5 DEPARTS SFO 1:35 PM ARRIVES DCA 9:40 PM

4 DEPARTS SFO 2:35 PM ARRIVES IAD 10:45 PM

6 DEPARTS SFO 11:35 PM ARRIVES IAD 7:45 AM (NEXT DAY)

Source: Company Records.
EXHIBIT VX-6

Page 1 of 1 

Virgin America Qualifies as a “New Entrant” at DCA

Virgin America is an air carrier that does not hold a slot at DCA and has never sold or 

given up a slot at DCA after December 16, 1985 and therefore qualifies as a “new entrant”

under FAA 2012.

Source: 49 U.S.C. § 41714(h)(3).
EXHIBIT VX-7

Page 1 of 2

Existing Slots and Slot Exemptions at DCA

Carrier(s)

Slots/ WithinPerimeter 

Exemptions

BeyondPerimeter 

Exemptions1 Total

Non-limited Incumbents

US Airways2 452 8 460

American Airlines3 103 2 105

Delta Air Lines 96 4 100

United Airlines4 72 4 76

Subtotal 723 18 741

Limited Incumbents

JetBlue Airways5 34 0 34

Southwest Airlines6 24 0 24

Frontier Airlines7 16 6 22

Air Canada 16 0 16

Spirit Airlines 6 0 6

Alaska Airlines 0 6 6

Republic Airways Holdings, Inc.8 2 0 2

Sun Country9 2 0 2

Subtotal 100 12 112

New Entrants

Virgin America 0 0 0

TOTALS 823 30 853

 1 Includes six beyond-perimeter exemptions for which Notices of Intent have been filed in Docket OST-2012-0029, 

including United’s notice to serve DCA-SFO. 2 Republic Airways Holdings, Inc. holds 113 commuter slots operated under a financing agreement with US Airways. 3 Reflects trade of 16 slots to JetBlue. 4 Reflects combination of United and Continental Airlines slots. 5 American traded 16 slots to JetBlue. JetBlue operates the slots but American remains the holder. JetBlue also 

purchased 16 slots in the FAA’s recent DCA slot auction. 6 Reflects combination of AirTran and Southwest. AirTran operates six slots obtained in a trade with Continental, 

but Continental remains the holder of the slots. 7 16 slots reassigned to Frontier after acquisition of Midwest by Republic. Two exemptions were reallocated to Sun 

Country. 8 Two exemptions to be returned to Republic Airways Holdings, Inc. after a recent court decision. 9 FAA granted two exemptions to Sun Country on March 2, 2012, to permit continuation of service.
EXHIBIT VX-7

Page 2 of 2

105

100

76

34

24 22

16

6 6

2 2 0

Existing Slots and Slot Exemptions at DCA

Source: FAA Table 5 – “DCA Slots – Previous, Current and as Proposed” in Docket No. FAA-2010-0109, 

“Notice of a Petition for Waiver and Solicitation of comments on Grant of Petition With Conditions,” 76 

Fed. Reg. 45323 (July 28, 2011). FAA Holder Report (April 1, 2011) as adjusted to reflect subsequent 

developments. Each slot authorizes either one departure or one arrival.

460
EXHIBIT VX-8

Page 1 of 1 

Previously Granted Beyond-Perimeter Slot Exemptions at DCA

AIR 21 Vision 100

PHX (4) US PHX (2) US

LAS (2) US DEN (4) FL

DEN (2) FL DEN (2) UA

SLC (2) DL LAX (2) AS

SEA (2) AS SEA (2) AS

AIRPORTS/CARRIERS

PHX (6) US

LAS (2) US

DEN (8) FL (6), UA (2)

SLC (2) DL

SEA (4) AS

LAX (2) AS

Source: DOT Orders in Docket OST-2000-7181.
EXHIBIT VX-9

Page 1 of 2

United Offers Multiple DCA-SFO Flight Options Throughout the Day 1

UA DCA-SFO Connecting and One Stop (Through) Flights

Source: Innovata schedules via diio.net.

 1 Includes flights operated by United and Continental.

Flight

Option

Connecting/

One-Stop

Dep 

Time Via Arr Time

1 CNX 0600 ORD 1052

2 CNX 0635 CLE 1127

3 CNX 0636 EWR 1210

4 CNX 0700 ORD 1159

5 CNX 0745 ORD 1240

6 CNX 0800 IAH 1343

7 CNX 0830 EWR 1441

8 CNX 0835 ORD 1449

9 1STOP 0930 ORD 1449

10 CNX 0930 ORD 1554

11 1STOP 1022 ORD 1554

12 CNX 1115 EWR 1716

13 CNX 1130 ORD 1647

14 CNX 1210 IAH 1834

15 CNX 1235 ORD 1754

16 CNX 1330 IAH 2024

17 CNX 1330 ORD 1844

18 CNX 1459 EWR 2101

19 CNX 1525 IAH 2122

20 CNX 1539 ORD 2010

21 CNX 1633 ORD 2122

21 CNX 1738 IAH 2326

23 CNX 1740 DEN 2359
EXHIBIT VX-9

Page 2 of 2

UA SFO-DCA Connecting and One Stop (Through) Flights

Source: Innovata schedules via diio.net.

Flight

Option

Connecting/

One-Stop

Dep 

Time Via

Arr 

Time

1 CNX 0031 IAH 1122

2 CNX 0540 DEN 1613

3 CNX 0600 EWR 1631

4 CNX 0600 IAH 1650

5 CNX 0605 ORD 1551

6 1STOP 0705 ORD 1651

7 CNX 0705 ORD 1751

8 CNX 0734 EWR 1818

9 CNX 0825 IAH 2008

10 CNX 0905 ORD 1853

11 CNX 1000 ORD 1958

12 CNX 1102 ORD 2058

13 CNX 1133 EWR 2256

14 CNX 1202 ORD 2150

15 CNX 1202 IAH 2259

16 CNX 1403 ORD 2343

17 CNX 2313 ORD 0841
EXHIBIT VX-10

Page 1 of 1

Map of United’s DCA-SFO Service 

Source: Innovata schedules via diio.net.
EXHIBIT VX-11

Page 1 of 1

SFO Exceeds Nearly All Other AIR-21/Vision 100 Beyond-Perimeter Markets

Airport

Annual WAS1 O&D 

Passengers

Daily WAS O&D 

Passengers

AIR-21/

Vision 100 

Awarded 

Exemptions

Daily 

Passengers 

Per 

Exemption

LAX 1,121,930 3,074 2 1,537

SFO 1,002,840 2,748 0 --

DEN 676,740 1,854 8 232

SEA 434,070 1,189 4 296

LAS 422,650 1,158 2 579

PHX 274,430 752 6 125

SLC 218,340 598 2 299

Source: OD1B database YE 3Q2011.

 1 WAS count includes DCA and IAD.
EXHIBIT VX-12

Page 1 of 1

23.38%

1.35%

9.48%

-3.38% -2.62%

SFO Has Out-Performed Other West Coast Airports:

Change in Passenger Growth (2006-2011)

SFO LAX SEA SAN PDX

Source: OD1B databse YE3Q2011.
EXHIBIT VX-13

Page 1 of 1

California Exceeds All AIR-21/Vision 100 Beyond-Perimeter Markets Combined

Airport Annual WAS1 O&D Passengers

LAX 1,121,930

SFO 1,002,840

Subtotal 2,124,770

DEN 676,740

SEA 434,070

LAS 422,650

PHX 274,430

SLC 218,340

Subtotal 2,026,230

Source: OD1B database YE3Q2011.

 1 WAS count includes DCA and IAD.
EXHIBIT VX-14

Page 1 of 1

The San Francisco Bay Area is Headquarters to 10 of the 100 Largest American Companies

Company County 2011 Revenues (millions)

Chevron Contra Costa $196,337

Hewlett-Packard Santa Clara $126,033

McKesson San Francisco $108,720

Wells Fargo San Francisco $93,249

Apple Santa Clara $65,225

Intel Santa Clara $43,623

Safeway Alameda $41,050

Cisco Systems Santa Clara $40,040

Google Santa Clara $29,321

Oracle San Mateo $26,820

Source: CNN, Fortune & Money, “Fortune 500: Our Annual Ranking of America’s Largest 

Corporations,” May 23, 2011.
EXHIBIT VX-15

Page 1 of 2

Virgin America Interior Cabin Views

Main Cabin (Economy)

Main Cabin Select (Premium Economy)
EXHIBIT VX-15

Page 2 of 2

First Class

Source: Company Records.
EXHIBIT VX-16

Page 1 of 1

Virgin America’s Onboard Services and Amenities
EXHIBIT VX-17

Page 1 of 1

Virgin America and Environmental Sustainability

As the only California-based airline and as a Virgin-branded carrier, Virgin America’s goal has been to build an 

airline from the ground up that makes environmentally-sustainable practices part and parcel of its business model, 

right down to the use of organic hand-soap in the lavatories and a focus on locally grown and organic food in its 

menus. Although no airline can be perfect, Virgin America’s goal as a new airline is to understand and mitigate its 

climate impact via fleet investment and the use of best practices on the ground and in the air. The airline was 

named Most Eco-Friendly Airline in SmarterTravel Editor’s Choice Awards in 2010 and Greenopia’s “Greenest” 

Domestic Airline in 2011. Environmental milestones include: 

From its launch, Virgin America has employed progressive practices and training to reduce its carbon 

footprint, such as single engine taxiing, maximizing use of efficient ground power, utilizing advanced avionics 

to fly more efficiently, and cost index flying – the practice of regulating cruising speeds to reduce fuel burn.

Virgin America publishes a Climate and Sustainability Report, which includes an overview of its industryleading sustainability efforts and comprehensive emissions data.

Virgin America’s new fleet is up to 25% more fuel and carbon efficient than the average fleet flying in the U.S.

The airline was the launch customer for both the new eco-efficient Airbus A320neo aircraft and the GE/CFM 

LEAP engine, which are slated for delivery in 2016 and together are projected to yield 15% additional 

improved fuel efficiency, corresponding improvements in carbon efficiency and double digit reductions in 

NOx emissions. The A320neo is projected to emit 3,600 fewer tons of CO2 per aircraft on an annual basis.

Virgin America was the first U.S. airline to list its carbon footprint according to globally-accepted standards 

via The Climate Registry.

Virgin America was the first U.S. airline to offer guests the ability to offset the carbon footprint of their flight 

– in-flight via the touch-screen Red seatback entertainment through partner CarbonFund.org.

The airline offsets its annual corporate headquarters footprint on an annual basis via CarbonFund.org.

Virgin America’s Company-wide Green Teams direct employee volunteering and resources to key 

environmental projects – including Virgin America’s ongoing sponsor of California Parks Foundation 

restoration projects in Northern California.

Virgin America is a member of Ceres, a leading coalition of investors, environmental groups and public 

interest organizations that works with companies to address sustainability challenges.

Although the nature of airport operations makes sustainable practices challenging, since Virgin America’s 

launch the airline has worked with airports that enable recycling to reduce and recycle its onboard waste. In 

its first full year of our operations, the airline recycled aluminum cans on 47% of its departures. By 2010, the 

airline recycled aluminum cans on 67% of its flights, and plastic, paper and glass on 32% of its flights. 

Virgin America is affiliated with the Virgin Group, which has committed to reinvesting all profits from Virgintransport related businesses to renewable fuels research and other initiatives that combat climate change.

Virgin America publishes an annual Climate and Sustainability Report, which includes an overview of its 

industry-leading sustainability efforts and comprehensive emissions data.

Virgin America’s Burlingame-based headquarters is LEED-Silver certified and the airline’s new home at San 

Francisco International Airport’s Terminal 2 (T2) is the first LEED-Gold certified airport in nation – with Virgin 

America further investing in its T2 office spaces to achieve the highest possible LEED-Platinum Certificatio
EXHIBIT VX-18

Page 1 of 1

Virgin America Awards for Outstanding Service
EXHIBIT VX-19

Page 1 of 2

Virgin America’s New SFO Terminal 2 Facilities
EXHIBIT VX-19

Page 2 of 2