BEFORE THE OFFICE OF THE SECRETARY DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

_____________________________________ ) Application of ) ) FRONTIER AIRLINES, INC. ) Docket DOT - OST - 2011 - 0214 ) f or an exemption under 49 U.S.C. § 40109 ) ) Chicago (O’Hare), Illinois

– ) Cancun, Puerto Vallarta, and San Jose del ) Cabo , Mexico )

_____________________________________ )

ANSWER OF AIRTRAN AIRWAYS, INC.
Communications with respect to this document should be sent to:

Bob Jordan Robert W. Kneisley

President Associate General Counsel AIRTRAN AIRWAYS, INC. Leslie C. Abbott 9955 AirTran Boulevard Senior Attorney Orlando, FL 32827 SOUTHWEST AIRLINES CO. 1901 L Street, N.W., Suite 640 Washington, D.C. 20036 bob.kneisley@wnco.com (202) 263

- 6284

December 6, 20112 BEFORE THE OFFICE OF THE SECRETARY DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

_____________________________________ ) Application of ) ) FRONTIER AIRLINES, INC. ) Docket DOT - OST - 2011 - 0214 ) f or an exemption under 49 U.S.C. § 40109 ) ) Chicago (O’Hare), Illinois

– ) Cancun, Puerto Vallarta, and San Jose del ) Cabo, Mexico )

_____________________________________ )
ANSWER OF AIRTRAN AIRWAYS, INC.
On November 21, 2011, Frontier Airlines, Inc. (Frontier) applied for an exemption and related designation s under 49 U.S.C. § 40109 authorizing it to engage in scheduled foreign air transportation between Chicago O’Hare Airport (ORD) and Cancun (CUN), P u erto Vallarta (PVR) and San Jose del Cabo (SJD) , Mexico. AirTran Airways, Inc. (AirTran) opposes the grant of Frontier’s application with respect to Chicago (ORD)

- Cancun, and today has file d a competing application for exemption authority to provide service between Chicago Midway Airport (MDW) and Cancun

. AirTran has no objection to Frontier’s application for Chicago

– PVR/SJD authority. Currently three U.S. carriers are designated under the U.S.

- Mexico bilateral agreement to provide scheduled service between Chicago and Cancun, all from ORD: American Airlines, United Airlines, and USA3000. USA3000 is purpor ted to be ceasing service soon, possibly as early as January 2012. The termination of USA3000’s service3 would leave one U.S. carrier designation available in the Chicago

– Cancun market. Accordingly, AirTran is filing its applicat ion for Chicago

– Cancun authority in anticipation of the near

- term availability of the third designation. For the reasons discussed below , it is clear that a warding the Chicago

- - Cancun authority to AirTran will provide far greater public benefits than the service proposed by Frontier. Accordingly, AirTran urges the Department to grant its a pplication for Chicago

– Cancun exemption authority at issue here as soon as possible. I. AIRTRAN/SOUTHWEST HAS A MASSIVE PRESENCE AT CHICAGO TO SUPPORT CANCUN SE R VI CE , WHILE FRONTIER HAS ALMOST NONE

. AirTran is a wholly owned subsidiary of Southwest Airlines Co. (Southwest ) , as Southwest closed its acquisition of AirTran on May 2 , 2011 . Since then t he two companies have worked steadily toward a full integrat ion of their operations and schedules . In fact, Southwest and AirTran anticipate receiving a Single Operating Certificate (SOC) from the Federal Aviation Administration by th e end of fi rst quarter 2012. For the purposes of th e present proceeding , therefore, the two companies should essentially be considered as one since they will be operating as a single combined carrier during most of the period in question

. 1 And, as a combined carrier, AirTran/Southwest has a massive presence at Chicago that will strongly support new service to Cancun, compared to Frontier’s tiny operation at Chicago with no support for ORD

– CUN service

. W ith an average of 220 daily departures at Chicago MDW, the combined AirTran/Southwest is the second largest carrier in the region , account ing for 28 % of all!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1 Frontier itself has recognized this. See Docket FAA

- 2010

- 0109 (US/DL Slot Swap), Comments of Frontier Airlines, Inc., p.23, August 29, 2011, “Thus, for all relevant intents and purposes, Southwest and AirTran are a single carrier and should be treated as one for the purposes of the slot reallocation process.”4 Chicago domestic O&D passengers (Exhibit FL

- 101 ). In fact, AirTran/Southwest originate 41 times as much domestic traffic in Chicago as Frontier (Exhibit FL

- 102 ), and operate over 65 times as much capacity in Chicago as Frontier (Exhibit FL

- 103 ). AirTran/Southwest operate nonstop service between Chicago and a total of 58 cities, many of which will generate significant feed traffic and provide convenient online connections for Chicago

– Cancun travelers (Exhibit FL

- 104)

. I n comparison , Frontier has a miniscule presence in Chicago, operating only a single route from MDW to DEN that carries less than one percent of Chicago traffic (Exhibit s FL

- 101 and 105 ). Moreover, while Frontier proposes to provide service from ORD to Cancun, it currently has n o service at ORD

. Thus , Frontier has no connections and no feed at ORD to support its proposed ORD

– CUN service

. Because Frontier has no meaningful presence at Chicago , no existing base of Chicago customers , and no feed support for ORD service , it would provide virtually no public benefits beyond the local Cancun market. AirTran/Southwest , on the other hand, with its huge network at Chicago Midway connecting to dozens of cities , will un questionably be able to generat e large amounts of traffic to support MDW

- Cancun service as well as to l everag e this valuable U.S. authority to the benefit of a large number of communities beyond Chicago. II. AIRTRAN WOULD PROVIDE THE ONLY CANCUN SERVICE FROM MDW , GENERATING FAR MORE PUBLIC BENEFITS THAN REDUNDANT SERVICE AT ORD. The best use of the one presumptively available Chicago

– Cancun designation is for the Department to authorize new AirTran low

- fare competition and service from Chicago Midway Airport. Midway serves the entire Chicago market but is particularly5 convenient to south side residents

. MDW has no nonstop service to Cancun , while ORD currently has daily, year

- round service to Cancun from both A merican and United (as well as USA3000 for the present)

. Therefore, awarding one of the three U. S. designation s to AirTran at MDW would create a geographical diversity of service that now does not exist and would clearly benefit the region. Beyond this , at ORD Frontier would be competing against established network service by mega

- carriers United and American with no passenger feed and very little name recognition , rais ing doubts whether it would have the staying power to succeed in this market . AirTran/Southwest, on the other hand, will undoubtedly be able to provide strong , long

- term competition in the Chicago

- Cancun market supported by its enormous base of operations at MDW. III. UNLIKE FRONTIER, AIRTRAN WILL PROVIDE DAILY, YEAR ROUND SERVICE TO CANCUN

. AirTran explicitly proposes in its application to provide year - round daily service between MDW and CUN

. In contrast, Frontier’s application states only that it will operate service between Chicago and Cancun “ up to seven times per week , ” which clearly suggests that its service will be less than daily for at least part of the ye ar

. Frontier Appl., ¶ 4 . In addition, while Frontier ’s application states that it plans to provide service on a “ year - round ” basis, Frontier has operated almost all of its current Cancun service s on a seasonal (less than year

- round) basis. For example, Frontier operates seasonal service in the IND

- CUN and SLC

- CUN markets ( October through April ) , MKE

CUN ( December to April ) , and MCI

- CUN ( October to August )

. Frontier also provided seasonal service in the STL

- CUN market until it was discontinued completely earlier this6 year

. 2 T he only year - round Cancun service Frontier o ffers is from its Denver hub. In D enver , however, Frontier operates 142 daily departures to 59 nonstop cities, 3 as compared to zero daily departures at ORD

. In sum, Frontier’s history raises serious doubts about both its ability and commitment to provide the year

- round service that its current application promises. In
contrast , AirTran /Southwest’s commitment to p rovide daily, year

- round service in this market , supported by strong local passenger traffic and a multiplicity of beyond market connections , is unquestionable. IV. THE U.S. DOES NOT NE ED TO , AND SHOULD NOT, WASTE A VALUABLE DESIGNATION TO ACCOM MODATE FRONTIER’S PROPOSAL FOR APPLE V ACATIONS Frontier’s p roposal is premised on an agreement to carry Apple Vacation’s bulk traffic to Mexico . Apple functions as a tour operator and therefore buys its airline seats in bulk, typically for most if not the entire capacity of the plane. Until now, Apple has acquired its lift in the ORD

- CUN market from USA3000 (a wholly owned subsidiary of Apple), which is purportedly exiting the market in early 2012. Frontier states in its application that by agreement with Apple it will essentially replace USA3000 in this

m arket. Frontier Appl., ¶ ¶ 2 and 3. In fact, it appears from the Frontier a pplication that it may take over the leased A320 aircraft of USA3000 as part of the deal. 4
Frontier ’s application appears to presume that the Department should simply accept its private deal with Apple by designating Frontier for Chicago

– Cancun service and allowing Frontier to step into the shoes of USA3000. But the choice of airlines in!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2 Official Airline Guide (OAG) as of December 3, 2011 , January 2011

- June 2012 schedules. 3 OAG for the week ending November 14, 2011. 4 Frontier’s Application states that it would utilize A320s with seat capacity ranging from 162 to 168. According to company websites, Frontier’s A320s have 162 seats and USA3000’s A320s have 168 seats.7 limited designation markets is a matter of the public interest , and should not be subservie nt to privately

- negotiated arrangements. Accordingly, the Department should reject Frontier’s presumption , and instead award the authority to the carrier that will provide the greatest public benefits. In this case the choice is clear. As shown above,
t here is no question that AirTran/Southwest will provide far greater public benefits in the MDW

- - CUN market than Frontier in the ORD

– CUN market. 5 But beyond this, a re solution is available to the Department that would enable both AirTran/Southwest and Frontier to participate in the Chicago

– Cancun market. To summarize the salient points:

• Frontier has no current service or market presence at ORD which is an essential prerequisite for developing individually ticketed traffic.

• Frontier has only one route to Chicago, but it is at MDW and provides no feed value for a new “scheduled” ORD route

.

• Frontier’s proposal is dependent largely, if not exclusively, on providing lift to Apple Vacations. Since Frontier has no existing se rvice at O’Hare and an extremely limited presence in Chicago, Frontier can provide service to Apple Vacation’s customers equally as well under the charter provisions of the U.S.

- Mexico bilateral agreement

. See U.S.

- M exico Air Transport Agreement (Agreement), as amended , Annex II: Charter Services. Charter services (including combination and all

- cargo services) between the United States and Mexico are provided for under the A greement, and there are no bilateral limitat ions on such services. There fore, there is no need for the Department to waste limited

- entry scheduled authority on Frontier’s proposal. Rather,
we urge the Department to award AirTran exemption authority to provide schedule d!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 5 An additional reason for questioning the long

- term viability of Frontier’s proposal is its nearly exclusive dependency on providing lift to Apple Vacations, since Apple contracts are usually for a defined period of time.8 service between Chicago MDW and Cancun while at the same time allowing Frontier to support the Apple program via the liberal charter authority that is available under the bilateral. This is a p roverbial “ win

- win ” solution that would allow the Department to make the best possible use of scarce U.S. scheduled service designations while also permitting Frontier to serve the market on a charter basis from ORD.

CONCLUSION For the reasons given above, w e urge the Department to deny Frontier’s application for ORD

– Cancun exemption authority, to grant AirTran’s application for MDW

– Cancun exemption authority, and to designate AirTran for such service under the U

. S

. - Mexico Agreement.
Respectfully submitted ,

____________________ Robert W. Kneisley

December 6, 2011

## AirTran/Southwest Carries The Second Largest Number of O&D Passengers In Chicago

Note: Frontier includes Midwest and Frontier data and United includes Continental. Source: U.S. DOT O&D Survey data. Domestic O&D Passenger Share Exhibit FL-101

29% 28%
26%

16%

1% 0% 5% 10% 15% 20% 25% 30%

UA FL/WN AA Other F9

## AirTran/Southwest Carries Over 41 Times More Originating Passengers Than Frontier From Chicago

5,448,234

131,821 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000

41 Times Chicago Originating O&D Passengers

Note: Frontier includes Midwest and Frontier data. Source: DOT, Origin-Destination Passenger Survey, YE Q2 2011. Exhibit FL-102

AirTran/Southwest Frontier208,160

2,994 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 190,000 200,000 210,000

69 Times

Note: Frontier includes Midwest and Frontier data. Source: DOT, Origin-Destination Passenger Survey, YE Q2 2011. Exhibit FL-103

AirTran/Southwest Frontier 

## AirTran/Southwest Operates Over 65 Times As Much Capacity As Frontier In Chicago

Weekly Seat DeparturesIAD IAD IAD IAD LGA LGA LGA EWR EWR EWR

ISP ISP ISP ISP

PHL PHL PHL PVD PVD PVD MHT MHT MHT

SRQ SRQ SRQ TPA TPA TPA SAT SAT SAT SAT ONT ONT ONT

SNA SNA SNA LAX LAX LAX

SAN SAN SAN SFO SFO SFO OAK OAK OAK SJC SJC SJC SMF SMF SMF RNO RNO RNO PDX PDX PDX SEA SEA SEA

MSP MSP MSP

MDW

CUN CUN ATL ATL ATL ATL BKG BKG BKG

MCO MCO MCO

RSW ABQ ABQ ABQ ALB ALB ALB

AUS AUS AUS BDL BDL BDL

BHM BHM BHM BNA BNA BNA BOS BOS BOS BUF BUF BUF

BWI BWI BWI

CHS CHS CHS CLE CLE CLE
CMH CMH CMH DEN DEN DEN DTW

FLL FLL FLL GSP GSP GSP

HOU HOU HOU IND IND IND IND

JAN JAN JAN JAN LAS LAS LAS LAS
LIT LIT LIT LIT MCI MCI MCI MCI

MSY MSY MSY OMA OMA OMA

ORF ORF ORF

PHX PHX PHX PIT PIT PIT PIT

RDU RDU RDU SDF SDF SDF SLC SLC SLC

STL STL STL STL

TUS TUS TUS 

## AirTran/Southwest Already Has A Major Presence in Chicago That Would Support Its Proposed MDW-CUN Service

Current AirTran/Southwest Markets Proposed AirTran Market Current AirTran/Southwest MDW Service Destinations 58 Weekly Departures 1,540 Weekly Seat Departures 208,160

Source: OAG schedule for the week of November 14, 2011. Exhibit FL-104

### ORD ORD MDW



### CUN CUN DEN DEN DEN 

## Frontier Operates Only One Route At Chicago Midway And Has No Feed Support For O’Hare Service

Current Frontier Market Proposed Frontier Market Current Frontier MDW Capacity Destinations 1 Weekly Departures 23 Weekly Seat Departures 2,994

Source: OAG schedule for the week of November 14, 2011. Exhibit FL-105