Order 2012-5-12

Served: May 14, 2012

 UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

 Issued by the Department of Transportation

 on the 14th day of May, 2012

Docket DOT-OST-2012-0029

ORDER GRANTING BEYOND-PERIMETER SLOT EXEMPTIONS AT

RONALD REAGAN WASHINGTON NATIONAL AIRPORT

SUMMARY

By this Order, the Department grants two beyond-perimeter slot exemptions 

at Ronald Reagan Washington National Airport (DCA) to each of four new 

entrant or limited incumbent carriers, utilizing single-aisle Stage 3 aircraft, to 

operate a nonstop roundtrip as follows:

• Alaska Airlines, Inc. (Alaska) for service to Portland, Oregon;

• JetBlue Airways Corporation (JetBlue) to serve San Juan, 

Puerto Rico;

• Southwest Airlines Co. (Southwest) for service to Austin, Texas; and

• Virgin America Inc. (Virgin America) to serve San Francisco, 

California.

Applications of:

AIR CANADA;

ALASKA AIRLINES, INC.;

FRONTIER AIRLINES, INC.;

JETBLUE AIRWAYS CORPORATION;

MN AIRLINES LLC d/b/a SUN COUNTRY 

AIRLINES;

SOUTHWEST AIRLINES CO.; and

VIRGIN AMERICA INC.

For exemptions from 14 C.F.R. Part 93, Subparts 

K and S, pursuant to 49 U.S.C. § 41718(g), 

Special rules for Ronald Reagan Washington 

National Airport (beyond-perimeter slot 

exemptions), as added by Section 414 of the 

Federal Aviation Administration Modernization and 

Reform Act of 2012
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Background

On February 14, 2012, President Obama signed into law the FAA Modernization and 

Reform Act of 2012 (FAA 2012), Pub. L. No. 112-95. Section 414 of FAA 2012

amended Section 41718 of Title 49 U.S. Code by adding a subsection (g), Additional Slot 

Exemptions, which directs the Department to grant, not later than 90 days after 

enactment, eight slot1 exemptions for nonstop service between DCA and airports beyond 

the 1,250-mile perimeter (known as “beyond-perimeter” slot exemptions) for service to 

be provided by new entrant and limited incumbents.

2

By Order 2012-2-21(February 24, 2012), the Department requested applications from 

new entrant and limited incumbent carriers for the eight additional beyond-perimeter slot 

exemptions made available under 49 U.S.C. Section 41718(g)(2).3

This is the fifth allocation proceeding for beyond-perimeter slot exemptions at DCA. 

With the creation of these 16 additional exemptions,

4 a total of 40 takeoffs and landings 

for service beyond the 1,250-mile perimeter at DCA have been authorized by law.5

 

Following the passage of the Wendell H. Ford Aviation Investment and Reform Act for 

the 21st Century (AIR-21), the Department awarded all 12 slot exemptions available 

under the law to America West Airlines, Inc. (America West), Frontier Airlines, Inc. 

 1 A slot is a reservation for an instrument flight rule takeoff or landing. Therefore, two slots are required to 

operate a roundtrip. 49 U.S.C. § 41714(h)(4). A slot exemption is an exemption from the slot limitations 

in the Federal Aviation Administration’s High Density Rule, 14 CFR Part 93, subparts K and S.

2 Section 414(c) of FAA 2012 amended the definition of a limited incumbent carrier by increasing the 

threshold of slots held or operated by an air carrier or commuter carrier, not including slot exemptions, slots

operated under certain fee-for-service arrangements for another carrier, or slots held under a sale and 

license-back financing arrangement with another carrier, from fewer than 20 to fewer than 40. 3 Due to the timetable for decision established by statute, applicants were required to submit a schedule for 

their proposed operations, including takeoff and landing times at DCA.

4 Section 414 of FAA 2012 also directed the Department to grant eight beyond-perimeter slot exemptions 

to incumbent carriers qualifying for status as a non-limited incumbent at DCA as of the date of enactment, 

up to a maximum of two each, the operation of which is conditioned upon the carrier’s discontinuing use of 

an equivalent number of existing slots currently used for service between DCA and a large hub airport 

within the 1,250 mile perimeter of DCA See, 49 U.S.C. §§ 41718 (c)(2)(B); (g)(1), (3)-(5). The 

incumbent carriers meeting the Section 41718(g)(3) definition at DCA included American Airlines, Inc. 

(American), Delta Air Lines, Inc. (Delta), United Air Lines, Inc. (United), and US Airways, Inc. (US 

Airways). By Order 2012-2-21 (February 24, 2012), the Department granted the incumbent carriers 

qualifying under 49 U.S.C. Section 41718(g)(3) two exemptions for beyond perimeter use, subject to the 

conditions set forth in the statute, and as required by 49 U.S.C. Section 41718(g)(3)-(4) for daily nonstop 

roundtrips to three airports in California and one in Utah. American will discontinue one nonstop roundtrip 

to Dallas-Fort Worth International Airport and replace it with one nonstop roundtrip to Los Angeles 

International Airport, starting June 14, 2012. Delta will discontinue the use of two DCA slots for service to 

New York La Guardia, in order to operate an additional nonstop roundtrip to Salt Lake City International 

Airport beginning June 7, 2012. Beginning May 15, 2012, United will convert the use of two DCA slot 

exemptions by discontinuing one roundtrip to O’Hare International Airport and replacing it with a nonstop 

roundtrip to the San Francisco International Airport. US Airways will discontinue one nonstop roundtrip 

between DCA and Dallas-Fort Worth International Airport and, instead, provide one nonstop to the 

San Diego International Airport beginning June 8, 2012. 5 Of these 40 beyond-perimeter slot exemptions, 32 will have resulted in a net increase in DCA operations. 

The eight newly-created slot exemptions for non-limited incumbents correspond to a discontinuance of 

eight existing within-perimeter slot allocations. 49 U.S.C. § 41718(a).
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(Frontier), National Airlines, Inc. (National), and Trans World Airlines, Inc (TWA), for 

various nonstop services to communities beyond the perimeter. Order 2000-7-1 (July 5, 

2000). In 2001, the Department reallocated two of the 12 slot exemptions to Alaska 

Airlines, Inc. (Alaska) after TWA returned its holdings during its bankruptcy and 

acquisition by another carrier. Order 2001-6-20 (June 22, 2001). In 2002, the 

Department reallocated two more of the slot exemptions to Delta Air Lines, Inc. (Delta) 

after National ceased operations at DCA. Order 2002-11-20 (November 27, 2002). 

Similarly, following the passage of Vision 100 - Century of Aviation Reauthorization 

Act, P.L. 108-176 (Vision 100), the Department awarded the 12 additional DCA 

beyond-perimeter slot exemptions that were made available under the law to: Alaska for 

single daily nonstop roundtrip service to both Seattle, Washington, and Los Angeles, 

California; America West for a daily nonstop roundtrip to Phoenix, Arizona; and 

Frontier for two daily nonstop roundtrips and United for one daily nonstop roundtrip to 

Denver, Colorado.6

As detailed in Order 2012-2-21, Section 414 of FAA 2012 directs the Department to 

consider seven criteria in awarding the eight additional DCA beyond-perimeter slot 

exemptions that have been created and made available to new entrant and limited 

incumbent carriers. We are directed to consider the extent to which the exemptions will: 

(A) provide air transportation with domestic network benefits beyond the 1,250 mile 

perimeter; (B) increase competition in multiple markets; (C) not reduce travel options for 

communities served by small hub airports and medium hub airports within the 1,250 mile 

perimeter; (D) not result in meaningfully increased travel delays; (E) enhance options for 

nonstop travel to and from the beyond-perimeter airports that will be served; (F) have a 

positive impact on the overall level of competition in the markets that will be served; or 

(G) produce public benefits, including lower fares, higher capacity, and a variety of 

service options.7 The statutory amendments provide three new criteria for our 

 6 See Order 2004-4-1. 7 Section 41718 (g)(1)-(2) reads:

(1) Increase in Slot Exemptions.—Not later than 90 days after the date of enactment of the FAA 

Modernization and Reform Act of 2012, the Secretary shall grant, by order 16 exemptions 

from—

(A) the application of sections 49104(a)(5), 49109, and 41714 to air carriers to operate 

limited frequencies and aircraft on routes between Ronald Reagan Washington National 

Airport and airports located beyond the perimeter described in section 49109; and

(B) the requirements of subparts K and S of part 93, Code of Federal Regulations.

(2) New Entrants and Limited Incumbents—Of the slot exemptions made available under 

paragraph (1), the Secretary shall make 8 available to limited incumbent air carriers or new 

entrant air carriers (as such terms are defined in section 41714(h)). Such exemptions shall be 

allocated pursuant to the application process established by the Secretary under subsection 

(d). The Secretary shall consider the extent to which the exemptions will—

(A) provide air transportation with domestic network benefits in areas beyond the 

perimeter described in section 49109;

(B) increase competition in multiple markets;

(C) not reduce travel options for communities served by small hub airports and medium 

hub airports within the perimeter described in section 49109;

(D) not result in meaningfully increased travel delays;

(E) enhance options for nonstop travel to and from the beyond-perimeter airports that 

will be served as a result of those exemptions;
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consideration in making these awards (new subsections (E), (F) and (G)) and do not 

require that an application meet each of the seven criteria.

Because we find that each of the proposals would not reduce travel options for 

communities served by small and medium hub airports within the perimeter and would 

not result in meaningfully increased travel delays, we focus our analysis in this 

proceeding on the extent to which the applicants meet other statutory criteria.

APPLICATIONS

As summarized below, the Department received applications from Air Canada, Alaska, 

Frontier, JetBlue, Southwest, MN Airlines LLC d/b/a Sun Country Airlines (Sun 

Country), and Virgin America. The entire public record for this proceeding, including 

proposals and reply comments, may be accessed online through the Federal Docket 

Management System at http://www.regulations.gov by doing a “search” on docket 

number DOT-OST-2012-0029.

Air Canada

Air Canada has requested two slot exemptions in order to establish one daily nonstop 

roundtrip to Vancouver International Airport (YVR) utilizing Airbus A319 aircraft 

configured with 120 seats, including 14 in business class and 106 in economy.

Arguments in Support

Air Canada states that, as Canada’s largest full-service airline, it is the first and only 

foreign carrier operating out of DCA.8 The carrier argues that it has made a significant 

financial investment in securing slots at DCA and is committed to maintaining a presence 

 

(F) have a positive impact on the overall level of competition in the markets that will be 

served as a result of those exemptions; or

(G) produce public benefits, including the likelihood that the service to airports located 

beyond the perimeter described in section 49109 will result in lower fares, higher 

capacity, and a variety of service options. 

Prior to the 2012 amendment, the pertinent provision in Section 41718 read:

(a) The Secretary shall grant, by order, 24 exemptions from the application of sections 

49104(a)(5), 49109, 49111(e), and 41714 of this title to air carriers to operate limited 

frequencies and aircraft on select routes between Ronald Reagan Washington National 

Airport and domestic hub airports and exemptions from the requirements of subparts K and S 

of part 93, Code of Federal Regulations, if the Secretary finds that the exemptions will—

(1) provide air transportation with domestic network benefits in areas beyond the perimeter 

described in that section;

(2) increase competition by new entrant air carriers or in multiple markets;

(3) not reduce travel options for communities served by small hub airports and medium hub 

airports within the perimeter described in section 49109; and

(4) not result in meaningfully increased travel delays.

8 Air Canada states that it has operated flights between points in Canada and DCA since it was granted 

access to DCA under the 1995 U.S.-Canada Air Transport Agreement, which provides that Canadian 

carriers are to acquire necessary DCA slots “under the prevailing rules for slot acquisition and minimum 

slot use applicable to United States Airlines,” DOT Order 95-4-30. Air Canada also states that it supported 

the 2007 U.S.-Canada Open Skies Agreement.
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at the airport. Air Canada confirms its status as a limited incumbent carrier at DCA, 

holding 16 slots and slot exemptions9, and states that, despite its efforts to do so, it has 

been unable to secure additional slots to expand service at DCA. The carrier also 

maintains that the statutory criteria that guided the award of previous DCA slot 

exemptions effectively prevented it from participating because service was to be provided 

to airports within the United States. 

Regarding its proposed service to YVR, Air Canada claims that the airport is Canada’s 

second busiest and that Vancouver is Canada’s third largest urban area. The carrier 

describes Vancouver as “the commercial heart of Western Canada,” and states that it is 

the largest market in Canada without nonstop service from the DC area. The carrier 

argues that its proposed service will reduce travel time to Vancouver by at least 1 hour 

and 39 minutes when compared to existing one-stop alternatives and will have a positive 

impact on competition. Air Canada proposes to use Airbus 319 aircraft configured with 

120 seats, providing two-class service. Air Canada also asserts that, together with its 

regional partner, Jazz, the two airlines provide service to 10 communities in the United 

States, and to a total of 46 destinations in North America (including Mexico and 

Caribbean), Asia Pacific, and Europe from YVR. The carrier also argues that its 

proposed service would create new within network connecting opportunities to 17 new 

communities in Western Canada. The carrier asserts its proposed service will have a 

positive impact on competition by competing with existing one-stop service to YVR from 

DCA and Washington Dulles International Airport (IAD), operated by Delta, United, 

American and Alaska.

In its March 27 answer, Air Canada reiterated the advantages that would be realized 

through its proposed service, and again asserted that it is not economically feasible for it 

to offer service to YVR from IAD, due to the high costs and inefficiencies of providing 

service at two airports in the same metropolitan area, and that its business travelers prefer 

DCA. Air Canada also urges the Department to extend DCA service to as many new 

markets as possible, rather than granting slot exemptions to markets already receiving 

nonstop DCA service.

Responsive Pleadings

Many of the other applicants commented on Air Canada’s proposal. They most 

commonly argued that Air Canada’s proposal would not provide low fares or domestic 

network benefits, and that Air Canada should not receive any preferential treatment as a 

non-U.S. air carrier.10 Several carriers also explain that Air Canada already holds a 

comparatively significant number of within-perimeter slots at DCA and provides air 

service to its within-perimeter hubs, which offer connecting service to Vancouver. Many 

of the applicants also make note of Air Canada’s proposed aircraft type, which would 

offer comparatively fewer seats, and of the relatively small size of the Vancouver -

Washington, D.C., market. Some highlight Air Canada’s code-share relationship with 

United and its Star Alliance membership and claim that an award to Air Canada would 

 9 Air Canada holds slot exemptions under 49 USC 41718.

10 In this regard, some commenters argue that, because the U.S.-Canada Air Transport Agreement subjects 

Air Canada’s access to DCA to the “prevailing perimeter rule,” the bilateral agreement does not require the 

Secretary to consider Air Canada’s application for beyond-perimeter slots. See, Section 41718(h)(3), as 

added by FAA 2012. 
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effectively provide a large incumbent carrier access to another transpacific gateway, 

which is contrary to the purpose of awarding DCA slot exemptions to new entrants or 

limited incumbents. Competing carriers also argue that the schedule included as part of 

Air Canada’s proposal is not convenient for customers in the local market, but intended to 

facilitate connections to international destinations.

Alaska

Alaska has requested four total slot exemptions in order to operate one daily nonstop 

roundtrip each to Portland International Airport (PDX) and San Diego International 

Airport (SAN), both utilizing Boeing 737-800 aircraft with 157 seats, 16 in first class and 

141 in economy. The carrier states that the proposed service to PDX is its first priority 

and that proposed service to SAN would continue on a single-plane basis to Honolulu, 

Hawaii.

Arguments in Support

Alaska points to its presence along the entire West Coast, the high load and completion 

factors and on-time performance of its service utilizing DCA slot exemptions, 

comparatively low customer complaint ratio, history of providing lower DCA fares (and 

the associated passenger cost savings), and status as a growing and financially strong 

carrier with excellent relationships with its stakeholders. Alaska also points out that it is 

the only network carrier not to have filed for bankruptcy, that it has received industry 

awards, and that political, civic and employee interests support its application. Alaska

states that it operates only three roundtrips at DCA, which, with the exception of Sun 

Country, represents the smallest presence when compared to other carriers operating at 

DCA. Alaska states that FAA 2012 added three new decisional criteria and changed the 

manner in which the criteria are to be applied by no longer requiring that an applicant 

meet each enumerated standard, but instead provided more flexibility for the Department 

to weigh each criterion separately. Alaska argues that the amended statute requires that 

local market benefits be treated as a co-equal decisional factor with beyond-perimeter 

network benefits and that its proposal to serve Portland and San Diego, the two largest 

Washington, D.C.-area markets lacking nonstop DCA service, is the strongest application 

in the docket.

In reference to its proposed service to PDX, Alaska argues that Portland is the third

largest beyond-perimeter market within its network system without nonstop service to 

DCA. Alaska commits to providing low-fares, approximately 18 percent below existing 

fares for Portland service at IAD, for at least a year, subject to adjustment as a result of 

increasing fuel prices. Alaska claims that its request would produce immediate network 

benefits by connecting to 10 communities from Portland, and over time, even more 

opportunities because of its substantial presence at the airport. The airline claims that its 

proposal would offer service with a convenient schedule, provide additional capacity in 

the Washington, D.C. area – Pacific Northwest market, represent a convenient, low-fare 

alternative to existing service at IAD, and increase competition.

Regarding its proposed service to SAN, the carrier states that it would offer service to 

close-in DCA for a large volume of government traffic, including military. Alaska 
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argues that San Diego is the second largest beyond-perimeter market within its network 

system without nonstop service to DCA. Similar to its proposal to PDX, the carrier 

commits to providing low fares, approximately 31 percent below existing fares for SAN 

service at IAD, for at least a year, subject to adjustment as a result of increasing fuel 

prices. Alaska asserts that its proposal would provide additional capacity and a 

convenient, low-fare alternative to existing service at IAD and Baltimore/Washington 

International Thurgood Marshall Airport (BWI), and provide important new competition 

as well.

In its March 27 reply comments, Alaska acknowledges US Airways’ recent 

announcement to inaugurate DCA - SAN service on June 8 and argues that its proposed 

service to SAN is even more important because it will provide much needed and welltimed competition in the market. Alaska also explains that, unlike US Airways’ 

proposed service, its service would become permanent in nature due to the conditions 

associated with the beyond-perimeter slot exemptions, and be suitable for SAN 

originating passengers while US Airways’ service appears to be timed to accommodate 

DCA originating passengers. 

Comments of the Port of Portland

The Port of Portland, the owner and operator of PDX, submitted reply comments in 

support of Alaska’s application on March 27. The Port asserts that it has been 

experiencing rapid growth in passenger traffic and that the PDX - DCA market is the 

largest origin and destination (O&D) market without current or announced service in this 

proceeding. The Port also claims that DCA is PDX’s second largest destination without 

nonstop service. The Port contends that it has better access to capital cities in Europe and 

Asia than it does to DCA.

Comments of the San Diego County Regional Airport Authority (SDCRAA)

SDCRAA, operator of SAN, also submitted comments in support of Alaska’s proposal on 

March 27. SDCRAA explains that the City of San Diego is the second largest city in 

California and the County is the fifth most populous county in the United States and 

second most populous in California. The Airport Authority states that SAN is situated 18 

miles from the US-Mexico border and therefore serves a diverse bi-national catchment 

area and has the highest airport-wide load factor in this proceeding. SDCRAA states that 

the San Diego region represents the single largest concentration of active duty military in 

the country and would benefit from direct access to the closest airport to the Pentagon. 

The airport operator also mentions that Alaska’s proposal would provide Honolulu - DCA 

passengers with their first roundtrip single-plane one-stop flight. SDCRAA also asserts 

that Alaska’s proposal would introduce new airline competition in the Washington market 

and is supported by a broad coalition of over 100 political leaders, civic organizations, 

corporations and individuals.

Reply comments of Association of Flight Attendants – CWA

On March 27, the Association of Flight Attendants-CWA (AFA) submitted reply 

comments in support of Alaska’s application. AFA explains that Alaska and its 

employees have a very good working relationship. The Association also makes note that 
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Alaska is the only established network carrier that has not filed for bankruptcy and 

therefore has avoided major job losses and service terminations.

Responsive Pleadings

Competing applicants explain that Alaska is not typically categorized as a low-fare carrier 

and has already been awarded a significant number of beyond-perimeter slot exemptions 

at DCA. Competitors also urge the Department not to award Alaska four slot exemptions 

in this proceeding. Several carriers highlight that both PDX and SAN already have 

mainline service to IAD and/or BWI and question the need for proposed SAN service 

based on US Airways’ recent announcement to provide service in the DCA - SAN market 

beginning June 8. Several other carriers dispute Alaska’s claims of network benefits 

based on the service the carrier already provides at the Los Angeles International Airport 

(LAX) and the Seattle-Tacoma International Airport (SEA). Carriers offering singleplane service to an additional destination argue that their respective proposals offer more 

benefits to a greater number of passengers. Applicants proposing aircraft with more 

passenger seats also argue that Alaska will offer service to fewer passengers.

Frontier

Frontier has requested two slot exemptions in order to offer one daily nonstop roundtrip 

to Colorado Springs Airport (COS), utilizing Airbus A320 aircraft with 168 seats, 36 of 

which have increased pitch, while the remaining 132 are economy. Proposed service 

would continue on a single-plane basis to San Diego, California.

Arguments in Support

Frontier claims to be a well-established carrier known for offering low air fares and high 

quality customer service. Frontier confirms its status as a limited incumbent carrier and 

states that Denver is the only beyond-perimeter community it serves, and that it provides 

service to five within-perimeter communities using slots held by its affiliate, Republic 

Airlines. The carrier claims its nonstop DCA-COS operation fulfills the statutory criteria 

and would best maximize the public interest and competition benefits.

Specifically for Colorado Springs, Frontier states that the community is the second 

largest city in Colorado and that Washington, D.C. is its largest destination due in part to 

the Air Force Academy and the significant presence of military personnel in the region. 

The carrier also argues that Colorado Springs is an underserved, high-fare market 

without nonstop service to DCA, and asserts that its proposal would not only provide 

additional capacity and offer a convenient, low-fare alternative to existing nonstop 

regional jet service at IAD and other connecting service, but also produce public benefits 

and introduce competition. In support of its claim to offer low fare service and stimulate 

demand in the COS market, Frontier references the 37 percent increase in DCA-Denver 

passenger traffic and 13 percent decrease in average DCA-DEN fares after it entered that 

market. Frontier also argues that its proposed service would enhance market structure, 

competition and network benefits to at least five additional beyond-perimeter 

communities, including its extensive network at Denver International Airport (DEN). 

Frontier also claims that its proposed service would increase competition by reducing the 
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travel time to Colorado Springs by at least 1 hour and 44 minutes when compared to 

existing one-stop alternatives. Also, Frontier claims that its one stop DCA-SAN flight 

would inject low-fare competition into the DCA-SAN and broader WAS-SAN markets.

In its consolidated answer of March 27, Frontier urges the Department not to grant any 

carrier more than one pair of slot exemptions, in order to maximize the number of carriers 

receiving slot exemption awards, and to limit the awards for service to cities that will 

receive first-time nonstop DCA service. In addition to restating many of arguments made 

in its application, Frontier explains that, like Alaska and Virgin America, it lacks a 

within-perimeter hub from which it could flow traffic to the west. The carrier also 

explains that Colorado Springs is a newly established western focus city from which it 

plans to serve or already serves five different western markets, including its Denver hub, 

and asserts that its proposal would provide the only low-cost, low-fare service to 

Colorado Springs from the entire Washington, D.C., metropolitan area, thereby 

competing with United Express’ IAD-COS service.11 It argues that its proposal would 

provide more annual seats than any other applicant and states that its application has 

strong public support from government officials, Members of Congress, travelers and 

businesses.

Answer of the City of Colorado Springs and the Colorado Springs Airport (COS)

COS submitted comments strongly supporting Frontier’s application on March 27. COS 

emphasizes that the Washington, D.C., metropolitan area is its largest market in terms of 

daily passengers. The Colorado Springs representatives highlight many of the arguments 

made by Frontier and explain that because of the variability in travel time, the air service 

available at DEN is not an acceptable substitute for its community. COS reiterates that 

Frontier would offer a low-fare service alternative utilizing mainline aircraft with onboard amenities (including personal TVs) to compete against the regional jet service 

provided by a legacy carrier at IAD.

Responsive Pleadings

Most of the other applicants in the proceeding offered comments on Frontier’s proposal. 

Many make note of the comparatively small size of the Washington, D.C. - Colorado 

Springs O&D market and reference the existing regional jet service available at IAD.12 

Several carriers also claim that Denver is an acceptable substitute for Colorado Springs 

because of the reasonable driving distance between them. The carriers state that Frontier 

has already been awarded six beyond-perimeter DCA slot exemptions to serve Denver 

 11 Frontier claims that its beyond-COS connections would offer the traveling public an alternative, low-fare 

service option that the Department should consider, citing our consideration of Alaska Airlines’ connecting 

service, in DOT Order 2004-4-1 (Apr. 1, 2004), at 17, as precedent 12 Southwest argues that, in measuring the Washington Metro region origin and destination traffic at COS, 

we should disregard the BWI and IAD traffic, because of a previous DOT/FAA determination that the three 

Washington area airports are “not interchangeable.” Notice Granting Petition with Conditions, 75 Fed. 

Reg., 26322-26333 (May 11, 2010). Frontier, in its April 11 Motion for Leave to File and Response to 

Second Unauthorized Filing by Southwest, argues that the proceedings are distinguishable because the 

Delta-US Airways slot swap divestitures were identified to address concentration and competition concerns 

that otherwise would have arisen with the slot exchange, and the Department of Justice noted that other 

area airports may be acceptable substitutes for price-sensitive passengers.
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and explain that Denver is also served from IAD and BWI. Other applicants also dispute 

Frontier’s claims of domestic network benefits. They argue that many of the additional 

connections (including San Diego) that may be available on Frontier’s network at 

Colorado Springs already have, or shortly will have, nonstop service to DCA and that 

Frontier has a very limited presence at SAN. Other carriers also argue that the carrier has 

an uncertain future, as its parent, Republic Airways Holdings, Inc., has mentioned that 

Frontier may be spun off or sold.

JetBlue

JetBlue has requested two slot exemptions in order to add one daily nonstop roundtrip to

Luis Muñoz Marín International Airport (SJU) in San Juan, Puerto Rico, and, if granted, 

another pair of slot exemptions to provide one daily roundtrip to Austin-Bergstrom 

International Airport (AUS) in Austin, Texas. Proposed service to SJU would utilize 

Airbus A320 aircraft configured with 150 seats, while service to AUS would utilize 100-

seat Embraer E190 aircraft.

Arguments in Support

JetBlue highlights its award-winning customer service, “everyday” air fares, history of 

stimulating demand for service, and the standard features of its service, including no 

overbooking, first checked bag free, all one-way fares, pre-assigned seats, the amount of 

legroom available in its seats, the relatively young age of its aircraft fleet, unlimited 

snacks and drinks, and 136 channels of free entertainment. In support of its claims to 

stimulate demand and lower fares, JetBlue points to the highly favorable impact of its 

services on fares and traffic in the Jacksonville, FL-SJU, Orlando, FL-Bogota, Colombia 

markets, and Boston-DCA markets, respectively. The carrier also explains that while it 

has recently begun service at DCA and that it has a growing presence at the airport 

through newly acquired and leased slots, it remains a limited incumbent carrier. 

Regarding its proposed service to SJU, JetBlue explains that San Juan is the capital of 

the Commonwealth of Puerto Rico and a focus city within its network. It states that with 

its partner Cape Air, the two airlines provide connections to eight domestic and 

international destinations from SJU. The carrier argues that its proposed service would 

provide an important boost to Puerto Rico’s economy, and therefore is consistent with 

the Obama administration’s goal of fostering and sustaining the economic development 

of Puerto Rico (citing to Executive Order 13517, of October 30, 2009). JetBlue also 

explains that nonstop service between DCA and SJU currently does not exist and asserts 

that its proposal would introduce a unique coach product in the market, lower fares, 

increase capacity, expand service options and offer an increased level of competition to 

service offered at IAD and BWI.

Similar to its arguments in support of SJU, JetBlue describes Austin as the fifth largest 

market beyond the 1,250-mile perimeter that does not have nonstop service from DCA. 

The carrier explains that the community’s population is increasing and describes the 

community as a growing center for business and tourism. The carrier states that it 

currently offers service to six destinations from Austin and asserts that its proposed 

service would offer meaningful competition, primarily in the DCA-AUS local market. 
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Similar to its arguments for its proposed service to SJU, the carrier also claims that its 

AUS proposal would lower fares, expand service options, stimulate the markets, provide 

public benefits and increase competition. For example, JetBlue states that its proposed 

$125 - $665 one way fare is “significantly” lower than United’s current one way IADAUS fare structure of $222-$1,473. 

In its March 27 filing, JetBlue asserts that its proposal to SJU would introduce nonstop 

service to the Caribbean, a region that is not currently served from DCA. JetBlue also 

highlights the significant financial investment it has made in gaining competitive access 

to, and securing slots at, DCA, which the Department should recognize. In regard to its 

proposed service to SJU, JetBlue notes reports that American Eagle may suspend 

operations at the airport, indicating that additional opportunities for its expansion at SJU 

may exist. The applicant also states that its SJU proposal would increase service to 

small hub airports and notes that its proposed schedule would occur at off-peak times at 

DCA and therefore not increase travel delays. JetBlue states that its application is 

supported by Congressional interests, economic development officials, the cruise 

industry, and private citizens. In regard to Austin, JetBlue states that it would connect 

with service to Long Beach, and, like its proposed schedule for SJU service, its service 

would occur during uncongested times at DCA and not increase travel delays.

Answer of the City of Austin in Support of the Applications of JetBlue and 

Southwest

The City of Austin (Austin), owner and operator of AUS, submitted comments in 

support of both carriers’ applications. The city explains that it is only 65 miles beyond 

the current 1,250 mile perimeter from DCA and argues that it would already have 

multiple nonstop flights to DCA, if the perimeter rule did not exist. Austin claims that 

originating travelers to DCA are currently paying significantly higher fares than from 

other destinations under consideration. The City also states that with the recent 

announcement of United to SFO and US Airways to SAN, Austin is the second largest 

market in this proceeding without nonstop service to DCA. Austin also maintains that 

yields to DCA are the highest among destinations included in the applications under 

consideration. The City also asserts that service to AUS would create public benefits at 

San Antonio International Airport (SAT). The owner and operator of AUS also states 

that both carriers’ applications have support from its 16 elected leaders, their more than 

two million constituents, twenty-one Austin area business and economic development 

groups, two major universities, the Austin Convention and Visitors Bureau and Texas 

Department of Transportation, four national associations based in Austin, and the 

AFSCME, Local 1624.

Responsive Pleadings

Most competing applicants in the proceeding offered comments on JetBlue’s 

application. These carriers note that while JetBlue has not been awarded previous DCA 

slot exemptions, it has already established a significant presence at DCA, operating more 

flights than any other applicant in this proceeding. The commenting carriers provide 

details on the existing service to both SJU and AUS that is available at IAD and BWI 

from low-cost and legacy carriers. Other applicants note that JetBlue’s proposal would 
- 12 -

serve smaller and/or leisure markets, utilize aircraft with fewer passenger seats, offer 

very limited connecting opportunities, and assert that monopoly routes from DCA 

usually result in fares that are comparatively more expensive.13 One of the other 

applicants also mentions JetBlue’s cooperative agreement with American Airlines, 

which operates a significant number of DCA slots, and questions the likelihood of any 

resulting pricing discipline on fares.

Southwest

Southwest’s proposal is for two slot exemptions to establish one daily nonstop roundtrip 

to AUS, initially utilizing Boeing 737-700 aircraft with 137 seats and, by November 

2012, Boeing 737-800 aircraft with 175 seats. Service would also continue on a singleplane basis to San Diego, California.

Arguments in Support

Southwest’s application asserts in particular the fare savings it would bring to passengers 

in Austin, San Diego, and other connecting markets. The carrier also highlights its award 

winning customer service, lower air fares, “no-fee” policy for checked baggage and 

reservation changes, the popularity of its frequent flier program and status as the nation’s 

largest domestic airline in terms of passenger traffic. The carrier also relates it has only a 

small presence at DCA, with access to 25 slots and slot exemptions, all through its 

AirTran subsidiary. 

Similar to JetBlue’s arguments in support of proposed service to Austin, Southwest also 

notes the lack of nonstop service from DCA and the economic growth the community 

has recently experienced. The carrier also details its presence at AUS by explaining that 

in June 2012, it will operate nonstop to 20 communities. Southwest also stresses that its 

proposed service to AUS will provide immediate connecting service to Dallas Love 

Field (DAL) and William P. Hobby Airport (HOU), offering a low-fare competitive 

alternative to customers that prefer close-in airports in Dallas and Houston, Texas. The 

carrier also argues that its proposal will produce public benefits in the form of fare 

savings, traffic stimulation, new service options and increased competition. In support 

of these claims, for example, Southwest claims that its projected DCA-AUS fare will be 

36 percent lower than the current average DCA-AUS fare and that it will compete with 

United’s IAD-AUS service by offering lower fares.

On March 27, Southwest filed a consolidated answer asserting that when compared to the 

other proposals, DCA - AUS is the second largest market that currently does not have 

nonstop service, that market yields are the highest, and that its proposed service will 

generate 147,000 new passengers, which it claims is the largest estimate of traffic 

stimulation among the applicants. The applicant also states that, based on its presence in 

the domestic market, it holds the smallest relative portfolio of DCA slot or slot 

exemptions and that offering single-plane, one-stop service to an underserved market 

increases competition and maximizes network benefits. Southwest claims its fares would 

 13 The carriers note that the Department, in the past, has favored carriers offering greater capacity in 

restricted-entry proceedings, citing to DOT Order 2005-3-25, at 4. 
- 13 -

be significantly lower than JetBlue’s in the DCA-AUS market and that it would attract 

more passengers due to its relatively large AUS presence.

Comments of the City of Austin in Support of the Applications of JetBlue and 

Southwest

See discussion above, at page 11.

Comments of the Southwest Airlines Pilots’ Association (SWAPA)

On March 27, the Southwest Airlines Pilots’ Association (SWAPA) submitted comments 

in support of Southwest’s application. SWAPA notes that when compared to the other 

applications, Southwest’s Boeing 737-800 aircraft will provide the highest level of 

seating capacity. SWAPA also argues that the network benefits associated with 

Southwest’s proposal could extend to additional communities with adjustments in 

schedule. SWAPA claims that Southwest will maximize the utilization of a scarce 

resource and produce the greatest public benefits.

Responsive Pleadings

The other applicants contend that Southwest already has a substantial presence at DCA 

via its AirTran subsidiary. Several applicants also note that Southwest’s proposal offers 

very limited connecting opportunities at AUS and that monopoly routes from DCA 

usually result in fares that are comparatively more expensive. Several carriers detail the 

existing mainline service to AUS available at both BWI and IAD. Other carriers also 

downplay any of the additional network benefits that may exist at SAN, DAL and HOU, 

arguing that numerous connecting opportunities to DCA already exist and that 

Southwest’s connections to DAL and HOU should not be considered because they are 

each within-perimeter destinations. JetBlue also compares Southwest’s forecast traffic 

stimulation with its own and asserts that if several assumptions and the methodology used 

were consistent among the two proposals, the differences in stimulated passenger demand 

would be small.

Supplemental Pleadings

On April 3, Southwest filed a limited response and motion for leave to file. In response 

to comments from the other applicant proposing service to Austin, Southwest asserts that 

its presence in Austin is larger, that it will operate aircraft with more seats and offer lower 

fares and, therefore, its proposal will produce greater stimulation in the DCA-AUS 

market. Southwest references the Department’s finding in the recent Delta– US Airways 

slot swap proceeding to argue that BWI and DCA are not effective substitutes for one 

another. Second, Southwest explains that traffic stimulation is expected to be larger in 

the earlier periods of service and taper off as service on the specific route matures. 

Frontier replied to Southwest’s response on April 5. Frontier argues that Southwest is 

inconsistent in its arguments regarding the availability of competing service in the 

Washington, D.C., area and argues that traffic data at all three airports (BWI, DCA and 

IAD) are competitive alternatives and makes note of Southwest’s significant presence at 

BWI. The carrier explains that the Department’s finding in the recent slot swap between 

Delta and US Airways was in the context of a slot exchange of within-perimeter slots to 
- 14 -

mitigate competition issues specific to DCA and not in regard to specific beyondperimeter route applications. 

On April 6, JetBlue also replied to Southwest’s filing. JetBlue challenges Southwest’s 

traffic stimulation projections, and argues that Southwest’s projections are overly 

optimistic. 

In response to Frontier and JetBlue, Southwest filed a second response on April 9. In that 

filing, Southwest makes references to several additional statements made by the 

Department in the Delta – US Airways slot swap case to further justify its claims that 

BWI and DCA are not interchangeable. Moreover, Southwest details the recent results of 

the mandated divestiture as a result of the Delta – US Airways slot swap to illustrate the 

value airlines place on the possibility of operating a few flights at DCA. Southwest also 

explains that its pricing strategy is based on distance and not on competition, and 

therefore its projected fares are based on its yield curve. In responding to JetBlue, 

Southwest provides additional detail with regard to its calculations. 

Frontier also filed a response to Southwest’s second filing on April 11. In the reply, 

Frontier provides several examples of the fares Southwest offers in monopoly markets. 

Frontier uses these examples to argue that Southwest’s estimated average DCA – AUS 

fare of $169 is unrealistic, to challenge Southwest’s claim that its fares are based on 

distance rather than the competitive landscape and as further evidence to indicate that 

Southwest may not provide low fares in markets where competition does not exist.

Sun Country

Sun Country applied for two slot exemptions to operate one daily nonstop roundtrip to 

Las Vegas McCarran International Airport (LAS), utilizing Boeing 737-700 aircraft with 

129 seats, including 12 in first-class.

Arguments in Support

Sun Country states that it is an independent low-fare carrier that has been recognized for 

its low fares, quality of service and customer satisfaction. It claims that it has a history of 

increasing passenger demand and lowering air fares in the markets it enters. Sun Country 

states that it qualifies as a limited incumbent, noting that it currently operates only a 

single roundtrip at DCA. The carrier argues that it could reduce its airport unit costs and 

serve its customers better if it could increase its presence at DCA.

Regarding its proposed service to LAS, Sun Country explains that it has served the 

community for 29 years and that the demand for flights continues to increase. The carrier 

also notes that Las Vegas is a major convention and trade show destination and the fourth 

largest O&D market beyond the 1,250 perimeter at DCA. The airline acknowledges that 

the Department has already granted slot exemptions for service to Las Vegas (operated 

now by US Airways), but argues that its proposal would offer service with a more

attractive schedule, provide convenient, low-fare travel, additional capacity and enhanced 

service options in the two markets, produce public benefits and increase competition. 
- 15 -

Sun Country submitted additional comments on March 27. The carrier argues that based 

on the size of the DCA-LAS market, additional service is warranted. Sun Country 

restates many of the arguments made in its original application and urges the Department 

to award these slot exemptions to carriers that are not adequately represented at DCA. 

The applicant also highlights the competitive impact its DCA – Lansing, Michigan, 

service has had and states that an award of two additional slot exemptions would be 

helpful in obtaining “a critical mass of slots” at DCA.

14

Responsive Pleadings

Several other applicants argued that Las Vegas is primarily a leisure market with low 

fares that limit the extent of competitive benefits, and that service would be provided with 

aircraft with comparatively smaller seating capacity. Other parties make note of both the 

existing service in the DCA – LAS market and the additional low-fare nonstop service 

available at IAD and BWI. The other carriers also mention that the carrier has a very 

limited presence at LAS, and highlight the lack of domestic network benefits associated 

with Sun Country’s proposal.

Virgin America

Virgin America has requested four slot exemptions in order to establish two daily 

nonstop roundtrips to SFO utilizing Airbus A319 aircraft with 8 first class seats, 12 main 

cabin select seats and 99 seats in the main cabin, or 119 seats in total. The proposed 

service will offer both morning and afternoon/evening flights in each direction.

Arguments in Support

Virgin America summarizes its growth in size as an airline since beginning service in 

2007, describes its focus towards improving customers’ in-flight experience, including 

the features of its award winning product (fuel efficiency, in-flight WiFi, interactive 

flight status maps, seat-to-seat chat, power outlets, USB jacks at every seat, movies, 

satellite TV, premium TV, music videos, radio, games, on-demand food and beverage 

ordering), and explains its history of lowering air fares in the markets it enters. The 

carrier also confirms that it qualifies as a new entrant carrier and that it has never held, 

sold or given up a DCA slot. The applicant argues that the size and significance of the 

local market, rather than a strict focus on demonstrating “domestic network benefits” and 

“increasing competition in multiple markets,” should now play a more prominent role 

when evaluating applications, in light of the additional statutory selection criteria 

included in FAA 2012 and the fact that the Department may choose to consider the 

criteria either in isolation or in combination. Virgin America, accordingly, suggests the 

Department should select the service proposed at a beyond-perimeter market serving a 

large metropolitan area with significant O&D traffic.

In regard to its proposal to serve San Francisco, the carrier argues that the San Francisco 

Bay Area is the largest metropolitan area and O&D market in the country without 

 14 Sun Country refers to the DOT/FAA Notice Granting Petition with Conditions, 75 Fed. Reg., 26322-

26333 (May 11, 2010), in which we recognized the importance of a critical mass of slots by structuring a 

slot auction for DCA and LaGuardia Airport slots in bundles of eight slot pairs.
- 16 -

nonstop service to DCA, and therefore its proposal will benefit more local passengers 

than any other application in this proceeding. The carrier states that SFO serves as its 

base of operations where it offers service to five (one seasonally) destinations in the west 

and three in Mexico. Virgin America also asserts that the Washington, D.C. – San 

Francisco market is important to the carrier by referencing its current service at IAD, 

which has been in place since 2007. The carrier urges that the proposed service will 

complement this existing service and allow it to continue to grow the market. The 

applicant also argues that its proposal would offer a viable service pattern of at least two 

daily nonstop flights in the market, and provide convenient one-stop connections to four 

of its other destinations in the west. The carrier claims its proposed service will also 

provide public benefits, including lower fares, offer a wide array of price, service and 

quality options, greater capacity in the market, and enhance competition. In support of 

this claim, Virgin America asserts that average fares fell in several markets within a year 

after it commenced service, including DFW-SFO/LAX, BOS-SFO/LAX, JFK-SFO, 

LAS-SFO, JFK-LAS, and ORD-SFO/LAX. Virgin America also states that its DCASFO service will offer convenient online connections to other western cities.

In its March 27 filing the carrier reiterates that it is the only carrier in this proceeding 

that does not operate at DCA,15 and that with the revision to the statutory selection 

criteria included in FAA 2012, the size of the local market should play a more prominent 

role when applications in this proceeding are evaluated, with less weight given to 

domestic network benefits and increased competition in multiple markets.16 It stresses 

that the SFO – DCA market is significantly larger than those included in other 

applications. The carrier acknowledges United’s recent announcement to inaugurate 

DCA – SFO service on May 14th and argues that its proposed service to SFO is even 

more important because it will provide much needed and well-timed competition in the 

market. Virgin America argues that its request for two roundtrips in the same market is 

consistent with some of the Department’s previous DCA slot exemption awards17 and 

necessary for it to compete with United, which has a much larger presence at both DCA 

and SFO.

Comments of the City and County of San Francisco and San Francisco 

International Airport (SF0)

SFO submitted comments strongly supporting Virgin America’s application on March 

27. Similar to the carrier’s arguments, SFO explains that Virgin America is the only new 

entrant in the proceeding and has provided important service quality and fare 

competition since its launch in 2007. The San Francisco parties also highlight the 

revisions made to the statutory selection criteria in FAA 2012 and assert that much 

 15 Virgin America claims that the Department has favored new entrants in the past, citing to the DOT/FAA 

O’Hare Notice, 71 Fed. Reg. 51381, 51388-90 (Aug. 29, 2006) and to the US Airways/Delta slot swap for 

the proposition that a new entrant needs a critical mass of slots. 75 Fed. Reg. 7130-11 (Feb. 28, 2010). 16 In this regard, it refers to one of our former beyond-perimeter selection cases in which we indicated that 

the AIR-21 selection criteria did not afford us sufficient discretion to consider the size and significance of 

the local beyond-perimeter market. Order 2002-11-20 (Nov. 27, 2002). 17 DOT Order 2000-7-1 (Jul. 5, 2000), awarding four exemptions to America West under AIR-21 to 

provide two roundtrip DCA-PHX flights; and Order 2004-4-1 (Apr. 1, 2004), awarding four Vision-100 

exemptions to Frontier for two roundtrip DCA-DEN flights.
- 17 -

greater emphasis should be placed on the size of the local markets proposed and 

competitive benefits associated with each proposal. The commenters explain that the 

SFO – Washington, D.C., market (approximately one million passengers) is nearly three 

times larger than the next largest market which does not have nonstop service to DCA. 

SFO estimates that, based on the size of the SFO-DCA market, six flights would be 

warranted.

Responsive Pleadings

The majority of other applicants filed reply comments on Virgin America’s application. 

Competitors urge the Department not to award half of the slot exemptions available in 

this proceeding to a single applicant.18 Several of the competing carriers highlight the 

existing service available at BWI and IAD, including more than 12 daily frequencies at 

IAD, a portion of which is provided by Virgin America. The other carriers also make 

note of the relatively low average market load factors and fares to argue that the San 

Francisco – Washington, D.C. market is already well-served. The other carriers also 

question the need for the proposed SFO service based on United’s recent announcement 

to provide service from DCA beginning May 14, 2012. Several other carriers also 

dispute Virgin America’s claims of network benefits based on inefficient routing that 

would occur from SFO and because many of the communities that Virgin America’s 

proposed service would connect to already have or soon will have nonstop service from 

DCA.19 One of the competing applicants also references a recent news article and 

questions the performance capability of the engines on Virgin America’s proposed 

aircraft and suggests that an upgrade will be required to ensure the maximum number of 

passenger seats will be available for sale.20

Comments of the Metropolitan Washington Airports Authority (MWAA)

On March 27, MWAA filed comments to inform the Department and applicants of the 

circumstances at DCA. MWAA does not state a preference for any application. Rather, 

MWAA explains that the new service to be awarded under this proceeding will increase 

both congestion and noise within the vicinity of DCA and place additional strain on the 

airport’s facilities, including automobile parking. MWAA explains that the 44 gates and 

overnight aircraft parking spaces at DCA are heavily utilized and that carriers hoping to 

gain access to the airport may have difficulty securing gates and other essential operating 

space. MWAA also expresses concern with the increase in authorized flights at DCA 

and the decline in domestic service at IAD.21

 18 Frontier, for example, referred to a 2000 Order in which we allocated twelve slot exemptions by granting 

two per carrier. DOT Order 2000-7-1.

19 The carriers also refer to DOT Order 2000-7-1, at 24, where we declined to find significant beyondperimeter network benefits in a proposal that offered circuitous routings and duplicative service. 

20 On March 30 and April 2, Virgin America filed responses stating that engine upgrades are in process and 

will be completed on any of the aircraft that will be used to operate at DCA by June 30.

21 These additional slot exemptions, however, were mandated by FAA 2012, which also increased 

permissible operations by two per hour. We note that MWAA, in the past, has successfully managed to 

accommodate requests by new or expanding airlines to gates and facilities. MWAA has facilitated 

access by airlines that leased, purchased or traded slots, received slots through lotteries, or were granted 

slot exemptions. We firmly expect MWAA to similarly facilitate these additional operations.
- 18 -

DECISION

All of the applications have merit and have received strong community support. In 

reaching our decision, we have carefully reviewed the applications and responsive 

pleadings, and we have evaluated the extent to which each application met the revised 

factors Congress outlined in Section 41718(g)(2). We conclude that the following 

proposed services merit allocations under the statute and award slot exemptions to: 

Alaska Airlines, for two slot exemptions for nonstop service to Portland, Oregon; JetBlue 

Airways, for two slot exemptions for nonstop service to San Juan, Puerto Rico; 

Southwest Airlines, for two slot exemptions for nonstop service to Austin, Texas; and 

Virgin America, for two slot exemptions for nonstop service to San Francisco, California. 

Our reasoning to support these decisions is set out below. 

Alaska to Portland

We conclude that Alaska merits an award of two exemptions for service to Portland 

(PDX). Alaska’s application will enhance options for nonstop travel, have a positive 

impact on competition, and produce public benefits of higher capacity and service 

options. 

We find that Alaska’s nonstop DCA-PDX service will enhance options for nonstop 

travel, because PDX is the fourth largest local O&D22 market from DCA currently 

without nonstop service.

23 Currently, Alaska’s ability to accommodate the DCA-PDX 

demand for service is limited, given the carrier’s sustained load factors of 91% on its 

existing nonstops to Seattle and 88% to Los Angeles.

24 We further find that Alaska’s 

nonstop DCA-PDX service will have a positive impact on the overall level of 

competition in the markets that will be served by increasing competition in the local 

market, which today consists of connecting service from DCA. Alaska’s new service 

will also increase competition in multiple markets throughout the Pacific Northwest, 

particularly in conjunction with its Seattle nonstop operations. As a new entrant/limited 

incumbent, Alaska has had a highly positive impact on competition between DCA and 

both Seattle and Los Angeles following its market entries in 2001 and 2004, 

respectively.

25 We also find that the nonstop DCA-PDX service will produce public 

benefits by Alaska’s use of high capacity aircraft and convenient schedules. Based on the 

service patterns Alaska established with its existing exemptions, it has attracted the third 

highest passenger share between DCA and PDX and the fourth highest revenue share26

even without the ability to flow traffic over multiple within perimeter hubs. However, 

Alaska’s current ability to enhance the level of competition between DCA and PDX as 

 22 DOT DB1B data, year ended September 30, 2011. 23 Schedules as of May 1, 2012. The three larger O&D markets without current nonstop service are San 

Francisco (receiving an award here for service by Virgin America, and, prospectively, service from 

United); San Diego (receiving prospective service from US Airways), and San Antonio, TX, for which no 

application for service has been filed in this docket. 

24 DOT T-100 onboard passengers, Year 2011. 25 See, Order 2001-6-20 and Order 2004-4-1. 26 DOT DB1B data, year ended September 30, 2011.
- 19 -

well as increase the amount of competitive network benefits to markets in the Pacific 

Northwest is limited, as it has no intervening within-perimeter hub over which to flow 

traffic to/from DCA. Operating in conjunction primarily with its Seattle nonstops, 

Alaska’s DCA-PDX service also will enhance domestic network benefits and increase 

competition in multiple markets throughout the Pacific Northwest. 

We are not persuaded by the comments opposing an award to Alaska for Portland. The 

primary contention raised in opposition to this application is that Alaska is not typically 

categorized as a low-fare carrier. Although criterion (G) from FAA 2012 provides for 

consideration of whether exemptions “produce public benefits, including low fares, 

higher capacity, and a variety of service options,” the language of this provision does not 

require us to disqualify from favorable consideration any carrier not classified as “lowfare.” Alaska, with just three roundtrips from DCA, has produced a positive competitive 

impact at the airport. Its proposal for Portland will build on its prior operational 

achievements and produce public benefits by offering the second highest capacity aircraft 

of all applicants from the launch date. The carrier will also provide a variety of service 

options, such as using complementary flight times to flow traffic to the Pacific Northwest 

either via Portland or Seattle, depending on consumer preference. These particular 

strengths, together with the network benefits offered in the Pacific Northwest, support our

decision that the benefits of an award to Alaska for Portland outweigh the benefits that 

would be achieved under the proposals that we have not selected.

JetBlue to San Juan

We conclude that JetBlue merits an award of two exemptions for service to San Juan. 

JetBlue’s application will enhance options for nonstop travel, have a positive impact on 

competition and provide domestic network benefits. 

We find that JetBlue’s nonstop DCA-SJU service will enhance options for nonstop travel 

to a unique region. The focus of all beyond-perimeter exemptions thus far has been to 

markets in the western U.S. Eight western cities27 have been awarded nonstop service 

and many more communities have gained single-connection service to DCA through 

beyond-perimeter hubs. JetBlue’s current share of DCA-SJU is less than five percent, 

resulting in a sixth place ranking. 

We also find that JetBlue’s nonstop DCA-SJU service will have a positive impact on 

competition in the markets to be served, based particularly on the carrier’s experience 

serving DCA. JetBlue recently began operations at DCA28 via a lease of slots from 

American and one pair of allocated slots from FAA, in 2010, and plans to expand its 

operations in June, utilizing the slots it purchased from Delta in 2011. Although its time 

in DCA has been short and its scope of nonstop services is limited, initial data indicate 

 27 Denver, Las Vegas, Los Angeles, Phoenix, Salt Lake City, and Seattle currently have nonstop beyond 

perimeter service. New service will be initiated to San Diego and San Francisco in June and May 2012, 

respectively.

28 Effective November 2010.
- 20 -

that JetBlue, an established low-fare carrier, has generated positive competitive discipline

in the DCA markets it serves, as it has rapidly gained passenger share, while at the same 

time recording average fares below the respective incumbent carriers. 

Further, we find JetBlue’s nonstop DCA-SJU service will provide beyond-perimeter 

domestic network benefits on a roundtrip basis to St. Thomas, a sizeable market from 

DCA in which JetBlue would be a new entrant. Overall JetBlue’s service will have a 

positive impact on the level of competition. 

We are not persuaded by the comments opposing an award to JetBlue for San Juan. 

Carriers’ comments included references to JetBlue’s having the largest presence of all 

applicants at DCA, that nonstop service to SJU already exists from IAD and BWI, and 

that SJU is primarily a leisure destination. Although JetBlue will have the largest DCA 

operation of all the applicants,

29 it remains qualified as a limited incumbent. In the last 

beyond-perimeter exemption case, we recognized the uniqueness of service to DCA, even 

when other area airports may have nonstop service to the same beyond-perimeter 

destination.30 Finally, nothing within the selection criteria directs us to avoid granting 

exemptions to leisure-oriented markets, as public benefits may accrue to any segment of 

the traveling public. 

Southwest to Austin

We conclude that Southwest merits an award of two exemptions for service to Austin. 

Southwest’s application will enhance options for nonstop travel, have a positive impact 

on competition and produce public benefits including lower fares. 

Southwest’s nonstop DCA-AUS service will enhance options for nonstop travel to a 

market located just 65 miles beyond DCA’s perimeter that is ranked fifth among cities 

without nonstop service to DCA.

31 We also find that Southwest’s nonstop DCA-AUS 

service will have a positive impact on competition, because current service from DCA to

AUS is divided primarily between the four non-limited incumbents (American, Delta, 

United and US Airways) with each carrier having at least a double-digit share, and, based 

on Southwest’s past performance, its new service would stimulate traffic. We further 

find that Southwest’s nonstop DCA-AUS service will produce public benefits,

particularly by lowering fares in the market. Austin has the highest average local O&D 

fare32 and yield of all applicant destinations, and Southwest, an established low-fare 

carrier, is expected to exert competitive discipline on the fare levels. 

We are not persuaded by the comments opposing an award to Southwest. Southwest has 

a solid history of offering low fares and, given its specific commitments here, we believe 

its proposal for service to a large and growing market like Austin, where DCA’s four 

 29 Effective June 2012. 30 See Order 2004-4-1 at 20. 31 DOT DB1B data, year ended September 30, 2011. 32 Id.
- 21 -

non-limited incumbents currently control over 90 percent of the local O&D revenue,

33

merits an award. 

Virgin America to San Francisco

We conclude that Virgin America merits an award of two exemptions for service to 

San Francisco. Virgin America’s application will enhance options for nonstop travel, 

have a positive impact on competition and produce public benefits including lower fares.

We find that Virgin America’s nonstop DCA-SFO service will enhance options for 

nonstop travel, because Virgin America is the only new entrant applicant in this 

proceeding, and San Francisco is the largest O&D market from DCA without nonstop 

service. The local DCA-SFO market is currently fragmented, with all four non-limited 

incumbents at DCA (American, Delta, United and US Airways) having double-digit 

passenger shares via their existing connecting services. 

Commenters asserted that establishing a sustainable presence in such a market will be 

challenging, especially given the nonstop entry of SFO hub carrier United.

34 However, 

we note that Alaska at Seattle, and Frontier at Denver, initially launched and successfully 

maintained beyond perimeter operations at DCA with only two exemptions each. 

Additionally, the size of the DCA-SFO market can accommodate Virgin America’s 

competitive nonstop service. 

Although Virgin America has put forth strong arguments supporting its request for four 

SFO exemptions, in the context of only eight exemptions being available and given the 

merits of the other proposals, we believe the overall benefits of a second SFO pair do not 

exceed the benefits attained through award of the first nonstops to Austin, Portland, or

San Juan. 

Other Applications

Air Canada to Vancouver

We decided not to select Air Canada’s proposed nonstop DCA-YVR proposal because, 

although it would enhance nonstop travel options, the local O&D market is relatively 

small compared to the DCA-Portland/Austin/San Francisco/and San Juan markets. 

Additionally, due to the seasonal nature of the DCA-YVR market, we do not find the

impact to the overall level of competition from Air Canada’s proposal would be as robust 

as that of the selected markets. Air Canada currently provides nonstop service from DCA 

to two of its hubs, Montreal and Toronto, as well as its nation’s capital of Ottawa.

35 

 33 Id. 34 United will commence service on May 14, 2012. 35 Contrary to the assertions made by some commenters, the terms of the U.S.-Canada Agreement do not 

preclude an award of beyond-perimeter slot exemptions under Section 41718(g)(2) to a Canadian carrier. 
- 22 -

Other applicants commented about the very small size of the local O&D market with one 

noting further that there had been multiple unsuccessful attempts made by Air Canada 

and its Star Alliance partner, United, to offer sustained hub-to-hub service between 

Washington Dulles and Vancouver.36 We find Air Canada’s application substantially 

less compelling than those for nonstop service to Portland, Austin, San Francisco and 

San Juan. 

Alaska to San Diego

In its application, Alaska states that its number one priority for slot exemptions is 

Portland, making San Diego its second choice. Although San Diego is the second largest 

O&D without nonstop service from DCA and has the second highest average fare of all 

applicant cities,

37 we find that Alaska’s case for Portland is the stronger of the two, due

primarily to the network benefits associated with Alaska’s Pacific Northwest operations. 

While we cannot disagree that there are strong benefits generated from an award to 

Alaska for San Diego,

38 they are not as compelling as those for an award to Portland, 

(including to Alaska Airlines itself), Austin, San Francisco, and San Juan. The services 

to Portland, Austin and San Juan that we are selecting here represent the first and only 

nonstop operations between those cities and DCA. Unlike those markets, San Diego, 

beginning in less than a month, will have nonstop US Airways service to DCA, and 

Southwest plans, soon thereafter, to offer single plane DCA service through Austin. We 

recognize that San Francisco’s award does not constitute the first nonstop service in the 

market, as United is inaugurating its new nonstop service this week. However, as already 

discussed, San Francisco is a larger O&D market than San Diego, and it will be served by 

a low-fare carrier that will also be the only new entrant at DCA. 

Frontier to Colorado Springs

We have determined not to select Frontier’s application primarily due to the relatively 

small size of the DCA-COS market. Although Frontier seeks to complement its 

successful record of operating six beyond-perimeter exemptions to Denver with a first 

nonstop to COS and plans to use the largest capacity aircraft of all applicants, COS is the 

smallest domestic O&D market of all the proposals. COS, with 49 passengers per day 

each way,39 is only the 19th largest O&D market from DCA without nonstop service. 

Frontier already captures 21 per cent of the local DCA-COS market via its existing 

connections in Denver. 

 

Annex II, section 2, para 1 of the Agreement allows Canadian carriers to operate in the DCA-Canada 

markets subject to “(a) the prevailing perimeter rule” and “(c) the acquisition by Canadian airlines of 

necessary slots at [DCA] under the prevailing rules for slot acquisition and minimum slot use applicable to 

United States airlines.” The Agreement provides that Canadian carriers are to be subject to the same 

perimeter and slot rules as US carriers. 36 See, Consolidated Answer of Southwest Airlines Co.,March 27, 2012, Exhibit WN-R-701A. 37 DOT DB1B data, year ended September 30, 2011. 38 US Airways will commence nonstop service effective June 8, 2012.

39 DOT DB1B data, year ended September 30, 2011.
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Frontier claims that its DCA-COS nonstop would provide extensive network benefits 

beyond the perimeter in the form of single connections to Seattle, Los Angeles, Portland, 

and Phoenix.40 All of these services from its designated “focus city” are scheduled to 

start after this Order is issued, and none of these points, as scheduled, will connect to 

Frontier’s proposed service between COS and DCA. San Diego, which Frontier proposes 

to serve on a one-stop basis over COS, is already served by Frontier on a singleconnection basis to DCA over Denver at the same time of day in both directions as 

proposed via COS. Additionally, Frontier says that it would offer an attractive low-fare 

service alternative to its beyond points,41 but it already does so via its Denver hub. 

JetBlue to Austin

JetBlue requested that its application for service to Austin be granted only if its San Juan 

application is granted first. We agree that Austin merits an award of slot exemptions, but 

we find that the range and scale of benefits resulting from an award to Southwest, 

particularly in the areas of aircraft capacity and beyond markets, to be superior. 

Regarding aircraft capacity, as we described above, Southwest will commence service 

using Boeing 737-700 aircraft with 137 seats and, in November 2012, upgrade to B 737-

800 aircraft with 175 seats, whereas JetBlue proposes use of 100-seat Embraer E190 

aircraft. 

Sun Country to Las Vegas

We have decided not to select Sun Country’s application for nonstop DCA-LAS service

primarily because, as discussed, LAS already receives nonstop service to DCA via slot 

exemptions. We note, however, that the DCA-LAS market generates the largest local 

demand from DCA of all the applicant destinations, and Sun Country’s proposed 

schedule would complement the existing schedule offered by US Airways, by providing

attractive departure and arrival times for convention and conference attendees in both 

LAS and DCA. Nonetheless, we find that without any beyond Las Vegas connecting 

opportunities, Sun Country’s proposed benefits are less compelling when compared to the 

scale of benefits offered by the service proposals for Portland, Austin, San Francisco, and 

San Juan. 

 40 See Frontier Application at 14. 41 Id. at 13.
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CONDITIONS

Start-up

We will require that the awardees inaugurate full service by no later than 

September 8, 2012. If, for any reason, an awardee is not able to use the slot 

exemptions awarded, we request that it notify the Department as soon as possible, but 

not later than 10 days after the date of service of this Order.

Assignment of Slot Times

As stated in Order 2012-2-21, Section 414 (b) of FAA 2012 allows the Department to 

assign two additional slot exemptions per one hour period (for a total of five), an 

increase from the three per hour authorized in Vision 100. There are 15 hourly 

periods beginning at 7:00 a.m. and ending at 9:59 p.m., and all slot exemptions must 

fit into those 75 slot times. Applicants were advised of these slot-time constraints. 

The Department noted that it anticipated multiple requests for the same slot periods, 

and therefore, all requests for slot exemption times may not be accommodated. In 

applying for specific times, the Department indicated to applicants that if they were 

awarded slot exemptions, specific justification of their requests may be required and 

that these slot-time constraints may cause some proposals not to be viable. In 

coordination with FAA’s Slot Administration Office, we shall assign slot times 

corresponding with the authority granted in these proceedings, and in accordance 

with the requirements of FAA 2012, in a notice subsequent to our decision.

ENVIRONMENTAL ISSUES

Although 49 U.S.C. Section 41718(e) specifically exempts our action here from

review under the National Environmental Policy Act,

42 we remain sensitive to the

environmental impact of increased operations at DCA. Consistent with the statute,

we will require that all operations authorized by this Order be conducted with Stage 3

aircraft.

Also, under 49 U.S.C. § 47117(e), the Department will give DCA priority in making

grants for airport noise compatibility planning and programs.

ADMINISTRATIVE TERMS

Under the provisions of 49 U.S.C. Section 41714(j), awardees may not sell, trade, 

transfer, or convey the operating authorities granted by the subject exemptions, except 

through an air carrier merger or acquisition. 

 42 Section 41718(e) states, "Neither the request for, nor the granting of an exemption, under this

section shall be considered for purposes of any Federal law a major Federal action significantly

affecting the quality of the human environment."
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Further, granting of these exemptions in no way is to be construed as allowing a carrier to 

operate services that it could not otherwise operate. Each awardee must still meet all the 

requirements of the Department and FAA, including but not limited to, use-or-lose 

provisions, and all other statutes and regulations governing air transportation.

This Order is issued under authority delegated in 49 C.F.R. Section 1.56(a).

ACCORDINGLY,

1. The Department grants slot exemptions from 14 C.F.R. Part 93, Subparts K and S, to 

Alaska Airlines, Inc. (two slot exemptions to serve Portland International Airport); 

JetBlue Airways Corporation (two slot exemptions to serve Luis Muñoz Marín 

International Airport); Southwest Airlines Co. (two slot exemptions to serve AustinBergstrom International Airport); and Virgin America Inc. (two slot exemptions to serve 

San Francisco International Airport);

2. The Department directs Alaska Airlines, Inc., JetBlue Airways Corporation, 

Southwest Airlines Co., and Virgin America Inc., to file in Docket OST-2012-0029 no 

later than ten business days after the service date of this Order their proposed flight 

schedules and effective date for operations authorized by this Order. Further, Alaska 

Airlines, Inc., JetBlue Airways Corporation, Southwest Airlines Co., and Virgin 

America Inc., must commence their proposed service by no later than 

September 8, 2012. The slot exemptions granted must be conducted with single-aisle 

Stage 3 aircraft, may not be used for operations between the hours of 10:00 p.m. and 

7:00 a.m., and may not increase the number of operations at Ronald Reagan Washington 

National Airport in any one-hour period during the hours of 7:00 a.m. and 9:59 p.m. by 

more than five operations. These carriers are advised to exercise maximum flexibility in 

proposed operating times to ensure compliance with these limits;

3. In coordination with the FAA Slot Administration Office, the Department will make 

the final assignment of operating times for these beyond-perimeter slot exemptions in a 

separate notice, as soon as possible. The Department directs the awardees to contact the 

FAA Slot Administration Office regarding their proposed schedules associated with the 

slot exemptions. FAA will assign slot exemption numbers, effective dates, and operating 

times consistent with statutory limitations;

4. The Department prohibits Alaska Airlines, Inc., JetBlue Airways Corporation, 

Southwest Airlines Co., and Virgin America Inc., from selling, trading, transferring, or 

conveying the operating authorities granted by the subject exemptions, except through an air 

carrier merger or acquisition;

5. The Department grants all motions to file otherwise unauthorized documents and denies 

motions to strike such documents;
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6. Except as otherwise granted, we deny all other applications for exemptions from 

14 C.F.R. Part 93, Subparts K and S, filed in this docket;

7. The authorities granted under these exemptions are subject to all of the other 

requirements delineated in 14 C.F.R. Part 93, Subparts K and S, including, but not limited 

to, the reporting provisions and use-or-lose requirements;

8. This docket will remain open until further order of the Department; and

9. We will serve this Order on all interested parties including MWAA and the FAA Slot 

Administration Office.

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document will be made available on the World Wide Web at:

http://www.regulations.gov/