Order 201 4

- 12

- 10 Served: December 15 , 201 4



### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 15 th day of December , 201 4

ORDER REALLOCATING WITHIN

- PERIME TER SLOT EXEMPTIONS AT RONALD REAGAN WASHINGTON NATIONAL AIRPORT

SUMMARY By this Order, the Department is reallocating two within

- perimeter slot exemptions at Ronald Reagan Washington National Airport (DCA) to Southwest Airlines Co. (Southwest) to operate one daily nonstop round trip to Kansas City International Airport ( MCI ) in Kansas City

, Missouri

.
BACKGROUND The Wendell H. Ford Aviation Invest ment and Reform Act for the 21 st Century, as amended by the Vision 100 Century of Aviation Reauthorization Act of 2003 (Vision 100) , directs the Department to grant slot exemptions at DCA, both within and beyon d the airport’s 1,250

- mile perimeter. These grants are limited in number, and selections of air carriers are made through application of specified statutory criteria. See 49 U.S.C. § 41718.

By Order 2012

- 3

- 8 (DOT March 13, 2012) , the Department issued two within

- perimeter slot exemptions to Republic Airline Inc. (Republic) pursuant to 49 U.S.C. § 41718(b) to provide

Applications of:

SOUTHWEST AIRLINES CO.; J ETBLUE AIRWAYS CORPORATION; US AIRWAYS INC. ; and PEOPLE EXPRESS AIRLINES, INC.

For exemptions from 14 C.F.R. Part 93, Subparts K and S, pursuant to 49 U.S.C. § 41718(b), Special rules for Ronald Reagan Washington National Airport (within

- perimeter slot exemptions) Docket DOT

- OST

- 2000

- 7182- 2

-

nonstop service between DCA and MCI. Republic provided the service under the brand of its then

- affiliate Frontier Airlines. On January 2 4, 2014, Republic informed the Department by letter that, due to the sale of Frontier, the service between DCA and MCI would be discontinued effective February 1, 2014 , and the slot exemptions returned for reallocation.

After receipt of the notice from Republic, the Department granted a request from Southwest Airlines for pendente lite authority to operate nonstop service between DCA and MCI

, using the two within

- perimeter slot exemptions authorized by 49 U.S.C. § 41718(b) and previously issued to Republ ic

, from February 1, 2014

, until such time as a final se lection decision is made in this reallocation proceeding and the selected carrier initiates service . As the Department stated in the Order Confirming Grant of Temporary Slot Exemption Authority

, Order 2014

- 1

- 6 (January 27, 2014), a grant of pendente lite authority is one of temporary character and is intended to minimize any inconvenience to travelers and to ensure that the slot exemptions are not idled pending the Department’s decision on longer term authority. The Department’s grant to Southwest of temporary authority to operate the slot exemptions between DCA and MCI does not give the carrier any benefit or advantage in the Department’s application of the stat utorily

- mandated criteria in this r eallocation proceeding. All applications receive full and fair comparative consideration of their merits under 49 U.S.C. § 41718(b).

On March 5, 2014 , the Department requested applications from air carriers using Stage 3 aircraft to provide service to DCA from airports that were designated as medium hub, small hub, or nonhub airports in 1997 1 within the 1,250

- mile perimeter established for civil operations at DCA under Title 49 U.S.C. § 49109.

The selection criteria applicable to granting slot exemptions are found in Title 49 U.S.C. § 41718(b), which directs the Secretary to distribute within

- perimeter slot exemptions in a manner that promotes air transportation: (1) by new entrant air carriers and limited incumbent air carriers; 2 (2) to communities without existing nonstop air transportation to DCA; (3) to small communities; (4) that will provide competitive nonstop air transportation on a monopoly nonstop route to DCA; or (5) that will produce the maximum competitive benefits, i ncluding low fares. As the Department explained in Order 2012

- 7

- 26 ( July 24, 2012), each case is unique and the Department has the discretion to premise an award of within

- perimeter slot exemptions on the satisfaction of less than the greatest number of

c riteria, or even one criterion, listed in Section 41718(b), based upon the Department’s analysis of the relative merits of each carrier’s proposal when evaluated under these criteria and the fact and circumstances of the case at hand

. With respect to airport size, Title 49 U.S.C. § 41718(c)(3) specifies additional requirements governing the grant of within

- perimeter slot exemptions, requiring that “[o]f the exemptions granted under 49 U.S.C. § 41718: (A) without regard to the criteria contained in sub section

1 Definitions of nonhub, small hub, and medium hub airports are provided under Title 49 U.S.C. § § 41714(h)(7), (8), and (9), which require that hub classifications be based on the Federal Aviation Administration’s Primary Airport Enplanement Activity Summar y for Calendar Year 1997. 2 A new entrant carrier or limited incumbent carrier is an air carrier that holds or operates fewer than 40 slots or slot exemptions at DCA. See 49 U.S.C. § § 41714(h)(3) and (5), as amended by the FAA Modernization and Reform Act of 2012, Pub. L. No. 112

- 95, 126 Stat. 11 (Feb. 14, 2012).- 3

-

(b)(1), six shall be for air transportation to small hub airports and nonhub airports; (B) ten shall be for air transportation to medium hub and smaller airports; and (C) four shall be for air transportation to airports without regard to their size .” Under this provision, then, a maximum of four slot exemptions may be used to serve large hubs. Currently, all large hub opportunities have been allocated, as have the six exemptions specifically for small and nonhub airports. Therefore, to be eligibl e for an award under this proceeding, carriers must have propose d service with Stage 3 aircraft to a medium hub or smaller airport within the 1,250

- mile perimeter.

APPLICATIONS As summarized below, the Department received applications from Southwest, JetB lue Airways Corporation (JetBlue)

, American Airlines, Inc. (American) , and People Express Airlines, Inc. (People Express)

. The entire public record for this proceeding, including applications and responses , may be accessed online through the Federal Docket Management System at www.regulations.gov by performing a search for docket number DOT

- OST

- 2000

- 7182.

Southwest : Washington DCA

- Kansas City, Missouri 3 Southwes t applied for the two available within

- perimeter DCA slot exemptions for service between DCA and MCI

. Southwest proposes to operate the route with a 143

- seat Boeing 737

- 700 aircraft. Southwest asserts that it s proposed service would advance the statutory goals of Vision 100 by providing low

- fare competition on what would otherwise be a monopoly route, significantly increasing capacity on an underserved route, and providing continuing one

- stop, same

- plane service to Oakland, Californi a

. Currently, aside from Southwest’s service provided on a pendente lite basis, American provides the only other nonstop service between DCA and MCI

. Southwest contends that the
average American one

- way nonstop fare between DCA and MCI is $188 , or about 28 percent higher than the average Southwest DCA

- MCI fare

. Southwest also asserts that

, by utilizing 143

- seat Boeing 737

- 700 aircraft, it would provide almost 50 percent of the seats in the market with just one daily roundtrip flight.

JetBlue : Washingto n DCA

- Jacksonville, Florida 4 JetBlue applied for the two available within

- perimeter DCA slot exemptions for service between DCA and the Jacksonville International Airport in Jacksonville, Florida (JAX). JetBlue would operate the route with a 100

- seat Embraer E

- 190 aircraft

. JetBlue claims that the DCA

- JAX market is currently underserved and s uffers as a result of American’s monopoly in the market

. American currently operates the route with a mixture of 50 to 80

- seat jet s

. 5 JetBlue point s to previous competition on the route by Delta Air Lines, a legacy carrier, which served to reduce fares and increase traffic. JetBlue claims that it would provide the maximum consumer benefits through increased service and lower fares. JetBlue
asserts t hat its proposed one

- way average fare of $110 would be 41 percent lower than the current American one

- way fare of $185 , resulting in $14.8 million in annual fare savings

.

3 Application of Southwest Airlines Co. , DOT

- OST

- 2000

- 7182

- 19 89

, March 25, 2014

. 4 Application of JetBlue Airways Corporation, DOT

- OST

- 2000

- 7182

- 19 91

, March 25, 2014

. 5 According to September, 2014 published schedules (including weekend operations )

.- 4

-

American : Washington DCA

- Islip, NY 6 American applied for the two available within

- perimeter DCA slot exemptions for service between DCA and the Long Island MacArthur Airport in Islip, New York (ISP)

. American would operate the route with a Bombardier CRJ

- 200 aircraft with 50 passenger seats. 7 American contends that its applica tion presents the Department with an opportunity to maintain air service to a small community that would otherwise lose it. 8 American asserts that the service generated approximately 4 0 passengers per

- day, each

- way. American states that

, without DCA serv ice at ISP, Long Island residents seeking air transportation to DCA

w ould be required to drive to LaGuardia or John. F. Kennedy airports.

People Express: Washington DCA

- Myrtle Beach, SC and West Palm Beach, FL 9 People Express filed an application to serve, on a seasonal basis, Myrtle Beach, S outh Carolina (April

- October) and West Palm Beach, F lorida (October

- April). People E xpress asserted that it is a proposed new entrant carrier that plans to begin scheduled operations throughout the northeast util izing Boeing 737

- 400 aircraft

. Summary of Comments

Answer of Southwest 10 Southwest contends that it should be chosen over both JetBlue and American , claiming its proposed service would generate the greatest consumer benefits by serving the largest market with the largest aircraft. Southwest argues that the DCA

- MCI origin and destination market is 29 percent larger than the DCA

- JAX market, and the metropolitan population of Kansas City is 60 percent larger than that of Jacksonville. In addition, Southwest asserts that it would utilize an aircraft with 43 percent more seats than would JetBlue. Southwest also
argues that the Kansas City market is far more underserved than Jacksonville, w hich

, despite its smaller size, has 90 percent more daily seats to DCA than Kansas City would have without Southwest’s service

. Southwest also argues that American’s application for Islip, NY, service should not be selected as American proposes to use t he slot exemptions inefficiently with small aircraft. Additionally , Southwest claims that American

, as the largest slot

- holder at DCA, could ch o ose to operate the service from its existing slot portfolio. Southwest further contends that its service would carry over 74,000 more annual passengers than would American’s proposed service.

6 Application of American Airlines, Inc. for an Exemption (Washington, DC Reagan National Airport

- Islip, Long Island MacArthur Airport, New York) , DOT

- OST

- 2000

- 7182

- 1990

, March 25, 2014

. 7 American no tes that the flight would ultimately be operated by its regional affiliate American Eagle . In the interim, before the final integration of American and US Airways, the flight will be branded as either US Airways Express or American Eagle.
8 US Airways beg an service the route in March, 2012 , however, the carrier ceased service on the route in July, 2014.
9 Application of People Express Airlines, Inc. (Operated as PEOPLExpress by Vision Airlines), DOT

- OST

2000

- 7182

- 1988, March 18, 2014.
10 Answer of Southwest Airlines Co., DOT

- OST

- 2000

- 7182

- 19 93

, April 3, 2014

.- 5

-

Consolidated Answer of JetBlue 11 With regard to American’s application, JetBlue argues that the Department should not award additional exemptions to the already dominant carrier at DCA. JetBlue states that such an award would serve to reduce competition at DCA and would be contrary to the Congressional intent of the slot exemption statute.

JetBlue also claims its proposal is superior to Southwest ’s in that JetBlue would best promote competition at DCA, provide the greatest consumer benefits, and the most government savings , due to the significant level of government and military travel in the market

. JetBlue argues that Southwest no longer has th e impact on fares that it once did . Additionally, JetBlue claims that its DCA service competes directly with the dominant carrier, American, 96 percent of the time, while Southwest competes against American on only 33 percent of its DCA routes . JetBlue a lso claims its service would stimulate 33, 259 more annual passengers and provide $8.4 million more in annual consumer savings tha n Southwest.

Consolidated Comments of American Airlines 12 American argues that

, of the applications in this proceeding, it best meets the statutory criteria in the slot exemption statute. American claims that it meets three out of the four applicable criteria. 13 American contends that Islip would otherwise los e its only nonstop DCA service, that Islip is a small community based on the fact that it is a small

- hub airport, and that American’s application w ould provide the greatest consumer benefits.

In support of its application, American argues that the Department has sought to maint ain air service to small communities, particularly from DCA. American also claims that residents of Long Island strongly supported their direct DCA service prior to its termination by American, consistently choosing ISP over the longer drive to LaGuardia or John F. Kennedy airports. American also asserts that both MCI and JAX have existing DCA service and that ISP is the only community in the proceeding that w ould be left without DCA access unless awarded these exemptions

. American argues that both Kansa s City and Jacksonville have significantly more existing service than Islip and further argues that Southwest has mischaracterized its DCA

- MCI fares and that JetBlue overstates its passenger stimulation estimates.

Sur

- Reply of JetBlue 14 JetBlue filed additi onal comments seeking to rebut Southwest’s claims. JetBlue argues that Southwest failed to take into account savings to existing customers when it calculated consumer savings. JetBlue further contends that Southwest no longer demonstrates the level of market competition that it once did, and that JetBlue now has a larger impact on fares than

11 Consolidated Answer of JetBlue Airways Corporation, DOT

- OST

- 2000

- 7182

- 1994, April 3, 2014.
12 Consolidated Comments of American Airlines, Inc., DOT

- OST

- 2000

- 7182

- 1992, April 3, 2014. 13 American argues that the first criterion, new entrants or limited incumbents, is not relevant as none of the carriers in the proceeding meet this criterion.
14 Motion for Leave to File Unauthorized Pleading and Consolidated Sur

- Reply of JetBlue Airways Cor poration , DOT

- OST

- 2000

- 7182

- 2000, April 14, 2014.- 6

-

Southwest. Finally, JetBlue argues that

, while it proposes to commence service with a 100

- seat aircraft, it can upgrade the aircraft should demand warrant.

Co ntingent Answer of Southwest Airlines 15 Southwest filed additional comments taking issue with JetBlue’s fare statistics in previous filings. Southwest claims that JetBlue selectively presented fare comparisons in an attempt to show that Southwest has raise d fares faster than other carriers. Southwest claims, however, that JetBlue has raised fares more than any other carrier since 2010. Southwest also states that it competes vigorously against American across its network.

Additional Comments of American Airlines 16 American filed additional comments specifically to rebut a claim by JetBlue that an award to American of these slot exemptions would be barred by the settlement agreement in the American

- US Airways merger. 17 American states that its settlement ag reement does not prohibit it from obtaining new regional slot capacity at DCA.

Comment of the Southwest Airlines Pilots ’ Association 18 The Southwest Airlines Pilots’ Association (SWAPA) filed comments in support of Southwest’s application. SWAPA questions American’s use of small, regional jet aircraft at slot

- constrained airports, arguing that American could upgauge some of its existing services, thereby freeing up other slots to serv e ISP. SWAPA makes a similar argument regarding JetBlue’s proposal to us e 100

- seat aircraft in DCA

- JAX market. The association further contended that Southwest’s application to compete with American on the DCA

- MCI route would provide the most benefit to the traveling public.

DECISION As a threshold matter, the Department has determined that People Express is not eligible to seek slot exemptions in this proceeding , as the company is not an air carrier. At the time of its application, People Express was seeking a Certificate of Public Convenience and Necessity to operate in terstate schedule d air transportation, but, within weeks of applying for slot exemptions in this proceeding , the company withdrew its application to become a certificated air carrier

. 19 In prior slot exemption decisions, the Department ha s declined to
gran t slot exemptions to entities that have been found fit to engage in interstate scheduled air transportation, but have not yet received air carrier certificates from the Federal Aviation Administration (FAA). 20 In this case, People Express lacks both the DO T certificate and the

15 Contingent Answer of Southwest Airlines Co. and Motion for Leave to File , DOT

- OST

- 2000

- 7182, April 16, 2014. 16 Motion for Leave to File an Otherwise Unauthorized Document and Additional Comments of American Airlines, Inc. , DOT

- OST

- 2000

- 7182

- 1999, April 7, 2014.
17 See Consolidated Answer of JetBlue at 6

- 7. 18 Comments of the Southwest Airlines Pilots' Association , DOT

- OST

- 2000

- 7182

- 1996, April 3, 2014. 19 O n May 20, 2014, counsel for People Express noti fied the Department that People Express wished to withdraw its application for a Certificate of Public Convenience and Necessity to operate interstate scheduled air transportation (DOT

- OST

- 2012

- 0042

- 0015). On May 23, 2014, the Department issued Order 2014

- 5

- 12 dismissing People Express’s application.
20 See Order 2004

- 4

- 2, OST

- 2000

- 7182 (April 1, 2004); Order 98

- 4

- 22, OST

- 97

- 3087 (April 21, 1998).- 7

-

FAA certificate and is not currently seeking authority to operate. Accordingly, we will not consider the merits of People Express’s application.

The Department ha s evaluated the eligible applications from Southwest, JetBlue, and Ame rican under the standard the Department reaffirmed in Order Reallocating Within

Perimeter Slot Exemptions at Ronald Reagan Washington National Airport , Order 2012

- 7

- 26 (DOT July 24, 2012)

, where we stated that the Department may grant within

- perimeter slot exemptions to a n air carrier satisfying the greatest number of criteria, less than the greatest number of criteria, or even one criterion listed in Section 41718(b), based upon the Department’s analysis of the relative merits of each carrier’s proposal wh en evaluated under the Section 41718(b) criteria. The Department ha s also carefully reviewed our prior within

perimeter slot exemption decisions.

After reviewing the record

, the Department ha s determined to award these two slot exemptions to Southwest for service to MCI because, based on the Department’s analysis and judgment in this proceeding, its application best meets the objectives of the slot exemption
statute. The reasoning to support t his decision is set out below.

In this proceeding, each applicant proposes service to a medium hub or smaller airport within the 1,250

- mile DCA perimeter using Stage 3 aircraft, and each application is therefore responsive to the solicitation. While ea ch eligible application has merit, based on the eligible applications received, and under the Department’s analysis of the relative merits of each air carrier’s proposal when evaluated under the Section 41718(b) criteria, the Department is persuaded that w e should allocate these slot exemptions to Southwest for service to MCI. In analyzing the applications, the Department has concluded that the criterion set forth in Section 41718(b)(5)

– promoting service that produces maximum competitive benefits, includ ing low fares

– carries the most weight in this proceeding and that Southwest’s application best satisfies this criterion.

In evaluating the relative merits of the eligible applications submitted in this proceeding under the remaining Section 41718(b) c riteria, the Department has conclude d that none of the air carriers satisfy Section 41718(b)(1), as they all operate more than 40 slots and slot exemptions at DCA. 21

American’s application satisfies the Section 41718(b)(2) criterion, promoting service to communities without existing nonstop transportation to DCA. While at the time of its application

, American provided service between DCA and ISP, it recently terminated this service in July, 2014. The other communities in question, Kansas City and Jackso nville, both have existing service to DCA from American.

With respect to the Section 41718(b)(3) criterion, w e find that none of the applicants in this proceeding would offer service to a small community. All of the communities in question have populatio ns well in excess of one million people. As we have held previously, we

21 American operates 519 slots and slot exemptions, Southwest operates 92 and JetBlue operates 62. For the definition of limited incumbent carrier, s ee foot note 2.- 8

-

generally would not consider a community of well over one million people to meet the small community criterion. 22

W ith respect to the Section 41718(b)(4) criterion, we find that Southwest satisfies the criterion of providing competitive nonstop air transportation on a monopoly route

. Southwest proposes nonstop service from MCI , competing with American ’s MCI

- DCA monopoly service . At the time of its application, JetB lue ’s proposed JAX service would have compet ed with American ’ s monopoly service to Jacksonville

. On August 14, 2014, JetBlue announced it would serve Jacksonville twice

- daily using slots from its existing holdings, with service beginning in December

, 2014

. In a subsequent letter to the Department, JetBlue stated that a grant of slot exemptions in this proceeding would allow the carrier to introduce a third daily non

- stop flight to JAX. While this factor does not negatively affect the Department’s analysis of their application , a s stated above, we find that, in this case, the Section 41718(b)(5) criterion carries the most weight.

In comparing the merits of the applications under the Section 41718(b)(5) criterion, we find that both Southwest and JetBlue would likely offer low

- fare service. Both carriers have affirmatively asserted their intention to offer low fares in their applications and have well

established records of providing competitive, low

- fare service upon entering markets. In
contras t, while American argued that it would offer a range of fares, including discount fares, American is not considered to be a low

- fare carrier. In addition, American proposes to operate the DCA

- ISP route with 50

- seat CRJ

- 200 aircraft. This is the smallest proposed aircraft in this proceeding and would not utilize the limited available capacity at DCA as efficiently as the Southwest or JetBlue proposals that would use 143

- seat and 100

- seat aircraft respectively. Given these factors, we do not believe the me rits of American’s application with respect to Section 41718(b)(5) reach those of either Southwest’s or JetBlue’s applications.

Having made this determination, a comparative analysis was conducted of the Southwest and JetBlue applications under Section 41 718(b)(5). In comparing the applications, we examined the patterns of air service between DCA and Kansas City, and DCA and Jacksonville, including the average fares in each market. This examination revealed that both Southwest and JetBlue offer significa nt fare discounts relative to their competitors on a system

- wide basis

, at 19 percent and 24 percent respectively. 23 However, in markets they serve from DCA, additional analysis found that both carriers offer a similar 20 percent discount compared to their competitors.

Given the similar fare levels exhibited by each carrier at DCA, we had to look to other differentiating factors. First, Southwest proposes to use an aircraft with 43 more seats than does JetBlue. Given the constrained nature of operation s at DCA, we find that Southwest would use the limited resources that are these slot exemptions more efficiently.

22 See Order 2004

- 12

- 6, December 6, 2004, where the Department held that Fort Lauderdale, F lorida , with a population over one million, does not qualify as a small community.
23 The Department used a statistical process to control for varying market sizes and stage lengths when calculating fare premium/discount.- 9

-

Moreover, Kansas City is a much larger market than Jacksonville, providing for a larger pool of potential passengers. According to the U.S . Census Bureau, the Kansas City Metropolitan Statistical Area (MSA) is home to 2,054,473 people, while Jacksonville is home to 1,394,624 people. 24 When examining current schedules

, we also found that there is less nonstop air service between DCA and Kansa s City than between DCA and Jacksonville

, even though Kansas City is the larger market . The DCA

- MCI market has 1,432 weekly nonstop seats while the DCA

- JAX market has 2,201 weekly nonstop seats. 25

MCI also offers more online connecting opportunities for passengers than does JAX. According to September, 2014 published schedules, the only connecting service offered by JetBlue at JAX is to San Juan, Puerto Rico, which JetBlue already serves directly from DCA. 26 On the other hand, Southwest offers connecting service from MCI to at least ten beyond destinations

, including Denver, Phoenix, Los Angeles, Seattle , and others.

While JetBlue’s application has merit, we find that Southwest’s application will likely
pro duce greater consumer benefits for a large r pool of passengers in a market w ith less DCA service than would JetBlue’s Jacksonville service. The proposals from both Southwest and JetBlue would bring competition to their respective proposed markets, but we conclude that the maximum competitive benefits will be realized by the award of these two slot exempti on s to Southwest for service to MCI

.
Conditions

Start

- up: Southwest is required to inaugurate full service under the terms of this Order by no later than March 15, 2015

. If, for any reason, Southwest is not able to use the slot exemptions granted

, we request that it notify the Department as soon as possible, but no later than 10 days after the service date of this Order.

Assignment of Slot Times: So uthwest is directed to file in the Docket, no later than 10 business days from the date of this Order, its proposed flight schedule.

Section 414(b) of the FAA Modernization and Reform Act of 2012 27 allows the Department to assign two add itional slot exemp tions per one

- hour period, an increase from the three per hour authorized in Vision 100 (for a total of five)

. 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. Applican ts were advised of these slot

- time constraints. In coordination with FAA’s Slot Administration Office, the Department shall assign slot times corresponding with the

24 U.S. Census Bureau Annual Estimates of the Resident Population: July 1, 2013

- United States Metropolitan and Micropolitan Statistical Areas ; and for Puerto Rico. 25 September, 2014 published schedules (excluding Southwest’s DCA

- MCI pendente lite service). All figures
are one way. 26 JetBlue also serves New York

- John F. Kennedy and Boston from Jacksonville, but these are unrealistic connecting options for DCA

- originating travelers.
27 Public Law No. 112

- 95.- 10

-

authority granted in this proceeding, and in accordance with the requirements of the FAA M odernization and Reform Act of 2012, in a notice subsequent to this decision.

Environmental Issues: Although 49 U.S.C. § 41718(e) specifically exempts the action here from review under the National Environmental Policy Act, 28 the Department remain s sensitive to the environmental impact of increased operations at DCA. Consistent with the statute, all operations authorized by this Order will be required to 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. § 41714(j), an awardee may not sell, trade, transfer, or convey the operating authorities granted by the subject exemptions, except through an air carrier merger or acquisition.

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. An awardee must still meet all the requirem ents 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. 25 (a).

ACCORDINGLY,

1. The Department reallocate s the two slot exemptions to Southwest Airlines Co. for service
to Kansas City International Airport (MCI) in Kansas City, Missouri ;
2. The Department directs Southwest to file in Docket OST

- 2000

- 7182 no later than 10 business days a fter the service date of this Order its proposed flight schedule and effective date for operations authorized by this Order. 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. The air carrier is advised to exercis e 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 within

- perimeter slot exemptions in a separate notice, as soon as possible. The Department directs Southwest 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;

28 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 significant ly affecting the quality of the human environment."- 11

-

4. The Department prohibits S outhwest 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;

6. Except as otherwise granted, the Department den ies 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. The Department 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 is available online at www.regulations.gov