Francis C. Heil Senior Attorney Lega l

1101 17 th Street, NW Suite 600 Washington, DC 20036
202

- 496

- 5642 Office
202

- 496

- 5660 FAX francis.heil@aa.com November 20 , 2013

Mr. Marc L. Warren, Esq. Acting Chief Counsel

Federal Aviation Administration 800 Independence Avenue, S.W. Washington, D.C. 20591

Re: Request of American Airlines for a Waiver

Dear Mr. Warren:

American Airlines, Inc. (“American”) requests a waiver from certain restrictions in the LaGuardia Interim Order, 1 so that it can permanently transfer, via sale, 34 LaGuardia operating authorizations (“slots”). Spec ifically, American requests the FAA waive the prohibition on the sale of slots by permitting American to sell:

1. 10 LGA slots currently leased by Southwest Airlines (“Southwest”) 2 , and

2. 24 slots to a carrier approved by DOJ 3

The sale of the se 34 slots is required by the terms of a proposed final judgment (“PFJ”) announced by DOJ on November 12, 2013. Granting the waiver will allow the merger of American and US Airways to proceed pursuant to the PFJ, to the benefit of the traveling public.

T he LaGuardia Interim Order was issued in 2006 as a temporary bridge between the existing High Density Rule, 4 which expired at LaGuardia under the Wendell H. Ford

Aviation Investment and Reform Act for the 21 st Century 5 on January 1, 2007, and a new

final r ule that the FAA issued October 10, 2008. 6 Thus, the LaGuardia Interim Order was

1 71 Fed. Reg. 77854 (December 27, 2006), as amended; hereinafter, “LGA Interim Order”.

2 U nder the terms of the sale, American intends to transfer holder status of the slots to Southwest
and/or other DOJ

- approved airlines immediately upon receipt of the waiver sought in this letter and DOJ approval of the transfer under the PFJ. American will c ontinue to operate the slots for a transition period until the other airlines are prepared to start operating the slots in 2014.

3 DOJ has yet to decide which potential purchaser will be permitted to acquire the 24 slots subject to the proposed final judg ment. American will notify the FAA as soon it is aware who the approved purchaser(s) will be. In the interim, American respectfully submits that the FAA has all relevant information necessary to determine whether a waiver is in the public interest and ne eds the name(s) of the approved purchaser only for purposes of finalizing any waiver.

4 93 C.F.R. 221.

5 49 U.S.C. 41715(a)(2), enacted by Pub. Law no. 106

- 181, §231, 114 Stat. 61, 106

- 10 (2000).

6 73 Fed. Reg. 60574. rescinded at 74 Fed. Reg. 52132.2 initially scheduled to expire in the spring of 2009 7 and did not address the possibility of selling slots, instead permitting only the lease of slots, and then only through t he end of the LaGuardia Interim Order. It is important to note that both the High Density Rule and the pending rulemaking permitted the sale of slots, and there is no reason to believe that the FAA intended to restrict the sale of slots over the long

- term

. 8 The LaGuardia Interim Order has been extended without change several times, and the final rule initially contemplated by the LaGuardia Interim Order is unlikely to be issued in time to address American’s need to permanently relinquish its interest in t he 34 slots. 9

The FAA may grant waivers when they are consistent with the public interest and will provide an equivalent or greater level of safety. 10 As explained more fully below, we

believe a waiver from the LaGuardia Interim Order’s restriction on the sale of slots is warranted in this instance. Here, the FAA’s objective of safely and efficiently managing air traffic at LaGuardia is preserved, and the public policy goal of promoting competition in air commerce and improved service to the traveling pub lic is enhanced. The public benefits are significant.

The transfer of these slots is required under the terms of a proposed PFJ between DOJ, the States of Arizona, Florida, Tennessee, and Michigan, the Commonwealths of Pennsylvania and Virginia, the District of Columbia, American and US Airways, requiring

that American divest the 34 slots identified on Attachment A to this letter. See Proposed Final J. (Doc. 147

- 2), United States, et al. v. US Airways Group, Inc., et al. , D.D.C. No. 13

- 01236 (Nov. 12 , 2013) (“PFJ”) at 5

- 9 & Ex. B. The DOJ believes that this divestiture will “allow [LCCs and other carriers] to provide greatly expanded service on numerous routes, including new nonstop and connecting service to points throughout the country.”

7 The LaGuardia Interim Order was initially set to expire “on the first change of scheduling season occurring no less than 90 days after the issuance of a final rule regulating congestion at LaGuardia. 71 Fed. Reg. 77854, 77860. With the publication of th e since rescinded final rule, that date was set as April 1, 2009. On January 8 2009, the FAA extended the LaGuardia Interim rule to a date certain, namely October 24, 2009. 74 Fed. Reg. 845. The FAA has continued to extend The LaGuardia Interim Rule, wh ich is now set to expire October 24, 2014. 78 Fed. Reg. 28280.

8 American appreciates the apparent reasoning behind not permitting the sale of slots at the time the LaGuardia Interim Order was initially issued. At that time, the FAA had issued a notice of proposed rulemaking (71 Fed. Reg. 51630, August 29, 2006) that contemplated awarding slots based upon who operated the slots during the week of October 1

- 6, 2006

– a date that had already passed when the LaGuardia Interim Order was issued. Had the LaGuar dia Interim Order permitted the sale of slots and the contemplated final rule been issued as proposed, the sale of any slots under the LaGuardia Interim Order would effectively be undone by virtue of the final rule, raising significant concerns about wheth er the FAA had engaged in an unconstitutional taking.

9 A notice of proposed rulemaking has been pending review at the Office of Management and Budget since March 9, 2013 (http://reginfo.gov/public/do/eoReviewSearch).

10 The slot rules were adopted to imp rove efficiency and not for reasons of aviation safety. Thus, there is no need in this instance to demonstrate an equivalent or greater level of safety. In any case, it is clear that transferring slots from one scheduled air carrier to another, both of w hich are regulated under the same operational rules in 14 CFR part 121, will not have an adverse effect on safety.3 Competiti ve Impact Statement (Doc. 148), United States, et al. v. US Airways Group, Inc.,

et al. , D.D.C. No. 13

- 01236 (Nov. 12, 2013) (“CIS”) at 9.

For its part, Southwest will use 10 of these slots currently being used via a lease from

American to continue its c urrent service to and from LaGuardia. The acquirer(s) of the

other 24 slots will use them to introduce service to new destinations and add additional frequencies to current destinations served from LaGuardia.

By approving this waiver, the FAA will allow American to fulfill a requirement under the PFJ that will 1) settle the litigation between the DOJ and American; 2) permit American to emerge from Chapter 11 bankruptcy protection; and, 3) complete its planned merger with US Airways in the coming weeks. For those reasons, alone, a grant of the waiver to American is in the public interest. 11

American anticipates that the impact to the traveling public will be positive, as more passengers will be served with no increase in the number of aircraft serving t he airport. Excluding the slots currently being utilized by Southwest, the remaining slots are largely used by American to operate a mix of mainline and regional aircraft. By removing those regional aircraft and replacing them with larger mainline aircra ft, the average seats per departure will rise at LGA, which has long been a goal of the FAA. As the FAA has stated: “Promoting larger aircraft is the only means to increase passenger access to LGA. . . . [T]he increase in passenger throughput can be cons idered a measure of efficiency of the use of airspace....” 71 Fed. Reg. at 51367 (August 29, 2006). None of the other potential buyers operate regional jets and, absent an unanticipated change in business profile, they will replace American’s regional airc raft with larger aircraft that can carry more passengers. These larger aircraft do not pose any operational concerns at LaGuardia. The gates that American has agreed to make available will be capable of accommodating the aircraft, and the aircraft do not require any special handling by air traffic control that would require additional spacing or otherwise introduce delay at the airport beyond that experienced today.

Approving the waiver will also “create network opportunities for the purchasing carriers

t hat would otherwise have been out of reach for the foreseeable future. Those opportunities will provide increased incentives for those carriers to invest in new capacity and expand into additional markets. . . . In this way, the [waiver] will deliver ben efits to consumers that could not be obtained [otherwise].” CIS at 8; see also Remarks of Assistant Attorney Gen. Bill Baer (Nov. 12, 2013) (explaining that, as much as “Southwest’s entry into Newark Liberty airport after the United

- Continental merger . .

. benefitted consumers,” so too will the proposed final judgment, including the permanent transfer of LGA slots, “open up the marketplace” and “provide consumers with more choices and more competitive airfares”), available at http://www.justice.gov/iso/op a/atr/speeches/ 2013/at

- speech

- 131112.html.

11 DOT has also granted pendente lite an exemption to enable the airlines to close the merger.4 The requested waiver does not prejudice any long

- term FAA policy decisions relating to congestion management at LaGuardia. Transfer of the slots from American to

Southwest 12 and the other buyers identified by DOJ will give them the same rights that American currently has to operate the slots at LGA

– no more and no less. 13

A waiver is needed as soon as possible so that American can satisfy its obligations under

the terms of the consent decree. Since the waiver request is based on the terms of the consent decree, American has very little latitude in deciding to whom, and under what circumstances, to sell the slots. In addition, the public policy considerations have been well explored by all parties to the litiga tion, including DOJ. As such, American believes there is good cause to forgo a notice and comment period. While notice and comment will certainly delay the ability of American to satisfy the terms of the consent decree expeditiously, it is unlikely to c hange the conditions or parties that would benefit from the

waiver.

Likewise, waiting for DOJ to identify which other buyer(s) it is willing to accept as the holder of the remaining slots before granting the waiver introduces needless delay in finalizing the consent order. The FAA may rely on DOJ’s ultimate assessment of who the appropriate purchasers of the slots will be. The FAA may also assume that DOJ will ensure that the public policy objectives voiced by that agency will be fulfilled without

Ameri can identifying with specificity who those carriers are now. Ultimately, it will be DOJ, and not American, who will decide who is eligible to purchase the slots.

In conclusion, the waiver is well justified and in the public interest. American respectfull y urges the FAA to grant the requested relief as soon as possible, so that the parties can close their transaction and begin to implement the beneficial new services described

above.

Sincerely,

Francis C. Heil Senior Attorney

12 If Southwes t does not elect to buy the 10 slots currently on lease, the s lots will be offered to other
bidders.

13 The FAA ultimately decided against pursuing a “look

- back period” for assigning slots in the final rule issued October 10, 2007 (73 Fed. Reg. 60574), instead deciding to initially allocate slots using operating authority the week before the final rule was published. This approach eliminated the pote ntial constitutional problem that could arise with a sale of slots prior to the publication of a final
rule.5 Attachment A

Slots at LGA

The following 24 slots at LGA will be made available for sale or transfer:

Slot Number Slot Time Arrival or Departure Frequency

3189 630 D x67

2139 730 A x67

3236 830 A x67

2222 830 D x67

2033 1100 A x67

2008 1230 D x6

3594 1300 A x6

3671 1400 D x6

3258 1600 D x6

2032 1700 A x6

2166 1830 D x6

3826 2000 A x66 Slot Number Slot Time Arrival or Departure Frequency

3068 700 D x67

2147 800 A x67

2096 930 D x67

2075 1000 A x67

3784 1030 D x67

3841 1230 A x6

3380 1430 A x6

3282 1600 D x6

3080 1630 A x6

2230 1730 D x6

3013 1830 A x6

2111 1930 D x67 The following 10 slots at LGA will be offered for sale to Southwest Airlines (WN):

Slot Number Slot Time Arrival or Departure Frequency

3351 700 D x67

2101 1200 D x6

3335 1400 A x6

3422 1430 D x6

3665 1630 A x6

3314 1700 A x6

2215 1730 D x6

3045 1730 D x6

2120 2000 D x6

3312 2030 A x6