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BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Applications of

FRONTIER AIRLINES, INC.

AIR CANADA

ALASKA AIRLINES, INC.

JETBLUE AIRWAYS CORPORATION

SUN COUNTRY AIRLINES

SOUTHWEST AIRLINES CO.

VIRGIN AMERICA INC.

For “beyond-perimeter” slot exemptions at

Ronald Reagan Washington National Airport

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Docket DOT-OST-2012-0029

MOTION FOR LEAVE TO FILE AND

RESPONSE OF FRONTIER AIRLINES, INC.

TO UNAUTHORIZED FILING BY SOUTHWEST AIRLINES CO.

Communications with respect to this document should be addressed to:

Daniel Shurz

Senior Vice President, Commercial

FRONTIER AIRLINES, INC.

Frontier Center One

7001 Tower Road

Denver, CO 80249

Robert E. Cohn

Patrick R. Rizzi

HOGAN LOVELLS US LLP

Columbia Square

555 Thirteenth Street, NW

Washington, DC 20004

+1 202 637 4999/5659

robert.cohn@hoganlovells.com

patrick.rizzi@hoganlovells.com

Counsel for

FRONTIER AIRLINES, INC.

April 5, 2012
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BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Applications of

FRONTIER AIRLINES, INC.

AIR CANADA

ALASKA AIRLINES, INC.

JETBLUE AIRWAYS CORPORATION

SUN COUNTRY AIRLINES

SOUTHWEST AIRLINES CO.

VIRGIN AMERICA INC.

For “beyond-perimeter” slot exemptions at

Ronald Reagan Washington National Airport

)

)

)

)

)

)

)

)

)

)

)

)

)

Docket DOT-OST-2012-0029

April 5, 2012

MOTION FOR LEAVE TO FILE AND

RESPONSE OF FRONTIER AIRLINES, INC.

TO UNAUTHORIZED FILING BY SOUTHWEST AIRLINES CO.

The Department “establish[ed] an expedited schedule for the application

process”, which did not provide for any reply comments because Congress mandated a

decision within 90 days of enactment of the FAA Act of 2012. Despite that clear

directive, which Frontier respects, Southwest has filed an unauthorized “Limited

Response” with a motion for leave to file. If the Department grants Southwest’s motion

and accepts Southwest’s unauthorized filing, Frontier hereby requests leave to file this

brief response to address the three points aimed at Frontier.1

1

Frontier requests leave to file this response. If Southwest’s Response is accepted by the Department, it is

only fair to give Frontier the opportunity to respond to Southwest’s incorrect assertions. Frontier’s brief Response

will ensure that the Department has an accurate and complete record before it and does not base its decision in this

proceeding on misinformation.
Motion and Response of Frontier Airlines, Inc.

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1. Southwest again2argues that the Department should disregard

Southwest’s huge presence in the Washington D.C. region, including the fact that it

dominates nearby BWI with over 72% of all domestic enplanements. With such a large

presence in the Washington region, an award of any additional slot exemptions to

Southwest would only serve to strengthen its already powerful position at WAS and

would not produce the level of competition-maximizing benefits that would result from

an award to Frontier. Although it is understandable why Southwest would seek to keep

data about the Washington, D.C. metropolitan area from consideration, given that

Southwest is 2,856% larger than Frontier in WAS and that Austin will have five

nonstop flights from WAS this summer, such data are highly relevant and entirely

appropriate for the Department to consider.

First, Southwest talks out of both sides of its mouth. On the one hand, it argues

that BWI is not a competitive alternative for travelers to the Nation’s Capital, and that its

massive presence in the greater Washington, D.C. metropolitan area (including DCA,

IAD, and BWI) should be disregarded, while on the other hand it criticizes other

applicants’ proposals based on existing services at nearby IAD. Southwest cannot

have it both ways. Just as IAD service and traffic data are relevant to the issues in this

case (as Southwest readily concedes), so too are BWI service and traffic data.

Anyone with even superficial knowledge of the Washington, D.C. metropolitan

area and a map understands that many passengers to/from the Nation’s Capital, who

live in relatively equal proximity to DCA, BWI, and IAD, use those airports

2

Southwest had previously made this point in its Consolidated Answer (at 12), and thus there is no legitimate

basis for its re-raising the issue in an unauthorized reply.
Motion and Response of Frontier Airlines, Inc.

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interchangeably. And, even assuming a central location for work/home/tourism is

Capital Hill, BWI is only 32.9 miles from the U.S. Capitol Building and IAD is only 27.3

miles.3These are hardly long distances, particularly given the extensive public and

private transportation options from the two airports to downtown D.C.

Southwest’s position is also inconsistent with its misguided argument that

Colorado Springs, which is located almost 90 miles from Denver is a viable substitute

for Denver International Airport (“Denver Int’l”). See, e.g., Exhibit WN-R-501; WN

Consolidated Answer at 12. As the Colorado Springs parties state:

“When the weather is good and traffic is not a factor, the drive from

downtown Colorado Springs to DEN takes approximately 90 minutes.

During rush hour, or when there is an accident along the way, the drive

time increases to as much as 2-3 hours overall. In winter and early spring,

the drive to DEN becomes even more unpredictable due to an increase in

accidents and road closures caused by frequent snow storms along

Colorado’s Front Range.”

Answer of City of Colorado and Colorado Springs Airport at 11.

If in Southwest’s myopic “world” BWI is not a reasonable alternative at 32.9 miles

from downtown D.C., it is disingenuous for Southwest to argue that DEN is a

reasonable alternative for Colorado Springs at 90 miles. In fact, the distance between

Denver Int’l and Colorado Springs is far more akin to the trip between Washington, D.C.

and Richmond, Virginia (about 107 miles), and certainly no one could plausibly claim

that Richmond is a reasonable alternative for Washington, D.C.

Southwest has it completely backwards. Denver Int’l is not a reasonable

substitute for Colorado Springs, but BWI and IAD are reasonable alternatives for DCA.

3 Mileages are based on mapquest – directions.
Motion and Response of Frontier Airlines, Inc.

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Second, notwithstanding what it self-servingly proclaims to the Department here,

Southwest tells its own customers a far different story about DCA/BWI/IAD, i.e., that

DCA, BWI and IAD are reasonable alternatives for service to Washington, D.C. For

example, the Southwest Route Map on its website emphasizes (in red and bold):

“These cities on the route map serve as alternative airport locations to the

following destinations:

. . .

 Washington, D.C. via Baltimore/Washington (BWI).”



Moreover, when a passenger books a flight on www.southwest.com and types in

“Wash” as the departure point, Southwest presents the following choices:

Washington (Reagan National), DC - DCA

Washington DC Area Airports -----------------

Washington (Dulles),DC – IAD

Baltimore/Washington, MD – BWI

And, if the passenger starts his or her inquiry from an airport without direct DCA service

on Southwest (e.g., Manchester, NH), when the destination of Washington, DC is typed

in, the passenger is presented with following showing that IAD and BWI are

interchangeable:

Washington DC Area Airports -----------------

Washington (Dulles),DC – IAD

Baltimore/Washington, MD – BWI

These examples demonstrate that even Southwest recognizes DCA, BWI, and IAD as

reasonable alternatives for its own passengers.

Third, if Washington National were the one-and-only airport alternative for

access to the Nation’s Capital, it is indeed curious that Southwest waited (i) ten years

(and nine DOT proceedings) before it participated in any proceeding for within-
Motion and Response of Frontier Airlines, Inc.

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perimeter DCA slot exemptions and (ii) more than eleven years and (five DOT

proceedings) before seeking any beyond-perimeter DCA slot exemptions. And when it

lost its bid to purchase DCA slots in the recent slot auction, it downplayed the

importance of the result, stating “it wasn’t a mandate. It wasn’t an imperative to

succeed in those markets, much less with our big four strategic initiatives we have

underway."4 What better explanation is there for their apparent minimization of the

importance of gaining DCA slots than the recognition that they already adequately

serve the Washington, D.C. region through their dominant market presence at BWI?5

Fourth, the Department has previously considered IAD and BWI data in

awarding DCA slot exemptions. In selecting US Airways for service to Sarasota,

Florida, the Department concluded:

Next, in comparing the existing patterns of service available between each

community and the Washington, D.C. vicinity, we find that Savannah

already received three nonstop a day to the Washington area (Dulles) with

a total of 150 nonstop seats per day each way, versus

Sarasota/Bradenton, which has only one nonstop with 117 nonstop seats

per day each way to the Washington area (BWI). Thus, while each

applicant is proposing the first nonstop service from DCA, the Savannah

market today has better access to the greater Washington region, by

virtue of more service and greater capacity, at airports other than

DCA. Thus, the margin of public benefits created by an award of

additional service favors Sarasota/Bradenton.” (DOT Order 2006-6-17, at

8; emphasis added.)

Fifth, Southwest’s reliance on the Delta-US Airways decisions to support its

position that BWI and IAD are not alternatives for DCA is misplaced. WN

4

See Airline Biz Blog, The Dallas Morning News, Terry Maxon, December 5, 2011, @

http://aviationblog.dallasnews.com/archives/2011/12/

5

See Airline Biz Blog, The Dallas Morning News, Terry Maxon, December 5, 2011, @

http://aviationblog.dallasnews.com/archives/2011/12/
Motion and Response of Frontier Airlines, Inc.

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Motion/Response at 3. Those determinations were in the context of a slot exchange of

only within-perimeter slots to address remedies it found were necessary to resolve

reduced competition directly at DCA. It did not deal with route-specific applications

among competing carriers vying for a handful of beyond-perimeter slot exemptions.

And, even in that entirely distinguishable context, the Department of Justice noted that

the “other [area] airports may be acceptable substitutes for some passengers

(particularly price-sensitive passengers),”6such as Southwest’s DCA–AUS passengers

which it claims will be more leisure, lower-fare passengers than it serves on its nonstop

BWI–AUS flights. Exhibit WN-200 at 3.

2. Southwest challenges Frontier’s criticism of Southwest’s unrealistic

benefits forecast. That forecast is in large part premised on an unrealistically low

average fare of $169 for DCA-AUS. As Southwest has evolved into the dominant

legacy airline it has become, its prior history of offering low fares particularly in

uncompetitive and/or monopoly markets is belied by reality. DCA-AUS would be a

monopoly Southwest market. In other monopoly markets of similar stage lengths

Southwest charges fares significantly higher than $169. Southwest’s current average

fare between BWI and Austin is $214 (net) and $251 (total), 26.7% higher on a net

basis and 49% higher on a total basis than the illusory average fare that Southwest

projects and upon which it bases its benefits forecast. Exhibit F9-A-4. And, as Virgin

America pointed out, when Southwest’s fares in markets of similar stage length where it

has a competitive advantage are examined, those fares “are significantly higher” than

6 Comments of U.S. Department of Justice [Public Version], at 16 (March 24, 2010, Docket FAA-2010-0109).
Motion and Response of Frontier Airlines, Inc.

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the projected $169 fare Southwest used in its forecast and application. VX

Consolidated Comments, at 29 (comparing HOU-ONT (1,341 miles) - $229 average

fare and HOU-SNA (1,352 miles) - $218 average fare with DCA-AUS (1,315 miles) -

$169 estimated); see also BWI-AUS (1,342 miles) - $214 average fare. There are

myriad other examples showing the fallacy of Southwest’s estimated average fare of

$169, as shown in the table below:

Market Haul WN Proposed Fare Paid Avg Fare YE3Q11 Direct Competition

MDWSLC 1258 $194 N

LASLIT 1294 $191 N

MSYPHX 1301 $191 N

HOUSAN 1312 $192 N

AUSDCA 1315 $169 - N

HOUPHL 1335 $182 N

AUSBWI 1342 $213 N

Southwest also argues that Frontier relied on a flawed analysis presented by US

Airways in Docket DOT-OST-2000-7182. WN Motion/Response at 3. Southwest’s

rebuttal falls short. For example, Southwest asserts that the use of LIT-PHX as a “new

route” is incorrect because the stimulation “was measured at least 14 years after

Southwest had initiated service.” WN Motion/Response at 3. But, Southwest

conveniently ignores the fact that Southwest stopped serving that route for nearly a

year (September 2008-July 2009), and thus the “new route” stimulation measured

between 2009 and the YE Q1 2011 was entirely appropriate. In any event, the analysis

explained by Frontier in its Answer and in US Airways’ Answer (in Docket DOT-OST2000-7182) speaks for itself.
Motion and Response of Frontier Airlines, Inc.

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3. Finally, Southwest takes issue with Frontier’s assertion that Frontier will

provide more capacity than Southwest. However, basic math confirms Frontier’s claim

to be correct. Frontier would begin service with its 168-seat Airbus 320, whereas

Southwest states that it would begin service with a much smaller 137-seat Boeing 737.

Thus, Frontier would offer 23% more capacity than Southwest. Contrary to Southwest’s

argument, Frontier acknowledged in its Consolidated Answer that Southwest said it

would use a 175-seat aircraft later in the year:

Frontier would also provide more capacity than Southwest. Frontier would

commence service using its largest aircraft, the 168-seat A-320.

Southwest states that it will begin service with 137-seat B737-700 aircraft

(although it claims that it will switch to a B737-800 aircraft at the end of

the year). Frontier’s A-320 aircraft will offer 23% more annual nonstop

capacity than Southwest’s B737-700 aircraft. Exhibit F9-A-5. And,

Frontier’s A-320 mainline aircraft has more passenger amenities than

Southwest’s, with personal TVs at each seat and substantial STRETCH

seating. Southwest offers none of these amenities on its B-737-700 and

B-737-800 aircraft. This is yet another distinct consumer benefit of

Frontier’s proposed service over Southwest’s, particularly given the stage

length of these beyond-perimeter flights and the ongoing single-plane

service to San Diego. (F9 Consolidated Answer at 15-16.)

There is no escaping the fact, however, that on day-one and for some significant period

of time, Frontier would offer 23% more capacity than Southwest.
Motion and Response of Frontier Airlines, Inc.

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CONCLUSION.

For the reasons stated above, in its Application, and its Consolidated Answer,

the Department should award two of the beyond-perimeter slot exemptions to Frontier

for daily nonstop roundtrip service between DCA and Colorado Springs.

Respectfully submitted,

______________________________________

Robert E. Cohn

Patrick R. Rizzi

HOGAN LOVELLS US LLP

555 Thirteenth Street, NW

Washington, DC 20004

+1 202 637 4999/5659

Counsel for

FRONTIER AIRLINES, INC.
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CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing Motion and Reply of

Frontier Airlines, Inc. has been served this 5th day of April 2012, upon each of the

following addressees:

bob.kneisley@wnco.com; megan.lawrence@alaskaair.com; marshall.sinick@squiresanders.com;

anita.mosner@hklaw.com; jhill@dowlohnes.com; john.fredericksen@suncountry.com;

john.varley@virginamerica.com; jegillick@zsrlaw.com; info@airlineinfo.com;

brian.ctr.meehan@faa.gov; Phil.Sunderland@mwaa.com; Leslie.Abbott@wnco.com;

Robert.Land@jetblue.com

Mayor Stephen Bach

Colorado Springs

sbach@springsgov.com

/s/ Patrick Rizzi

_____________________________

Patrick Rizzi