\\DC - 036787/000001 - 3389312 v3 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

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\\DC - 036787/000001 - 3389312 v3 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. Page 2

\\DC - 036787/000001 - 3389312 v3 1. Southwest again2 argues 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. Page 3

\\DC - 036787/000001 - 3389312 v3 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.3 These 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. Page 4

\\DC - 036787/000001 - 3389312 v3 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. Page 5

\\DC - 036787/000001 - 3389312 v3 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. Page 6

\\DC - 036787/000001 - 3389312 v3 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),”6 such 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. Page 7

\\DC - 036787/000001 - 3389312 v3 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 analysisexplained 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. Page 8

\\DC - 036787/000001 - 3389312 v3 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. Page 9

\\DC - 036787/000001 - 3389312 v3 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.\\DC - 036787/000001 - 3389312 v3 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