BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________

)

Application of )

)

VIRGIN AMERICA INC. )

) Docket No. OST-2012-0029

for four beyond-perimeter slot exemptions )

pursuant to 49 U.S.C. § 41718, as amended )

)

(Washington, D.C. (DCA) – San Francisco, CA )

(SFO)) )

)

CONSOLIDATED COMMENTS OF VIRGIN AMERICA INC. 

Communications with respect to this document should be sent to:

John Varley

Senior Vice President &

 General Counsel 

Virgin America Inc.

555 Airport Boulevard, Suite 500

Burlingame, CA 94010

(650) 762-7108

john.varley@virginamerica.com

John E. Gillick

Jonathon H. Foglia

Zuckert, Scoutt & Rasenberger L.L.P.

888 Seventeenth Street, N.W., Suite 700

Washington, D.C. 20006

Tel: (202) 973-7939

Fax: (202) 342-0683

jegillick@zsrlaw.com

jhfoglia@zsrlaw.com

Counsel for 

Virgin America Inc.

March 27, 2012
2

Table of Contents

I. INTRODUCTION....................................................................................................... 2

II. VIRGIN AMERICA’S PROPOSED DCA-SFO SERVICE BEST MEETS THE 

STANDARDS ESTABLISHED FOR THE GRANT OF NEW ENTRANT AND 

LIMITED INCUMBENT SLOT EXEMPTIONS AT DCA AND WILL MAXIMIZE 

CONSUMER BENEFITS ........................................................................................... 6

A. WAS-SFO Is By Far The Largest Market For Which Beyond-Perimeter Slot 

Exemptions Are Sought And Fully Supports The Allocation Of Four Exemptions 

To Virgin America With Which To Enhance Nonstop DCA Travel Options To 

And From SFO. ..................................................................................................... 7

B. Virgin America’s Twice Daily Nonstop DCA-SFO Service Will Have An 

Extremely Favorable Impact On Competition In The DCA-SFO Nonstop and 

Connecting Markets As Well As The WAS-SFO Market. ................................. 11

C. Virgin America’s DCA-SFO Service Will Produce Important Public Benefits To 

More Passengers Than Any Other Applicant...................................................... 17

D. Virgin America Will Offer Convenient Connections To Its DCA-SFO Nonstop 

Flights.................................................................................................................. 18

III. COMMENTS ON THE COMPETING PROPOSALS............................................. 19

A. Alaska’s Portland and San Diego Proposals ....................................................... 19

B. JetBlue’s San Juan and Austin Proposals............................................................ 23

C. Southwest’s Austin Proposal............................................................................... 27

D. Frontier’s Colorado Springs Proposal ................................................................. 32

E. Air Canada’s Vancouver Proposal ...................................................................... 34

F. Sun Country’s Las Vegas Proposal..................................................................... 37

IV. CONCLUSION ......................................................................................................... 39
BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________

)

Application of )

)

VIRGIN AMERICA INC. )

) Docket No. OST-2012-0029

for four beyond-perimeter slot exemptions )

pursuant to 49 U.S.C. § 41718, as amended )

)

(Washington, D.C. (DCA) – San Francisco, CA )

(SFO)) )

)

CONSOLIDATED COMMENTS OF VIRGIN AMERICA INC. 

In accordance with Order 2012-2-21, dated February 24, 2012, Virgin America Inc. 

(“Virgin America”), the only airline in this proceeding that does not operate a single flight 

at Ronald Reagan Washington National Airport (“DCA”), hereby submits the following 

comments on the six other applications filed in this docket for eight beyond-perimeter slot 

exemptions authorized at DCA under the FAA Modernization and Reform Act of 2012 

(“FAA 2012”), Pub L. No. 112-95, 126 Stat. 11 (Feb. 14, 2012). As we will demonstrate 

herein, Virgin America’s application, which seeks four of these slot exemptions to provide

twice-daily nonstop roundtrip service between DCA and San Francisco International 

Airport (“SFO”) (the largest metropolitan area in the United States with the greatest 

number of passengers that currently lacks nonstop DCA service), should be granted 

because it best meets the new allocation criteria set forth in FAA 2012 and yields the 

greatest public benefits.
2

I. INTRODUCTION

With the passage of FAA 2012, Congress significantly altered the basis upon which 

the Department can allocate beyond-perimeter slot exemptions to new entrants and limited 

incumbents at DCA. Although “domestic network benefits” are one of the criteria that 

may be considered, the Department is no longer required to allocate these slot exemptions 

on the basis of satisfying the domestic network benefits test, as was the case under AIR211 and Vision 100.

2

 Instead, Congress has, pursuant to FAA 2012, now provided the 

Department with an important opportunity to balance the prior awards with a focus on the 

needs of the local market, by adding the following three new criteria for allocating slot 

exemptions at DCA – (i) enhancement of options for nonstop travel to and from the 

beyond-perimeter airports that will be served, (ii) a positive impact on the overall level of 

competition in the markets that will be served and (iii) public benefits, including lower 

fares, higher capacity, and a variety of service options, in these markets. 3

Under the new set of selection criteria, Virgin America’s application for four 

beyond-perimeter slot exemptions to provide competitive, nonstop service in the DCASFO market is clearly superior to any of the other applications in this proceeding and 

would produce the greatest public benefits. The DCA-SFO market is the largest beyond-

 1 Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, Pub. L. No. 106-181, 114 

Stat. 198 (Apr. 5, 2000).

2 Vision 100 – Century of Aviation Reauthorization Act, Pub. L. No. 108-176, 117 Stat. 2599 (Dec. 12, 

2003).

3 As has been true in the prior DCA beyond-perimeter route proceedings, Congress did not provide any 

specific direction as to how the Department should weigh the various criteria set out in Section 41718 in 

conducting its carrier selection process. However, under AIR-21 and Vision 100, the Department 

required a showing of “domestic network benefits” determined by the Department to be the same as 

increased competition in multiple markets. See Order 2004-4-1 (Apr. 15, 2004) at 15 (“Carriers that can 

demonstrate domestic network benefits will logically be able to offer benefits in multiple markets.”) 

Since the prior twenty-four beyond-perimeter slot exemptions have been granted with an emphasis on 

domestic network benefits/service to multiple markets, those criteria should be given less weight in this 

proceeding, which affords the Department an important opportunity to address the critical lack of DCA 

nonstop service at some of the largest cities in the Western U.S. 
3

perimeter, nonstop DCA market currently without service, and the DCA/IAD (“WAS”)-

SFO market is the largest market at issue in this proceeding. And, as discussed herein, 

when the sizes of the proposed markets are properly adjusted to reflect nonstop DCA 

service, the resulting size of the DCA-SFO market is demonstrably larger than the size of 

each of the other DCA markets at issue and fully supports the allocation of four beyondperimeter slot exemptions to Virgin America.

Moreover, Virgin America’s proposal responds directly to the needs of the DCASFO nonstop market, providing morning and evening departures from DCA and morning 

and afternoon departures from SFO with Airbus A319 aircraft that are up to 25% more fuel 

and carbon efficient than other domestic airline fleets. Furthermore, Virgin America’s

proposed service would compete head-to-head with new nonstop DCA-SFO service that 

United is scheduled to inaugurate on May 14, 2012, using two exemptions exercised by 

United under FAA 2012, thereby enhancing options for nonstop SFO travel and providing 

a positive impact on competition, not only to United in the DCA-SFO market but also to 

other incumbent carriers serving DCA-SFO on a one-stop or connecting basis over their 

hubs. Finally, Virgin America will provide (i) its award-winning, high quality service to 

DCA-SFO passengers in its uniquely outfitted aircraft, (ii) the same favorable effect on 

fares that Virgin America has had in so many markets since launching operations in 2007,

and (iii) more public benefits than any other applicant.

The other six applications are far less compelling than Virgin America’s proposal. 

Most importantly, each of the other nonstop DCA markets proposed by the applicants is

smaller than WAS-SFO and these size differences become significantly greater when the 

size of the DCA markets are adjusted to account for DCA nonstop service. 
4

Alaska’s first choice proposal, Portland (“PDX”), involves a small local O&D 

market and an airport from which Alaska does not serve any points it does not already 

serve from SEA, where Alaska operates two daily nonstop DCA flights. Alaska’s less 

important backup San Diego (“SAN”) proposal involves a local O&D market that is onethird the size of Virgin America’s proposed local market and will be more than adequately 

served by US Airways’ recently announced nonstop DCA-SAN service. Moreover, Alaska 

has little presence at SAN, limiting its ability to provide any meaningful network benefits 

or competition in multiple markets.

JetBlue’s first choice proposal, San Juan (“SJU”), would not put these scarce 

beyond-perimeter exemptions to their best use given the small size of the local market, the 

difficulty in sustaining WAS-SJU nonstop service (with JetBlue and at least two other 

carriers having terminated such service in recent years), and the lack of any significant 

network benefits or opportunities to increase competition in multiple markets, in light of

JetBlue’s limited connecting options at SJU. JetBlue’s second choice Austin (“AUS”)

proposal also is deficient given the small local market and absence of any meaningful AUS 

online connections. Southwest’s AUS proposal is similarly inferior and relies on asserted 

public benefits that are unlikely to materialize given the historic fares that Southwest has 

actually charged in WAS-AUS and other markets of similar stage length. Moreover, 

Southwest’s one-stop DCA-SAN service is rendered less compelling given US Airways’ 

recent entry into the market on a nonstop basis. Frontier’s proposal to serve Colorado 

Springs (“COS”), the smallest local U.S. O&D market at issue in this proceeding and an 

airport where Frontier currently offers no service other than to Denver (“DEN”) (which is a 

mere 73 miles from COS and where Frontier already operates three nonstop daily roundtrip 
5

DCA flights), with continuing service to SAN (which US Airways will shortly serve 

nonstop from DCA) presents fewer public benefits than any other application.

Air Canada’s Vancouver (“YVR”) proposal, entailing nonstop service in an 

immunized Star Alliance hub-to-hub market, which Air Canada has chosen, in large

measure, in order to feed its considerable Pacific traffic at YVR, would not produce the 

benefits that Congress intended to unleash under FAA 2012. Finally, Sun Country’s 

proposed DCA-Las Vegas (“LAS”) service is one of the least compelling proposals in this 

proceeding, given that Sun Country has practically no presence at LAS and, most 

importantly, would be entirely dependent upon the local O&D market, providing no 

connecting opportunities at LAS. 

Importantly, the other applicants have, for the most part, requested that the 

Department establish a monopoly DCA nonstop route on which they will be the only 

competitor. None of the proposals will result in head-to-head competition with another 

carrier providing nonstop DCA service in the market, except Sun Country’s LAS proposal

and Alaska’s second-choice SAN proposal. In sum, the actual (rather than claimed) public 

benefits offered by the other applicants are insignificant when compared to those that 

Virgin America will provide to the DCA-SFO market, the largest market proposed in this 

proceeding.

As detailed in Virgin America’s application and discussed herein, an award of four 

beyond-perimeter slot exemptions will permit it to meet the ever-growing needs of the 

DCA-SFO nonstop market, maintain highly effective competition to United and other 

carriers in the overall WAS-SFO market, provide the greatest public benefits of any of the 

applicants in this proceeding as well as result in domestic network benefits in the other 
6

SFO-beyond markets that it currently serves, a number that will grow as Virgin America

expands at SFO, as it did recently with new SFO-PDX service. The strong support for the 

Virgin America service among the Bay Area civic and business communities and its 

federal and regional political backers is set forth in the letters attached as an Appendix to 

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

Airport.

II. VIRGIN AMERICA’S PROPOSED DCA-SFO SERVICE BEST MEETS 

THE STANDARDS ESTABLISHED FOR THE GRANT OF NEW 

ENTRANT AND LIMITED INCUMBENT SLOT EXEMPTIONS AT DCA 

AND WILL MAXIMIZE CONSUMER BENEFITS

As noted supra, AIR-21 and Vision 100 compelled the Secretary to focus upon 

“domestic network benefits” in evaluating beyond-perimeter slot exemptions, and the 

awards were predictably made to carriers with large, developed hubs located beyond the 

perimeter rather than to carriers that could meet the needs of large local markets. Indeed, 

the Department, when pressed to recognize the importance of the size of the Los Angeles

and San Francisco local markets, in a proceeding to reallocate exemptions previously 

awarded to National Airlines, candidly stated that:

Nonetheless, neither the size nor the significance of the local market is an 

AIR-21 selection criterion, and accordingly we cannot make a finding that 

any one city, such as Los Angeles, deserves DCA nonstop service on that 

basis. In fact, the argument that Washington-Los Angeles is a large local 

market militates against its selection, as it would reduce any network 

benefits. That is, the large number of local passengers for beyond-Los 

Angeles destinations, thereby diminishing the network benefits and service 

to multiple markets afforded by these proposals.

* * *

As with the Los Angeles Proposals, the statutory criteria do not allow us to 

consider the needs for service or the benefits to passengers traveling in the 

local market. As with Los Angeles, San Francisco is also a very large local 

market. We are required to consider the network benefits and increase 

competition in multiple markets. Thus, every seat taken up by a local San 
7

Francisco-DCA passenger deprives a connecting passenger the ability to 

access DCA on a one-stop basis.

Order 2002-11-20 (Nov. 27, 2002) at 7-8.

Thankfully, for the traveling public, after more than a decade of awards to carriers 

serving smaller cities, Congress has modified these criteria to permit the Department to 

focus on the needs of large local beyond-perimeter markets that will enjoy the benefits 

which will flow from DCA nonstop service, including, most particularly, SFO, which 

currently has no nonstop DCA service.

A. WAS-SFO Is By Far The Largest Market For Which BeyondPerimeter Slot Exemptions Are Sought And Fully Supports The 

Allocation Of Four Exemptions To Virgin America With Which To 

Enhance Nonstop DCA Travel Options To And From SFO.

Beyond-perimeter slot exemption applications have been filed to provide service in 

seven markets that do not currently have DCA nonstop service, SFO, PDX, SAN, SJU, 

AUS, COS and YVR, and one market, LAS, that has had DCA nonstop service for eleven 

years. VX-R-1. By any measure, the SFO airport and the WAS-SFO and DCA-SFO

markets are far larger than the other airports and markets at issue in this proceeding. The 

critically important economic activity occurring in the San Francisco Bay Area (“Bay 

Area”) provides further support for the allocation of four slot exemptions to Virgin 

America to provide nonstop service and competition in the WAS-SFO and DCA-SFO 

markets. 

Beginning with the airport itself, SFO easily exceeds the size of each of the other 

proposed airports currently without nonstop DCA service. VX-R-4. Indeed, SFO is at 

least twice as large as any of those competing airports, reflecting the fact that the Bay Area

is by far the largest metropolitan area covered by the applications filed in this proceeding. 

VX-R-3.
8

Similarly, the WAS-SFO market is by far the largest overall WAS market for 

which beyond-perimeter slot exemptions are sought, VX-R-5, including WAS-LAS, where 

US Airways has been providing nonstop DCA-LAS service in 2000. See Order 2000-7-1

(Jul. 5, 2000). And in the case of five of the proposed Washington, D.C. markets, the 

WAS-SFO market is at least five times greater in size than these much smaller markets. 

Id.

4

Furthermore, traffic in the DCA-SFO market (currently traveling via connecting 

and one-stop services) is larger than traffic in any of the other six DCA markets that do not 

currently have DCA nonstop service and is fully 86 percent of the traffic in the DCA-LAS 

market, a market where, as noted, US Airways has been providing nonstop service since 

2000. VX-R-12; see Order 2000-7-1.

The size of the DCA-SFO market, which presently accounts only for 15% of the 

overall WAS-SFO market, and five of the other proposed DCA markets is, of course, 

understated, because they do not receive any nonstop DCA service. As set forth in 

Exhibits VX-R-10-12, the potential size of these DCA markets has been estimated by 

calculating the current division of traffic between DCA and IAD in the 20 largest WAS 

markets, and, applying the average percentage of traffic that uses DCA in these markets

(60 percent) to the total WAS market for each of the markets at issue, approximating the 

potential size of the DCA market that could be anticipated if DCA nonstop service were 

provided. As may be seen from the following table, the potential size of the DCA-SFO 

market grows most dramatically as the potential increase in DCA traffic is approximately 

 4 Importantly, United’s newly announced DCA-SFO service, which is timed to meet United’s Pacific 

flights at SFO, will not adequately meet the needs of the local nonstop market. 
9

three times the size of the current DCA-SFO market, with the estimated increases for the 

other markets being substantially less.

Current DCA 

O&D

DCA O&D As 

Adjusted

Potential 

Increase In 

Traffic

San Francisco 155,300 601,704 446,564

Las Vegas 181,140 253,590 72,450

San Diego 133,420 224,214 90,794

Portland 99,030 117,522 18,492

Austin 89,030 105,096 16,066

San Juan 55,870 90,822 34,952

Colorado Springs 33,290 43,422 10,132

Vancouver 27,181 29,265 2,084

Moreover, given that the average passenger load factor for all DCA markets for the 

year ending third quarter 2011 is approximately 75 percent,

5 it would take a total of 

595,419 seats to accommodate this potential increase in demand in the DCA-SFO market. 

Assuming the institution of roundtrip service by United and the award of four slot 

exemptions to permit Virgin America to provide two daily nonstop roundtrip flights, there 

would still be a shortage of 331,159 seats in the DCA-SFO market after these awards—a 

shortfall in available seats that would not occur in any of the other markets at issue in this 

proceeding. In light of this significant number of anticipated DCA-SFO passengers, an 

award of four beyond-perimeter slot exemptions to Virgin America is more than justified.

In addition to responding to this very strong anticipated demand for nonstop DCASFO service, an award of four exemptions with which to provide nonstop DCA-SFO 

service would improve a critical link between Washington, D.C. and the Bay Area, one of 

the most important economic regions in the world. On March 18, 2012, the Bay Area 

 5 Bureau of Transportation Statistics, T-100 data, YE3Q2011.
10

Council Economic Institute released a report entitled “Innovation and Investment: 

Building Tomorrow’s Economy in the Bay Area” (“BACEI Report”),6 the eighth in a 

series of biennial Bay Area Economic Profile reports produced by the Institute that 

benchmarks the Bay Area’s economic performance against other economies in the United 

States and around the world, to assess the region’s national and global competitiveness.

As stated in the report, the Bay Area is the 19th largest economy in the world with a 

GDP of $535 billion. BACEI Report at 5. Moreover, many of the country’s largest and 

fastest growing corporations are located in the Bay Area. In fact, the Bay Area has 30 

companies in the U.S. Fortune 500, second only to New York, with none of the other cities 

at issue in this proceeding among the top ten cities in America in which Fortune 500 

companies are headquartered. Id at 8. Finally, the Bay Area has more companies (26) in 

the 2011 Inc. 500 fastest growing companies list than any other region in the United States. 

Id. at 8. 

An award of additional frequencies to Silicon Valley would also enhance the link 

between Washington, D.C. and the innovation business sector in the Bay Area. The Bay 

Area is the leading technology innovation center in the United States and leads all other 

regions of the country with the highest number of patents (16,364) granted in 2010, 

compared to 2,449 for Austin and 2,993 for San Diego. Id. at 12. Indeed, investments in 

innovative companies in the Bay Area attracts a disproportionate share of the nation’s 

venture capital. As a result, this region attracts 40 percent of all venture capital invested in 

the United States. Id. at 14.

 6 Available at http://www.bayareaeconomy.org/media/files/pdf/BayAreaEconomicProfile2012Web.pdf. 
11

Building a stronger transportation link between downtown Washington, D.C. and 

the Bay Area will enhance the opportunity to connect the Bay Area’s focus on innovation 

with leaders in Washington who are seeking to provide a competitive advantage in the 

marketplace for U.S. workers.

In short, the DCA-SFO market is several times larger than any other DCA nonstop 

market at issue in this proceeding, and the large size of the market, even with the 

institution of service by United, fully supports an award of four slot exemptions to Virgin 

America so that passengers can benefit from enhanced nonstop travel options to and from 

SFO in the manner contemplated by Congress in FAA 2012.

B. Virgin America’s Twice Daily Nonstop DCA-SFO Service Will Have 

An Extremely Favorable Impact On Competition In The DCA-SFO 

Nonstop and Connecting Markets As Well As The WAS-SFO Market.

Congress and the Department have consistently acknowledged the critical role that 

new entrants play in enhancing competition in airline markets in general and slotcontrolled airport markets in particular. As the Department explained when it created 

preferences for new entrants at Chicago’s O’Hare International Airport:

Congress has set forth a policy of promoting deregulation and competition 

in the airline industry by means of the Airline Deregulation Act of 1978 and 

subsequent legislation . . . Congress authorized the award of slot 

exemptions at the [High Density Rule] airports to new entrants and limited 

incumbents – i.e., those carriers that have little or no presence at the slotcontrolled airport.

* * *

Entry, particularly by low-fare airlines, is an essential ingredient for airline 

competition. Studies of airline industry competition under deregulation

have concluded that low-fare entry has a substantial impact on price and 

service . . . A policy that fails to provide any special treatment for new entry 

. . . would curtail competition that leads to substantial fare reductions, 

increased service, and enables more people to travel.

71 Fed. Reg. 51381, 51388-90 (Aug. 29, 2006).
12

This theme was echoed when the Department imposed conditions on a proposed 

slot transaction between US Airways and Delta involving DCA slots:

These new or limited incumbent carriers offer the prospect of increased 

efficiencies and innovations to the markets, such as through better 

utilization of ground staff, equipment and facilities.

* * *

Moreover, new entrants and those limited incumbents at the respective 

airports could bring alternative business models and new competition to 

the slot constrained airports as long as they have a sufficient number of 

slot interests to establish sustainable patterns of service.

75 Fed. Reg. 7310-11 (Feb. 18, 2010) (emphasis added).

Most recently, Congress reinforced the importance of maintaining competition at 

DCA by requiring that the Department, when considering beyond-perimeter slot exemption 

applications of new entrants and limited incumbents, specifically evaluate the “positive 

impact” that such applications have on the “overall level of competition in the markets that 

will be served.” 49 U.S.C. § 41718(g).

Virgin America’s proposal will have a positive impact on competition in five

distinct areas. First and most importantly, the grant of Virgin America’s application will 

permit it to compete on a direct head-to-head basis with United in the nonstop DCA-SFO

market, where United intends to begin service on May 14, 2012. Virgin America’s welltimed, two daily roundtrip DCA-SFO flights will have a direct disciplining effect on 

United’s fares in this market.

Second, Virgin America’s nonstop DCA-SFO service will compete directly with 

the one-stop and connecting services that are today being provided by United and other 

carriers that have a significant presence at DCA and flow DCA-SFO traffic over their hubs 

throughout the country. With their multiple hub flights, United and other large incumbent 
13

carriers have a tremendous competitive advantage over Virgin America and other small 

carriers with no or only limited access to DCA. The large incumbent carriers use their 

within-perimeter hubs to offer extensive one-stop connecting options to Western 

destinations. Looking at United, in particular, it today offers a total of three one-stop, 

single-plane and 37 one-stop, connecting flights in the DCA-SFO market. Virgin America 

App. at VX-9. The award of four slot exemptions to Virgin America will increase 

competitive DCA alternatives to the legacy network carriers, including, in particular, 

United. 

Third, Virgin America’s proposed twice daily DCA-SFO service will permit it to 

continue to compete effectively, on a nonstop basis, against United in the overall WASSFO market. Virgin America has provided service in the IAD-SFO market since shortly 

after beginning operations in September 2007, and has clearly had a disciplining effect on 

United’s fares in that market, where United maintains hubs at both SFO and IAD. The 

award of four slot exemptions to Virgin America will have a significantly positive effect 

on its ability to compete in the WAS-SFO market, a hub-to-hub market in which United, 

the largest carrier in the world, is the dominant carrier. The need for a competitive spur in 

the overall WAS-SFO market now is heightened by United’s new nonstop DCA-SFO 

service, a market that United will control in the absence of nonstop head-to-head 

competition provided by Virgin America.

Fourth, the authorization of new service at DCA by Virgin America, the only 

carrier in this proceeding without a single flight at DCA, will inject a new competitor into 

DCA, which will have an overall favorable impact on competition at this critically 

important airport serving our nation’s capital. As the Department stated, when making the 
14

initial beyond-perimeter slot allocations at DCA authorized by AIR-21, “increased service 

alternatives by existing competitors at DCA would have less competitive effect then 

additional service alternatives by new competitors.” Order 2000-7-1 at 20.

Lastly, as Virgin America demonstrated in its application (Virgin America App. at 

13), it has had a significant favorable competitive effect on fares when launching nonstop 

service—precisely the public benefit one would expect by awarding slot exemptions to a 

low-fare carrier that is establishing a presence in the DCA market. Significantly, the 

competition provided by new-entrant carriers is enhanced when the new entrant has 

multiple frequencies. As the Department observed in 2003:

While leisure travelers have always chosen an airline primarily based on

price, there is growing evidence that business travelers have become 

significantly more price sensitive.

* * *

Anecdotal evidence suggests that business travelers are increasingly 

willing to fly on low-fare carriers whose growth is having a greater 

influence on premiums the legacy carriers can charge to business 

passengers....While low-fare carriers continue to grow the scale and 

scope of their operations, the low-fare carriers will only become more 

attractive to the business traveler over time.

* * *

[A]s the difference between the flight frequencies offered by the legacy 

carrier and the low-fare carrier declined, fare premiums declined. Our 

regression indicated that a decline in the frequency gap of one daily 

roundtrip reduces legacy carrier premiums by 1.8 percentage points. 

This effect is consistent with the notion that low-fare carriers become 

more attractive to business travelers when they offer greater convenience 

through improved time of day schedule coverage.

* * *

The major findings is that while legacy carriers can still obtain a premium 

on average when competing with low-fare carriers head-to-head on a nonstop basis, all else being equal, that premium declines as the frequency 

gap between legacy carrier and the low-fare carrier shrinks. This 

suggests that legacy carrier premiums should continue to fall if low-fare 

carriers expand their head-to-head competition with legacy carriers.
15

DOT, Fourth Quarter 2002 Passenger and Fare Information (Oct. 2003) (emphasis added). 

Thus, as important as access to slot–controlled airports is to new entrants, having sufficient 

frequencies to compete effectively against the incumbent carriers enhances the competitive 

benefits that can be made available to the traveling public. An award of four exemptions 

to Virgin America will assure that the airline can be an effective competitor in this 

market—and is justified by the large size of the WAS-SFO market. Virgin America App. 

at VX-13.

To be certain, an award of four exemptions to Virgin America for two daily 

roundtrips would be entirely consistent with previous Department beyond-perimeter 

allocations. For example, in Order 2000-7-1 (Jul. 5, 2000), the Department granted four 

exemptions to America West (which at the time did not operate any of its own flights at 

DCA) under AIR-21 to provide two daily roundtrip DCA-PHX flights. Thereafter, in 

Order 2004-4-1 (Apr. 1, 2004), the Department awarded: (i) four exemptions under Vision 

100 to then-limited incumbent Frontier, to provide two additional daily roundtrip DCADEN flights on top of two exemptions previously granted to Frontier for DCA-DEN 

service as a new entrant under AIR-21; and (ii) an additional two exemptions to America 

West for a third daily roundtrip DCA-PHX flight.

In previously discussing awards of multiple frequencies, the Department has 

strongly favored low-fare carriers that did not operate flights at DCA and with principal 

network hubs or focus cities beyond the perimeter. See Order 2000-7-1 at 21. See also 

Order 2004-4-1 at 19. An award of four slot exemptions to Virgin America in this 

proceeding would result in very similar public benefits given the airline’s record as a low-
16

fare competitor and its present inability to provide beyond-perimeter DCA service, 

including, most particularly, to its largest focus city, San Francisco. 

Perhaps most importantly, the primary focus of Virgin America’s business plan is 

on providing nonstop, point-to-point service in medium-to-long-haul markets in successful 

competition with the legacy network carriers. See Virgin America App. at VX-3. DCASFO is, of course, precisely this type of market, and Virgin America would use the DCA 

opportunity to compete with United, as it does today in 15 of the 16 nonstop routes that 

Virgin America operates from SFO. 

Finally, Virgin America’s request for four beyond-perimeter exemptions is critical 

where—as here—it is seeking to compete against United, the world’s largest airline, with 

its much larger presence in both San Francisco and Washington, D.C. As the Department 

is aware, there are significant barriers to competition with established network airlines in

their hub markets. These include the hub carrier’s frequency/scheduling advantages, 

frequent flyer loyalty programs, corporate discount programs, domestic and international 

alliances, and travel agent incentive agreements. New entrants often face severe 

competitive responses from major carriers when they enter hub markets, with incumbent 

hub carriers frequently implementing a series of aggressive competitive actions intended to 

drive the smaller airline from the hub market. Given the challenges faced in competing 

against network carriers at hub airports, an award of four frequencies would be a highly 

desirable outcome from a market structure standpoint since it would help level the playing 

field and limit the enormous competitive advantages that United holds at its hub markets. 

In addition to its newly announced roundtrip DCA-SFO nonstop flight, United will 

also offer passengers multiple connecting flights between San Francisco and DCA 
17

throughout the day with a total of 23 daily DCA-SFO connecting flights and 17 daily SFODCA connecting flights. Virgin America App. at VX-9. The Department is well aware of 

prior studies that have recognized that a significant airline schedule disparity provides an 

enormous competitive advantage and drives carrier selection decisions by business 

travelers. In order to effectively compete with United for time sensitive business travelers 

in the SFO-DCA market, Virgin America needs the important benefit of a morning and 

evening departure from DCA and a morning and afternoon departure from SFO given the 

huge schedule disparity that will exist between the two carriers in the SFO-DCA market 

and the preference of business travelers to complete their journey on a single airline.

C. Virgin America’s DCA-SFO Service Will Produce Important Public 

Benefits To More Passengers Than Any Other Applicant.

An award to Virgin America of two daily roundtrip nonstop flights would deliver

lower fares, higher capacity and a variety of service options, all in the largest beyondperimeter nonstop DCA market at issue in this proceeding. As Virgin America previously 

demonstrated, Virgin America App. at 13, its entry into new markets has resulted in a 

significant reduction in average fares in those markets in direct competition with larger 

incumbent carriers. 

Similarly, Virgin America will increase capacity in the DCA-SFO market using a 

fleet of modern Airbus A319 aircraft that are more fuel and carbon efficient than the 

average fleet domestically, particularly the older B757 aircraft that are used by several 

carriers at DCA, an airport that is particularly noise and environmentally sensitive. In 

addition, Virgin America will offer three cabins of service on these A319 aircraft – First 

Class, Main Cabin Select and Main Cabin.
18

Moreover, Virgin America offers a very high-quality level of service to the 

passengers on its aircraft, all of which is detailed in its application. Virgin America App. 

at 7. This high quality service has been recognized on numerous occasions by Travel & 

Leisure, Conde Nest, Zagat and several other travel publications. See Virgin America 

App. at VX-18 (setting forth a complete list of awards— including numerous best 

domestic airline awards—won by Virgin America since it began service in 2007).

Finally and most importantly, given that the DCA-SFO market is by far the largest 

market in this proceeding, the public benefits provided by Virgin America will, by 

definition, be extended to the greatest number of passengers in this proceeding, a market 

that has the potential to grow, with sufficient capacity, to over 600,000 passengers based 

upon the division of traffic between DCA and IAD in the 20 largest Washington, D.C.

markets.

D. Virgin America Will Offer Convenient Connections To Its DCA-SFO 

Nonstop Flights.

Although the Department’s assessment of the applications in this proceeding will 

be based on the new FAA 2012 allocation criteria, that evaluation is expected to place far 

less emphasis on beyond services than was used in the prior decisions under AIR-21 and 

Vision 100 where the outcomes were determined by reference to a showing of domestic 

network benefits. Nevertheless, the criteria of domestic network benefits/service in 

multiple markets remain listed factors in FAA 2012 and Virgin America’s proposal will 

provide convenient online connections from its DCA-SFO service to SAN, LAS, Seattle

(“SEA”) and Los Angeles (“LAX”), in both directions. Virgin America’s DCA-SFO 

service will, therefore, provide important benefits to passengers traveling to or from these 
19

other Western destinations and provide a competitive alternative in several markets to 

other DCA services.

III. COMMENTS ON THE COMPETING PROPOSALS

As set forth above, each of the competing applications in this proceeding is far less 

compelling than Virgin America’s proposal. Even in cases where competing applicants’ 

proposals may technically qualify under one or more of the applicable statutory selection 

criteria, Virgin America’s proposed twice daily, nonstop, roundtrip DCA-SFO proposal 

better meets such criteria. 

A. Alaska’s Portland and San Diego Proposals

Alaska has benefitted greatly from prior contested beyond-perimeter exemption 

proceedings, and today holds a quarter of all such exemptions issued under AIR-21 and 

Vision 100 combined. If Alaska were awarded the four exemptions it now seeks, the 

airline would hold nearly one-third of all beyond-perimeter exemptions awarded on a 

contested basis. VX-R-17. Yet, unlike at least five applicants in this proceeding, Alaska is 

not a low-fare carrier, and, in any event, no decisional weight should be assigned to its fare 

proposals in this proceeding, much less its claim of $16 million in annual consumer 

savings, as more fully discussed below.7

Awarding slot exemptions for Alaska to serve DCA—PDX (its first choice) would 

not put the exemptions to their best use. To begin with, Alaska currently operates nonstop 

monopoly service in the DCA-SEA market twice a day. Alaska does not serve any cities 

from PDX that the airline does not already serve from SEA. VX-R-21. Given PDX’s 

 7 Tellingly, Alaska is classified as a “network airline,” rather than a “low cost carrier” by the Department. 

See Bureau of Transportation Statistics, 11-12, “3rd Quarter 2011 Airline Financial Data: Network 

Airlines, Low-Cost Airlines and Regional Airlines All Report Profits,” available at 

www.dot.gov/briefing-room.html.
20

geographic proximity to SEA and the remarkable route overlaps among PDX and SEA, the 

potential public benefits of DCA-PDX are diminished, in particular Alaska’s asserted 

network benefits and ability to increase competition in multiple markets. 

Turning to the size of the WAS-PDX market, WAS ranks a distant 16th among all 

O&D markets for PDX, VX-R-20, and a number of WAS O&D markets currently without 

any nonstop DCA service are considerably larger than PDX, including, most particularly, 

SFO. VX-R-5. Moreover, PDX presently ranks 30th among all U.S. airports when 

measured by annual passenger enplanements.8 And, as Virgin America illustrated in its 

initial application, PDX has lost traffic over the last five years, while SFO has been 

experiencing sustained and robust growth during the same time period. Virgin America 

App. at VX-12. Under such circumstances, allocating two exemptions to support daily 

DCA-PDX service would not unleash the public benefits that Congress intended when it 

passed FAA 2012.

Furthermore, Alaska currently serves only one East Coast destination from PDX 

and the long-term viability of the route is questionable, given both the relatively small size 

of the local O&D market and the absence of connecting opportunities via PDX not 

currently provided via Alaska’s twice daily DCA-SEA service. VX-R-21. Turning to 

Alaska’s claimed economic benefits based on its DCA-PDX fare proposal, such benefits 

should be viewed with a healthy degree of skepticism, given Alaska’s actual average fares 

for its DCA-SEA service (which is similar in nonstop stage length to its proposed DCAPDX service), where average fares are 68% higher than the fares Alaska proposes in its 

application, Alaska App. at AS-D-9. Given such fare premiums, Alaska is unlikely to 

 8 FAA, Passenger Boarding (Enplanement) and All-Cargo Data for U.S. Airports, CY2010 (latest year), 

available at http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger.
21

price below its historic levels, unless forced to do so by competition (which is unlikely at 

slot-controlled DCA) or weakness of the market. Given the relatively small size of the 

WAS-PDX market (as described above), Alaska will, in all likelihood, be required to fill 

its DCA-PDX aircraft with the same O&D passengers that Alaska carries on its twice-daily 

DCA-SEA nonstop service. VX-R-19. As a consequence, the actual savings of Alaska’s 

DCA-PDX proposal will be minimal. 

If, however, notwithstanding the limitations of Alaska’s DCA-PDX proposal, the 

Department were to award exemptions to Alaska to provide such service (which it should 

not), the Department most certainly should not provide another two exemptions for 

Alaska’s second choice DCA-SAN proposal, which is equally unpersuasive, suffers from a 

number of the same deficiencies that hinder Alaska’s DCA-PDX proposal, and would 

result in a single carrier holding almost one-third of all DCA beyond-perimeter exemptions 

awarded in contested slot proceedings.

Most significantly, as between WAS-SFO and WAS-SAN O&D traffic, SFO is 

nearly three times as large as SAN. VX-R-5. Moreover, the Bay Area is considerably 

larger than the San Diego metropolitan area, and, as discussed in Section II.A., supra, the 

Bay Area is home to more large American companies than any other metropolitan area, 

other than New York. And, as Virgin America illustrated earlier in this proceeding, Virgin 

America App. at VX-12, SAN has lost traffic over the last five years, while SFO grew at a 

healthy pace over the same period. 

Based on the size of the local WAS-SAN market, demand for nonstop service in 

the market will be more than adequately met by US Airways, which recently announced its 
22

intent to operate such service.9 US Airways’ planned nonstop service is much stronger 

than Alaska’s proposal, making success in the market very difficult for Alaska. US 

Airways will operate in the preferred time channels for business travel with a DCA 

departure at 8:55 and DCA arrival at 20:23, with considerable connecting opportunities 

through its expanded DCA focus city. Alaska’s westbound service would depart from 

DCA at 16:10, too early for the business traveler leaving at the end of a day’s work. Its 

eastbound 7:10 departure is similarly too early for many travelers.

Alaska’s existing and future planned tributary services at SAN are limited to two 

small California airports, its hubs at PDX and SEA, and a handful of leisure points in 

Hawaii and Mexico. VX-R-23. Furthermore, all of the points that Alaska serves on a 

nonstop basis from SAN (with the exception of Monterey, which is very small) are already 

served by Alaska via LAX or SEA—two cities for which Alaska already holds DCA 

beyond perimeter exemptions. Therefore, Alaska either does or could provide online DCA 

connections to its SAN spokes via the airline’s other West Coast gateways by virtue of its 

existing long-haul DCA services. As a consequence, few network benefits of any 

consequence are likely to result from Alaska’s DCA-SAN proposal.

As with Alaska’s claimed consumer savings for its DCA-PDX proposal, such 

benefits for DCA-SAN have been similarly overstated. Alaska’s actual average fares for 

its DCA-LAX service (which is similar in nonstop stage length to its proposed DCA-SAN 

service and is served once daily), are nearly 27% higher than the SAN fares Alaska 

proposes in its application. VX-R-18; Alaska App. at AS-D-9. Alaska, in the context of a 

single nonstop DCA-SAN flight, is unlikely to price below its average DCA-LAX fares, 

 9 Notice of Intent in Docket OST-2012-0029 (Mar. 21, 2012).
23

much less industry average DCA-SAN fares, thereby foregoing a considerable fare 

premium. However, unlike its DCA-PDX proposed route, where Alaska conceivably 

could carry many of the same connecting O&Ds currently traveling via its twice-daily 

DCA-SEA service, its ability to fill the aircraft with connecting O&Ds is weaker on its 

DCA-SAN route, given that Alaska serves considerably fewer points via SAN than via 

PDX. VX-R-23. As a consequence, Alaska will need to reduce aircraft size or suffer 

considerable operating losses for its DCA-SAN service.

 Finally, Alaska has chosen not to make the same investment in the Washington, 

D.C. area that Virgin America has made with respect to long-haul operations at IAD, either 

because Alaska believes that: (i) it would not be able to support such services at IAD; 

and/or (ii) it would be to Alaska’s advantage to hold out for future beyond-perimeter 

flights at DCA. Therefore, as between the competing beyond-perimeter exemption 

proposals of Alaska and Virgin America, each involving a request for a total of four 

exemptions, Virgin America’s proposed service would put the exemptions to a far better 

use. 

B. JetBlue’s San Juan and Austin Proposals

It is ironic that JetBlue claims in its application that it has been thwarted due to

artificial constraints at airports subject to the High Density Rule (“HDR”), JetBlue App. at 

6, given the airline’s early experiences at JFK, where JetBlue applied for and received an 

unprecedented 75 slot exemptions from the HDR in 1999, free of charge, providing 

JetBlue with a tremendous competitive advantage over other new entrants and startups, an 

advantage that JetBlue still enjoys today in the New York area. Order 99-9-11 (Sep. 16, 

1999). In any event, notwithstanding JetBlue’s attempt to characterize its DCA operations 

as “very small,” the airline currently operates no fewer than 34 slots at the airport (more 
24

than any other applicant in this proceeding), and is able to compete for the exemptions at 

issue in this proceeding because of the considerably expanded definition of “limited 

incumbent” under FAA 2012.

Furthermore, any decisional consideration of downward pricing pressure that 

JetBlue might potentially exercise at DCA must be analyzed with a view to the potential 

competitive impact of the cooperative commercial arrangements in place between JetBlue 

and American, now the second largest slot holder at DCA, Virgin America App. at VX-7, 

especially in the WAS-SJU market, where American and JetBlue together account for onethird of O&D traffic. JetBlue App. at 22. 

Turning to the merits of JetBlue’s specific market proposals, SFO is considerably 

larger than JetBlue’s first choice—SJU—when measured by any objective criteria, 

including, most particularly, WAS O&D traffic and metropolitan population size. VX-R11 and 3. And, among markets currently lacking nonstop DCA service at issue in this 

proceeding, WAS-SJU is smaller than all other proposed markets, with the exception of 

COS and YVR.

Significantly, this would not be JetBlue’s first foray into the nonstop WAS-SJU 

market. Indeed, JetBlue launched nonstop IAD-SJU service in December of 2008, only to 

terminate the service in April of 2010 due to disappointing performance. JetBlue is not 

alone in this regard, with both US Airways and, more recently, American, withdrawing 

from the nonstop WAS-SJU market under similar circumstances. VX-R-31. This very 

recent history strongly suggests that the current exemptions at issue can be put to a far 

better use than SJU service, which has been difficult to sustain on a nonstop basis from the 

Washington, D.C. area.
25

Nevertheless, JetBlue claims that its experience in other nonstop markets, namely 

DCA-BOS, “foretells” success in the DCA-SJU market. JetBlue App. at 8. However, the 

two markets are fundamentally different. BOS-DCA is the largest WAS O&D market, 

VX-R-12, with business travelers accounting for a very large share of total traffic, based on 

historic yields. In contrast, SJU is a decidedly leisure market that depends, in large 

measure, on ocean cruise calls in and around the Port of San Juan, as JetBlue notes 

throughout its application. Although the Department ought to properly evaluate leisure 

demand in its analysis, it must strike an appropriate balance by choosing those markets that 

will maximize benefits to all consumers, ideally large local O&D markets with a blend of 

both sizable business and leisure travelers.

Turning to the claimed competitive benefits of JetBlue’s SJU proposal, the 

likelihood that JetBlue will inject much needed competition and stimulate low-fare growth 

in a WAS leisure market oriented towards cruise travel is diminished given that United 

operates daily nonstop IAD-SJU service and AirTran operates two daily nonstop BWI—

SJU flights. And, with roughly 75 PDEWs in the DCA-SJU market (which JetBlue 

proposes to serve with an aircraft configured with 150 seats), and barely 200 PDEWs in 

the overall WAS-SJU market, VX-R-5, JetBlue’s estimate of passenger stimulation—

(41,610 annual new passengers, representing an increase of nearly 60%)—is likely 

overstated. JetBlue App. at 27. 

Given the modest size of the WAS-SJU market, and with more than two-fifths of 

Puerto Rico’s population living within 30 miles of SJU, JetBlue App. at 13, the airline will 

be highly dependent upon connecting traffic at SJU, where it offers only two domestic 

online connections to beyond points. JetBlue App. at G. Although JetBlue touts Cape 
26

Air’s operations at SJU as an important part of its proposal, those connections would be 

provided on an interline basis, which carry less decisional significance than online service 

connections. Moreover, Cape Air only provides interline connections to two domestic 

points from SJU that are not served by JetBlue (JetBlue App. at G)—and then only with 

very small Cessna 402 aircraft capable of carrying a maximum of nine passengers. Given 

Cape Air’s limited aircraft passenger capacity, it is unlikely that JetBlue will be able to 

stimulate growth in domestic markets beyond SJU at levels sufficient to justify an award of 

two exemptions to the airline in this proceeding.10

Of course, as the Department will recall, this is not the first DCA-SJU beyondperimeter proposal. Indeed, under Vision 100, US Airways presented a remarkably similar 

proposal, touting the potential network benefits in this leisure market. There, 

notwithstanding the fact that US Airways proposed online connections at SJU (as opposed 

to JetBlue’s interline proposal), the Department still declined to award beyond-perimeter 

exemptions for DCA-SJU service, concluding that there were “almost no network 

benefits.” Order 2004-4-1 (Apr. 1, 2004), at 22. For the reasons discussed above, the 

same outcome should result here.

Nevertheless, should the Department decide to award slot exemptions to JetBlue 

for its proposed DCA-SJU service (which it should not), JetBlue should not be awarded 

two additional exemptions for its proposed second choice DCA-AUS service, which is 

 10 Although JetBlue notes that its SJU service would connect to four international destinations from SJU,

Application of JetBlue App. at G, only one of these destinations—Santo Domingo—is an online 

destination served with large aircraft. The other three destinations, linked via the interline relationship 

with Cape Air, would not offer much in the way of network benefits, and, in any event, are very small 

markets. Contrary to JetBlue’s claim, the very limited service options at SJU are not “precisely the type 

of network benefits ‘beyond the perimeter’ that Congress delineated.” JetBlue App. at 18.
27

insufficient in several important respects and would result in JetBlue operating 38 slots/slot 

exemptions at DCA—far more than any other limited incumbent at the airport.

Turning to the merits of JetBlue’s DCA-AUS service, the WAS-AUS market is 

smaller than any other proposed market in this proceeding, with the exception of only SJU, 

YVR and COS. Significantly, in terms of annual passenger enplanements, AUS ranks a 

very distant 43rd nationally,11 and, in the context of this proceeding, is smaller than all 

other proposed airports, with the lone exceptions of COS and YVR. VX-R-5.

JetBlue’s asserted network benefits in connection with its DCA-AUS proposal are 

unlikely to materialize were the airline awarded exemptions. Indeed, all of the Western 

destinations that JetBlue currently serves from AUS already enjoy nonstop DCA service 

and, significantly, JetBlue only proposes to offer connecting AUS service to one of these 

markets, Los Angeles/Long Beach. As a consequence, any increase in competition in 

multiple markets as a result of JetBlue nonstop DCA-AUS service is likely to be very 

marginal. In sum, and as between the competing beyond-perimeter exemption proposals 

of JetBlue and Virgin America, each involving a request for a total of four exemptions, 

Virgin America’s proposal should be granted.

C. Southwest’s Austin Proposal

Southwest is already the nation’s second largest airline when measured by 

passengers.

12 Moreover, with 24 DCA slots/exemptions (and another application pending 

for two within-perimeter exemptions) and nearly 72% of all domestic enplanements at 

 11 FAA, Passenger Boarding (Enplanement) and All-Cargo Data for U.S. Airports, CY2010 (latest year), 

available at http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger.

12 Air Transport World, 2010 World Airline Report (Jul. 2011), at 35.
28

close-in BWI,13 Southwest has a very large presence in the Washington, D.C. region. 

Although technically a “limited incumbent” for purposes of this proceeding, an award of 

two beyond-perimeter exemptions to Southwest would only strengthen its foothold in the 

Washington, D.C. region, without maximizing public benefits under 49 U.S.C. § 41718(g).

Historically, Southwest has enjoyed a deserved reputation for stimulating traffic 

and lowering fares; however, the carrier has, at times and concurrent with its maturation 

into a dominant U.S. airline, demonstrated a willingness to extract high fares in markets 

where it faces little or no competition. For example, and as set forth in the Department’s 

latest report on consumer airfares,14 prices for travel in the Orlando, FL-San Antonio, TX 

market recently increased 35% year-over-year while passengers in the market declined by 

nearly 23%; during the same period, average domestic fares increased by barely 6%.15 

Tellingly, the increase followed AirTran’s cessation of nonstop service in the market, 

leaving Southwest as the only carrier providing nonstop service between Orlando and San 

Antonio. 

To be certain, an applicant for beyond-perimeter exemptions is not required to 

provide a specific fare proposal as a condition of receiving an award. However,

Southwest’s traffic and consumer fare savings forecasts (Southwest App. at WN-200) are 

premised on several flawed assumptions that, after proper adjustment, significantly reduce 

the benefits claimed by Southwest.

 13 Bureau of Transportation Statistics, Airport Snapshot for BWI (Jan. through Dec. 2011), available at 

http://www.transtats.bts.gov/airports.asp. 

14 Domestic Airline Fares Consumer Report for Third Quarter 2011 at Table 4, available at 

http://ostpxweb.dot.gov/aviation/domfares/web20113.pdf. 

15 Bureau of Transportation Statistics Press Release 5-12, “BTS Releases 3rd-Quarter 2011 Air Fare Data: 

3rd-Quarter Domestic Air Fares Rose 6.2% from 3rd Quarter 2010.”
29

Turning initially to Southwest’s DCA-AUS local market forecast, the bulk (72.4%) 

of the claimed increase in the size of this local market traffic (which is only 76,995 

passengers for YE Q3 2011) is based upon a claimed reduction in fares from $265 to $169, 

which is not a fare that Southwest has stated it will actually offer in the DCA-AUS market 

but is instead simply the average fare for a market of that distance on the Southwest fare 

curve. See Appendix 6 to WN-200. As the Department is well aware, average fares in 

slot-controlled markets are generally higher than average fares in non slot-controlled 

markets with similar mileage blocks, and it is simply not credible to claim that Southwest 

will, over time, have an average fare of $169 in the DCA-AUS market. Indeed, as 

Southwest candidly concedes in its traffic forecast (WN-200 at 3), its average fare in the 

BWI-AUS local market (where it provides twice a day, nonstop service) for YE Q3 2011 

was $214, and the average fare in the AUS-IAD market (in which connecting service is 

provided) is $206. VX-R-32. Not surprisingly, Southwest’s average fares vary based 

upon the level of competition provided in each market, with higher fares charged in 

markets where Southwest has a competitive advantage, as it will, no doubt, have in the 

DCA-AUS market where it would have a monopoly on nonstop service. Importantly, 

Southwest’s fares in markets of similar stage length where it has a competitive advantage, 

such as HOU-ONT (1,341 miles) and HOU-SNA (1,352 miles), are significantly higher 

than the $169 fare used in Southwest’s forecast for DCA-AUS, with the average fare in 

HOU-ONT being $229 and the average fare in HOU-SNA being $218. Id. Furthermore, 

the $265 comparative industry DCA-AUS benchmark fare used in the Southwest forecast 

excludes “free” passengers on frequent flyer tickets, and, thus, overstates the average fare 

in that market. With these two adjustments to the projected fare differential, the traffic that 
30

Southwest forecasts as a consequence of fare stimulation will be reduced significantly from 

the 60,000 plus passengers forecast by Southwest, an exact level that will not be known 

until Southwest actually establishes the fares that it will charge in the DCA-AUS market.

Similarly, Southwest’s DCA-SAN forecast needs to be adjusted to reflect the fares 

that are more likely to be charged by Southwest. Thus, in contrast to the $196 DCA-SAN 

fare used in the Southwest forecast, it should be noted that the actual Southwest fare in the 

BWI-SAN market (which Southwest serves twice a day on a nonstop basis and once a day 

on a one-stop basis) is $235 and the average fare in the IAD-SAN market (where 

Southwest offers connecting service) is $224. Id. Moreover, Southwest charges 

comparable fares of $225 in the BWI-ONT market and $221 in the BWI-RNO market, 

markets of comparable stage length to DCA-SAN and where Southwest has a competitive 

advantage. Id. And, although Southwest could not have known this when it prepared its 

DCA-SAN one-stop traffic forecast, the initiation of nonstop service by US Airways on 

June 8, 2012, will also compromise the number of passengers that Southwest can 

reasonably expect to carry on its proposed DCA-SAN one-stop service. Once again, it is 

not possible, because of these unresolved variables, to forecast the precise level of annual 

traffic that Southwest will carry on its DCA-SAN flights, but such traffic is not likely to be 

in the range of 10,067 passengers that is predicted in Southwest’s forecast.

In any event, and as discussed in Virgin America’s comments on JetBlue’s AUS 

proposal, the WAS-AUS market is considerably smaller than a number of the competing 

proposals and, moreover, AUS ranks a distant 43rd nationally among airport passenger 

enplanements.16 Turning to Southwest’s asserted public benefits (other than its projected 

 16 FAA, Passenger Boarding (Enplanement) and All-Cargo Data for U.S. Airports, CY2010 (latest year), 

available at http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger.
31

passenger stimulation and claimed fare reductions), neither its proposal for through service 

to SAN nor its existing pattern of nonstop service between AUS and other points would 

result in any meaningful domestic network benefits or competition in multiple markets.

In this regard, and as discussed in Virgin America’s comments on Frontier’s 

proposed single plane DCA-SAN service via COS, infra, passengers traveling between 

DCA and SAN already have a multitude of connecting opportunities on competing carriers 

and, as a consequence, Southwest’s one-stop DCA-SAN service is unlikely to translate 

into the large passenger stimulation that Southwest predicts. As for Southwest’s ability to 

offer competition in multiple markets by virtue of its proposed DCA service, the airline has 

identified only two markets that it would connect to via AUS—Dallas and Houston—both 

of which are served nonstop from DCA. Although Southwest’s Dallas connecting service 

would utilize Dallas Love Field (“DAL”) and its Houston connecting service would utilize 

Houston Hobby (“HOU”), both of these two airports already have ample DCA connecting 

service. VX-R-33 and 34. Indeed, Southwest already provides online single connection 

service in the DCA-HOU market through its wholly-owned subsidiary, AirTran. VX-R34. As a consequence, Southwest’s claimed traffic for its Dallas and Houston connecting 

services, which is based on its connecting experience in the Philadelphia-HOU market 

rather than the reality of existing nonstop and connecting services in the DCA-Dulles and 

DCA-Houston markets, is seriously overstated. Southwest App. at WN-200, p.6.17 Even 

assuming, arguendo, that Southwest were eventually to connect DCA with points its serves 

via AUS other than DAL or HOU, such points either already have nonstop beyondperimeter service from DCA or are very small. Southwest App. at WN-108. Ultimately, 

 17 Five of Southwest’s beyond Austin markets either already have nonstop DCA service (LAX, LAS, PHX 

and DEN) and /or will have such service by May 14, 2012, when US Airways institutes its DCA-SAN 

nonstop service.
32

as between the competing beyond-perimeter exemption proposals of Southwest and Virgin 

America, Virgin America’s proposed service is clearly superior. 

D. Frontier’s Colorado Springs Proposal

Similar to Alaska, Frontier today is one of the largest beneficiaries of DCA 

beyond-perimeter exemptions awarded by the Department in contested proceedings, 

holding 25% of all such exemptions. VX-R-17. Frontier, presumably recognizing the 

difficulty of obtaining an unprecedented fourth pair of beyond-perimeter slot exemptions 

to supplement its three daily roundtrip nonstop DCA-DEN flights, proposes service to 

COS, located a mere 73 miles from DEN. VX-R-25. A close review of Frontier’s 

application for service to COS indicates that Frontier’s proposal would provide fewer 

public benefits than any other proposal in this proceeding.

As an initial matter, the WAS-COS market is extremely small relative to many 

markets that currently lack DCA nonstop service. VX-R-5. At fewer than 75,000 O&D 

passengers per year, it is the smallest of all the U.S. market proposals in this proceeding. 

Of course, if nonstop WAS-COS service is as important to Frontier as the airline claims in 

its application, there is nothing preventing Frontier from adding as much service as it 

believes is warranted via IAD, an airport which Frontier, in contrast to Virgin America, has 

intentionally chosen not to serve from its proposed nonstop Western market—or any other 

market for that matter.

Importantly, Frontier today only serves DEN from COS. And, other than its 

proposal to provide one stop DCA-SAN service via COS, Frontier does not propose to 

offer online connections at COS to any other beyond Western market, merely holding out 

“the potential for additional one-stop low-fare connections between DCA and major 

western communities.” Frontier App. At 18. Even were Frontier to offer additional one-
33

stop connections via COS after the airline adds service later this year, all but one of the 

future cities that Frontier could connect to at COS already receive nonstop DCA access. 

VX-R-27. And, perhaps most importantly, Frontier does not currently serve, and has not 

announced plans to serve, any cities from COS that the airline does not already serve from 

its DEN hub.

As for Frontier’s claim that its COS service would offer additional options for 

Denver area travelers, this is hardly the network benefit that Congress had in mind when 

amending 49 U.S.C. § 41718, given that Frontier currently operates three daily roundtrip 

nonstop DCA-DEN flights, on top of daily United nonstop service on the route. Similarly, 

Frontier’s claimed competitive benefit in the form of “two-stop service to the numerous 

beyond communities served by Frontier at . . . Denver,” Frontier App. At 18, is of no

decisional significance in this proceeding.

Turning to Frontier’s proposal to offer one-stop service in the DCA-SAN market, 

travelers in this market already have extensive travel options offered on multiple airlines, 

including a number of connecting itineraries in each direction operated by Frontier, and 

few public benefits would be realized by allocating these exemptions to support such 

service. VX-R-28. It also should be noted that Frontier has seemingly combined local 

seats in the DCA-COS and COS-SAN market to arrive at a very large—and unrealistic—

capacity claim. By way of illustration, although Frontier claims its DCA-COS-SAN 

service would yield an annual capacity of 245,952 seats, Frontier’s proposal entails 

122,640 seats to and from DCA each year. Frontier App. at F9-4.

Finally, the Department should pause to carefully consider whether an award of any 

slot exemptions to Frontier at this time would be in the public interest at all, given that 
34

Frontier’s parent company, Republic Airways Holdings Inc., has publically stated that it is 

actively studying plans to sell Frontier, including hiring advisors to assist in such a 

transaction. VX-R-30. Moreover, Frontier is, at the moment, a shrinking airline, recently 

forecasting an annual capacity reduction of between 10% to 12%. Id. Indeed, the 

Department was faced with similar circumstances in 2000, when it awarded two beyondperimeter exemptions to TWA for DCA-LAX service, only to see American acquire TWA 

a mere six months later, forcing the Department to recall and reallocate the two exemptions 

through a new contested proceeding. Orders 2000-7-1 (Jul. 5, 2000); Order 2001-6-20 

(Jun. 22, 2001). The Department must strive to avoid a similar outcome with any of the 

slot exemptions at issue in this proceeding. In sum, Virgin America’s proposed DCA-SFO 

service is superior to Frontier’s proposal.

E. Air Canada’s Vancouver Proposal

Air Canada, a mature hub-and-spoke flag carrier, is already the world’s 15th largest 

airline by revenue passenger miles.18 As Air Canada readily concedes in its application, it 

already operates 430 daily U.S. flights to and from 52 airports. Air Canada App. at 2. 

And, with 16 slots at DCA and United operating code-share services on Air Canada’s 

behalf at IAD, Air Canada’s Washington, D.C. presence exceeds that of several other 

applicants in this proceeding. An award to Air Canada at the expense of new entrants and 

other limited incumbents at DCA would not be consistent with the objectives that Congress 

directed the Department to consider under FAA 2012.

As a threshold matter, Air Canada’s proposal is unlikely to spur competition at

DCA in general, or in the local O&D market in particular, which, as the Department is 

 18 Air Transport World, 2011 World Airline Report. 
35

aware, is an immunized Star Alliance hub-to-hub route. In this regard, Air Canada’s claim 

that its proposal will compete with existing one-stop VYR service offered at IAD by 

United—the largest airline in the world and an alliance partner with which Air Canada 

coordinates prices, service offerings and schedules—is wholly without merit. Air Canada 

App. at 6. Furthermore, although Air Canada claims that its proposal will maximize 

public benefits by providing the first-ever nonstop Washington, D.C. service, it should be 

noted that Air Canada has been free to operate such service at IAD for many years without 

any limitations under the U.S.-Canada air services agreement, but has chosen not to do so.

Although precise O&D numbers for WAS-YVR traffic are, under the Department’s 

regulations, confidential, based on MIDT statistics, YVR is considerably smaller than 

SFO, VX-R-11 and, as set forth above, given the lack of actual or potential competition 

between Air Canada (which dominates international traffic at YVR) and a recently 

expanded United (which dominates international traffic at IAD), it is unlikely that Air 

Canada’s proposed once daily DCA-YVR nonstop service would significantly decrease 

fares or stimulate demand in the WAS-YVR market at levels that would result in any 

significant growth in the size of the local market. 

To be certain, Air Canada readily concedes that its real interest in operating 

nonstop DCA-YVR service is based, in large measure, on feeding the airline’s transpacific 

network at YVR, with its proposed schedule timed to connect to Air Canada YVR flights 

to and from Hong Kong, Seoul, Shanghai, Beijing, Sydney and Tokyo. Air Canada App. 

at Exh. AC-5. In this regard, it appears that Air Canada is eager to link DCA with its 

transpacific service at YVR because the airline will benefit from the Canadian Transit 

Without Visa program for foreign passengers using gateways in Canada for travel between 
36

third countries and the U.S., which are more permissive than U.S. requirements for such 

passengers in transit. Even assuming, arguendo, that Air Canada’s proposed service 

might benefit the level of competition for foreign, non-Canadian points beyond YVR, this 

factor should have very little, if any, decisional significance in this proceeding, as the 

recent statutory amendment is primarily focused on expanding service options between 

DCA and domestic points. If anything, the award of exemptions to Air Canada will 

facilitate diversion of valuable international connecting traffic from U.S. carriers at DCA.

Turning to Air Canada’s claims that its proposal would provide domestic Canadian 

network benefits, even such benefits are minimal. Indeed, the two largest markets that Air 

Canada claims would receive convenient online DCA connecting service over YVR—

Edmonton and Calgary—each involve backhauls and circuitous routings, VX-R-14, and 

already have ample and more convenient existing online connecting service on Air Canada 

over Toronto, while the remaining markets are, in the aggregate, very small. VX-R-15 and 

16.

Finally, long before DCA and IAD were leased by the Department to the 

Metropolitan Washington Airports Authority, Congress had established a scheme for air 

service development at these airports, with IAD as the airport intended for long-haul 

international service. The award of beyond-perimeter exemptions to Air Canada for longhaul, transborder service intended to siphon off third country connecting traffic would not 

be an appropriate use of these scarce public resources. Therefore, as between the 

competing beyond-perimeter exemption proposals of Air Canada and Virgin America, the 

proposal offered by Virgin America is clearly superior.
37

F. Sun Country’s Las Vegas Proposal

After Frontier’s proposal, Sun Country’s proposal for nonstop DCA-LAS service is 

the most lacking in public benefits. As an initial matter, Sun Country has very little 

experience operating scheduled point-to-point service at DCA, having only recently 

secured (and thereafter retained in the wake of an unfavorable court decision) withinperimeter exemptions for nonstop service between DCA and its focus city of Lansing, 

Michigan. 

Admittedly, new entrants and limited incumbents frequently lack connecting traffic 

opportunities at DCA. However, Sun Country barely has any presence at all in its 

proposed beyond-perimeter market, LAS, which it only serves from Minneapolis/St. Paul. 

VX-R-35. As a result, Sun Country’s application does not offer any opportunity for 

increased competition in multiple markets.

Moreover, Sun Country has not demonstrated a sustained commitment to the 

Washington, D.C. region, with no such service prior to receiving its two exemptions for 

single daily DCA-Lansing roundtrip service in late 2010. Indeed, the airline does not 

provide any scheduled service at either IAD or BWI, even though it has been free to do so 

at any time. And, even when considering its DCA-Lansing service, its success in the 

market is in doubt, having only achieved modest load factors since launching such service. 

VX-R-36.

Even when confronted with an application for DCA-LAS service involving 

substantial connecting opportunities (which is certainly not the case with Sun Country’s 

proposal), the Department has still chosen other competing applications, as was in the case 

in the Vision 100 allocations of beyond-perimeter exemptions, in which the Department 
38

properly rejected America West’s proposal for additional LAS nonstop service from DCA. 

Order 2004-4-1 (Apr. 1, 2004). 

As with JetBlue’s SJU proposal, LAS is a predominantly leisure market, and more 

importantly, is already served by US Airways on a nonstop basis from DCA, which more 

than satisfies demand in the local market and also offers convenient online connections at 

both ends of the route. More fundamentally, however, Sun Country’s proposal does not 

appear to be a natural fit within its existing pattern of service or apparent business plan. 

Tellingly, Sun Country’s application is not supported by a single exhibit to assist the 

Department in its analysis of Sun Country’s proposed service.

Sun Country’s reliance on its previous award of two within-perimeter exemptions 

in support of its current proposal is misplaced. There, the Department necessarily applied a 

wholly different set of statutory selection criteria under 49 U.S.C. § 41718(b), not 

applicable in this proceeding, in reaching its decision, including a selection criterion that 

considered service to a small community without nonstop service to DCA. Order 2010-12-

16 (Dec. 10, 2010), at 11. 

However, Sun Country’s current proposal, which must be assessed under 49 U.S.C. 

§ 41718(g), would only provide very marginal public benefits. Ultimately, scarce beyondperimeter DCA exemptions can (and should) be put to a far better use than to support Sun 

Country’s questionable service proposal. In sum, Virgin America’s proposal stands a 

vastly better chance of delivering the advantages that Congress delineated under FAA 

2012. 
39

IV. CONCLUSION

Virgin America’s proposal is superior to all of the other proposals in meeting the 

new allocation criteria in FAA 2012 and providing the greatest overall opportunity to serve

the traveling public in the DCA-SFO and beyond markets. With the institution of Virgin 

America’s service, the needs of the largest beyond-perimeter market currently without 

nonstop DCA service will be met, important competitive DCA service will be instituted by 

a new entrant and significant public benefits will be provided to passengers traveling to 

and from Washington, D.C. in precisely the manner intended by Congress when it 

significantly revised the slot exemption allocation criteria for new entrants and limited 

incumbents in FAA 2012. Accordingly, the Department should grant Virgin America’s

request for four DCA, beyond-perimeter slot exemptions to launch nonstop San Francisco

service as soon as possible.

Respectfully submitted,

______________________________

John E. Gillick

Jonathon H. Foglia

Zuckert, Scoutt & Rasenberger L.L.P.

888 Seventeenth Street, NW, Suite 700

Washington, D.C. 20006

Tel: (202) 973-7939

jegillick@zsrlaw.com

jhfoglia@zsrlaw.com

Counsel for 

Virgin America Inc.

March 27, 2012
CERTIFICATE OF SERVICE 

I hereby certify that on this 27th day of March, 2012, a copy of the foregoing 

Consolidated Comments of Virgin America was served via electronic mail on the parties 

named below: 

carl.nelson@aa.com 

jhill@dowlohnes.com 

perkmann@dowlohes.com 

robert.land@jetblue.com 

sascha. vanderbellen@del ta.com 

scott.mcclain@delta.com 

sametta.c.bamett@delta.com 

rbkeiner@crowell.com 

lhalloway@crowell.com 

gmurphy@crowell.com 

dan. weiss@united.com 

steve.morrissey@united.com 

j onathan.linde@united.com 

bob.kneisley@wnco.com 

leslie.abbott@wnco.com 

dkirstein@yklaw. com 

jyoung@yklaw.com 

marshall.sinick@squiresanders.com 

edward. sauer@squiresanders. com 

cdonley@squiresanders.com 

40 

robert.cohn@hoganlovells.com 

patrick.rizzi@hoganlovells.com 

anita.mosner@hklaw .com 

j ennifer.nowak@hklaw .com 

howard.kass@usairways.com 

benjamin.slocum@usairways.com 

john.fredericksen@suncountry.com 

sheryl.bregman@sfgov.org 

john.martin@flysfo.com 

susan.kurland@dot. gov 

todd.homan@dot. gov 

j ames.dann@dot. gov 

peter. irvine@ dot. gov 

dennis.devany@dot. gov 

esta.rosenberg@dot. gov 

brian.ctr.meehan@faa. gov 

j ohn.potter@mwaa.com 

j ohn.allen@faa. gov 

william. stallings@usdoj . gov 
i

Table of Rebuttal Exhibits

Rebuttal Exhibit Exhibit No.

Applicants’ Beyond-Perimeter DCA Proposals VX-R-1

Beyond-Perimeter Exemption Authority Sought VX-R-2

The San Francisco Metropolitan Area Is Much Larger Than All Other 

Proposed Markets

VX-R-3

SFO Is Larger Than All Other Proposed Points Currently Without Nonstop 

DCA Service

VX-R-4

SFO Is By Far The Largest U.S. Market For Which Beyond-Perimeter 

Exemptions Are Sought

VX-R-5

Virgin America, With No Slot Holdings At DCA, Is The Only True “New

Entrant” Applicant In This Proceeding

VX-R-6

Virgin America Best Meets The New Statutory Criteria For The Award Of 

These Eight Exemptions To New Entrants And Limited Incumbents

VX-R-7

Virgin America Is The Only Applicant To Provide WAS Service To Its 

Proposed Market Notwithstanding Barriers To Entry At DCA

VX-R-8

United BWI/DCA/IAD Nonstop SFO Flights VX-R-9

The San Francisco-DCA Market Will Support Many More Than Three Daily 

Roundtrip Flights

VX-R-10

Current DCA Share Of WAS Markets At Issue In This Proceeding VX-R-11

Top 20 Washington, D.C. O&D Markets VX-R-12

San Diego Is Not Any Applicant’s First Choice For Slot Exemptions VX-R-13

Air Canada’s Two Largest Claimed Canadian Connections, Which Account 

For Almost 80% Of The Claimed Canadian Benefits, Involve Significant 

Backhauls And Are Better Served Over Other Gateways

VX-R-14

Victoria And Kelowna Are Small Connecting Points Not Far From Seattle And 

Vancouver: Both Are Already Well Served Via Alaska’s SEA-DCA Flights

VX-R-15

Air Canada’s Remaining Connections Involve Very Small Points And Offer 

Few, If Any, Public Benefits

VX-R-16
ii

Rebuttal Exhibit Exhibit No.

Alaska, Which Already Holds 25 Percent of AIR 21/Vision 100 Exemptions, 

Would, If Its Application Were Granted, Hold Fully One-Third Of all Awarded 

Exemptions

VX-R-17

Alaska’s Actual Fares In DCA Are Very Close To The Industry Average And 

Much Higher Than Its Proposed Fares For DCA-PDX Or DCA-SAN

VX-R-18

Alaska’s Experience On Its DCA-SEA And DCA-LAX Routes Suggests The 

Airline Will Rely Heavily On The Same Connecting Traffic Traveling On These 

Routes To Fill Aircraft For Its Proposed DCA-PDX And DCA-SAN Service

VX-R-19

Among The Top 20 PDX O&D Markets, Washington, DC Ranks A Distant 16th, 

Even With Nonstop Daily IAD-PDX Service Provided By United

VX-R-20

All Of Alaska’s Portland-DCA Connecting Markets Already Receive One-Stop 

Connecting Service Over Seattle

VX-R-21

Alaska Provides Only Very Limited East Coast Service At Portland VX-R-22

Alaska Has Very Limited Operations At San Diego VX-R-23

Alaska’s DCA-SAN-HNL Schedule Is Not Convenient For Westbound 

Passengers And Extensive Connecting Service Exists For DCA-HNL 

Passengers

VX-R-24

Colorado Springs Is Only 73 Miles From Denver, Which Has Four Daily 

Nonstop DCA Flights

VX-R-25

Colorado Springs Is The Closest Proposed Point To Any Currently Served 

DCA Beyond-Perimeter Nonstop Point

VX-R-26

Three Of The Five Nonstop Routes That Frontier Serves, Or Will Serve, From 

Colorado Springs, Do Not Entail Daily Service And Four Of The Five Cities 

Already Have Nonstop DCA Service

VX-R-27

There Are Multiple DCA-SAN Flight Options Throughout The Day, In Addition 

To US Airways’ Recently Announced DCA-SAN Nonstop Service

VX-R-28

The Denver Area Already Has Extensive Nonstop SAN Service Provided By 

Three Competing Carriers, Including Frontier

VX-R-29

Frontier Should Not Receive Any Slot Exemptions Until Its Status Is Resolved VX-R-30

JetBlue Has Previously Abandoned The Washington, DC (Dulles) – San Juan 

Nonstop Market, As Have At Least Two Other Carriers

VX-R-31
iii

Rebuttal Exhibit Exhibit No.

Southwest’s Asserted Consumer Savings Are Overstated VX-R-32

DCA Travelers Already Have Ample DAL Connecting Opportunities VX-R-33

DCA Travelers Already Have Ample HOU Connecting Opportunities, 

Including Several Options Provided By Southwest’s Wholly-Owned 

Subsidiary, AirTran

VX-R-34

Sun Country Provides Extremely Limited Service At Las Vegas, And No 

Connecting Opportunities

VX-R-35

Sun Country’s Traffic Results To Date For Its Only DCA Service

Are Below Industry Average

VX-R-36
EXHIBIT VX-R-1

Page 1 of 1

Applicants’ Beyond-Perimeter DCA Proposals

Applicant Exemptions 

Requested

Proposed Roundtrip Service 

Description

Proposed 

Equipment

Air Canada 2 1x daily DCA-YVR A319

Alaska 4 1x daily DCA-PDX (first choice) B738

1x daily DCA-SAN-HNL B738

Frontier 2 1x daily DCA-COS-SAN A320

JetBlue 4 1x daily DCA-SJU (first choice) A320

1x daily DCA-AUS E190

Southwest 2 1x daily DCA-AUS-SAN B738

Sun Country 2 1x daily DCA-LAS B738

Virgin America 4 2x daily DCA-SFO A319

Source: Applicant filings in Docket OST-2012-0029.
EXHIBIT VX-R-2

Page 1 of 1

Beyond-Perimeter Exemption Authority Sought

Source: Applicant filings in Docket OST-2012-0029.
EXHIBIT VX-R-3

Page 1 of 1

The San Francisco Metropolitan Area Is Much Larger Than

All Other Proposed Markets 

Source: U.S. Census Bureau, Metropolitan Statistical Areas; Statistics Canada Census Divisions.
EXHIBIT VX-R-4

Page 1 of 1

SFO Is Larger Than All Other Proposed Points

Currently Without Nonstop DCA Service

Airport 2010 Enplanements

SFO 19,359,003

YVR 8,516,371

SAN 8,430,509

PDX 6,582,227

SJU 4,243,475

AUS 4,201,136

COS 877,367

Source: FAA, Passenger Boarding (Enplanement) and All-Cargo Data for U.S. Airports, CY2010 (latest year), 

available at http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger; Vancouver 

International Airport, YVR Passengers (Enplaned + Deplaned) 1992-2012, available at 

http://www.yvr.ca/Libraries/Facts_and_Stats/1992_-_2012_Enplaned-Deplaned_Passengers.sflb.ashx. For 

comparative purposes, VYR passengers (enplanements plus enplanements) have been divided in half.
EXHIBIT VX-R-5

Page 1 of 1

SFO Is By Far The Largest U.S. Market For Which

Beyond-Perimeter Exemptions Are Sought

Airport WAS (IAD & DCA) Annual O&D

SFO 1,002,840

LAS 422,650

SAN 373,690

PDX 195,870

AUS 175,160

SJU 151,370

COS 72,370

YVR 48,775

Source: OD1B database YE3Q2011, except Vancouver – MIDT2011.
EXHIBIT VX-R-6

Page 1 of 1

Virgin America, With No Slot Holdings At DCA, Is The Only True

“New Entrant” Applicant In This Proceeding

Source: FAA Table 5 – “DCA Slots – Previous, Current and as Proposed” in Docket No. FAA-2010-

0109,“Notice of a Petition for Waiver and Solicitation of comments on Grant of Petition With 

Conditions,” 76Fed. Reg. 45323 (July 28, 2011). FAA Holder Report (April 1, 2011) as adjusted to 

reflect subsequent developments. Each slot authorizes either one departure or one arrival.
EXHIBIT VX-R-7

Page 1 of 2

Virgin America Best Meets The New Statutory Criteria For The Award Of These 

Eight Exemptions To New Entrants And Limited Incumbents

Carrier Beyondperimeter 

domestic 

network 

benefits 

Increase 

competition in 

multiple 

markets

Not 

reduce 

withinperimeter 

travel 

options 

Not 

Increase 

travel 

delays

Enhance 

nonstop 

options 

Positive 

impact on 

the overall 

level of 

competition 

in the 

markets that 

will be 

served

Public benefits, 

including lower 

fares, higher 

capacity, and a 

variety of 

service options

Air 

Canada

No; only 

international 

network 

benefits

No; most of the 

markets 

beyond YVR are 

only served by 

Canadian 

carriers

Yes Yes Yes No; DCA-YVR 

would be a 

monopoly 

nonstop 

route

No; Air Canada 

is not a low fare 

carrier

Alaska

(PDX 

proposal)

No; AS can 

already 

connect DCA 

traffic to 

points 

beyond PDX 

via SEA or 

LAX

No; AS can 

already connect 

DCA traffic to 

points beyond 

PDX via SEA or 

LAX

Yes Yes Yes No; DCAPDX would 

be a 

monopoly 

nonstop 

route

No; Alaska is not 

a low fare 

carrier

Alaska 

(SAN 

proposal)

No; AS can 

already 

connect DCA 

traffic to 

points 

beyond SAN 

via SEA or 

LAX

No; AS can 

already connect 

DCA traffic to 

points beyond 

SAN via SEA or 

LAX

Yes Yes Yes Yes No; Alaska is not 

a low fare 

carrier

Frontier No; F9 can 

already 

connect DCA 

traffic to 

points 

beyond COS 

via DEN 

No; F9 can 

already connect 

DCA traffic to 

points beyond 

COS via DEN 

Yes Yes Yes No; DCACOS would 

be a 

monopoly 

nonstop 

route 

Yes
EXHIBIT VX-R-7

Page 2 of 2

Carrier Beyondperimeter 

domestic 

network 

benefits 

Increase 

competition in 

multiple 

markets

Not 

reduce 

withinperimeter

travel 

options 

Not 

Increase 

travel 

delays

Enhance 

nonstop 

options 

Positive 

impact on 

the overall 

level of 

competition 

in the 

markets that 

will be 

served

Public benefits, 

including lower 

fares, higher 

capacity, and a 

variety of 

service options

JetBlue

(SJU 

proposal)

No; B6 

would only 

provide 

limited 

connecting 

service at 

SJU, 

including 

inconvenient 

interline 

service

No; B6 would 

only provide 

limited 

connecting 

service at SJU, 

including 

inconvenient 

interline service

Yes Yes Yes No; B6 

would not 

compete on 

a nonstop 

basis with 

any carriers 

on the route

Yes

JetBlue 

(AUS 

proposal)

No; B6 

would only 

provide 

limited 

connecting 

service at 

AUS

No; B6 would 

only provide 

limited 

connecting 

service at AUS

Yes Yes Yes No; B6 

would not 

compete on 

a nonstop 

basis with 

any carriers 

on the route

Yes

Southwest No; WN 

would only 

provide 

limited 

connecting 

service at 

AUS

No; WN would 

only provide 

limited 

connecting 

service at AUS

Yes Yes Yes No; WN 

would not 

compete on 

a nonstop 

basis with 

any carriers 

on the route

Yes

Sun 

Country

No; SY 

would not 

provide any 

connecting 

service at 

LAS

No; SY would 

not provide any 

connecting 

service at LAS

Yes Yes No; 

DCA-LAS 

already 

has 

nonstop 

service

Yes Yes

Virgin 

America

Yes Yes Yes Yes Yes Yes Yes

Source: Applicant filings in Docket OST-2012-0029.
EXHIBIT VX-R-8

Page 1 of 1

Virgin America Is The Only Applicant To Provide WAS Service To Its Proposed 

Market Notwithstanding Barriers To Entry At DCA

Applicants DCA Market Service To IAD

Air Canada Vancouver No

Alaska Portland

San Diego

No

No

Frontier Colorado Springs No

jetBlue San Juan

Austin

No

No

Southwest Austin No

Sun Country Las Vegas No

Virgin America San Francisco Yes

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-9

Page 1 of 1

United BWI/DCA/IAD Nonstop SFO Flights

Option Org Dst Equip Departure Time Arrival Time

1 BWI SFO 320 0600 0909

2 IAD SFO 752 0602 0911

3 DCA1 SFO 73G 0800 1105

4 IAD SFO 752 0810 1112

5 IAD SFO 752 0906 1215

6 IAD SFO 319 0941 1250

7 IAD SFO 752 1228 1523

8 IAD SFO 752 1500 1805

9 IAD SFO 320 1652 2000

10 IAD SFO 777 1720 2005

11 IAD SFO 752 1907 2203

12 IAD SFO 320 2201 0100 (next day)

Option Org Dst Equip Departure Time Arrival Time

1 SFO IAD 777 0751 1549

2 SFO IAD 320 0852 1655

3 SFO IAD 320 0959 1809

4 SFO IAD 320 1039 1844

5 SFO DCA2 73G 1300 2117

6 SFO IAD 763 1302 2108

7 SFO IAD 319 1603 2359

8 SFO BWI 752 1621 0026 (next day)

9 SFO IAD 320 1658 0100 (next day)

10 SFO IAD 752 2234 0642 (next day)

11 SFO IAD 320 2306 0718 (next day)

Source: Innovata schedules via diio.net.

 1 Begins May 15, 2012.

2 Begins May 14, 2012.
EXHIBIT VX-R-10

Page 1 of 2

The San Francisco – DCA Market Will Support

Many More Than Three Daily Roundtrip Flights

1. The Washington, DC (DCA and IAD)—San Francisco and the DCA—SFO 

(existing connecting and one-stop services) markets are beyond question the largest U.S. 

market at issue in this proceeding:

WAS DCA

San Francisco 1,002,840 155,300

Las Vegas 422,650 181,140

San Diego 373,690 133,420

Portland 195,870 99,030

Austin 175,160 89,090

San Juan 151,370 55,870

Colorado Springs 72,370 33,290

Vancouver 48,775 27,181

VX-R-5.

2. The size of the DCA-SFO market is, however, significantly understated, 

because it does not receive any nonstop DCA service. In the top 20 DCA markets, 60 

percent of the passengers in these Washington, DC (DCA and IAD) markets actually use DCA. 

VX-R-12.

3. When the size of the DCA—SFO and other DCA markets at issue in this 

proceeding are adjusted to reflect this impact of nonstop DCA service, the differences in the 

absolute size between the DCA—SFO and the other DCA markets grows even larger:

Current 

DCA

DCA As 

Adjusted1

Increase in 

DCA Potential

San Francisco 155,300 601,704 446,404

Las Vegas 181,140 253,590 72, 450

San Diego 133,420 224,214 90,794

Portland 99,030 117,522 18,492

Austin 89,090 105,096 16,006

San Juan 55,870 90,822 34,952

Colorado Springs 33,290 43,422 10,132

Vancouver 27,181 29,265 2,084

 1 Adjustment reflects DCA accounting for 60% of overall WAS (DCA and IAD) O&D market.
EXHIBIT VX-R-10

Page 2 of 2

4. The average passenger load factor in all DCA markets is approximately 75 

percent. DOT Domestic T-100 data. On this basis, it would take a total of 595,205 seats to 

accommodate the anticipated increase in demand in the SFO—DCA market. Assuming the 

institution of roundtrip service by United and the award of sufficient slot exemptions to 

permit Virgin America to provide two roundtrip flights per day, there would nonetheless be 

a shortage of 330,945 seats in the DCA—SFO market after these awards.

5. This serious shortfall in available seats would not occur in any of the other 

markets at issue in this proceeding.

Source: OD1B database YE3Q2011, except Vancouver – MIDT2011.
EXHIBIT VX-R-11

Page 1 of 1

Current DCA Share Of WAS Markets At Issue In This Proceeding

DCA IAD WAS DCA Share

San Francisco 155,300 847,540 1,002,840 15.5%

Las Vegas 181,140 241,510 422,650 42.9%

San Diego 133,420 240,270 373,690 35.7%

Portland 99,030 96,840 195,870 50.6%

Austin 89,090 86,070 175,160 50.9%

San Juan 55,870 95,500 151,370 36.9%

Colorado Springs 33,290 39,080 72,370 46.0%

Vancouver 27,181 21,594 48,775 55.7%

Source: OD1B database YE3Q2011, except Vancouver – MIDT2011.
EXHIBIT VX-R-12

Page 1 of 1

Top 20 Washington, DC O&D Markets

DCA IAD Total

DCA Share of 

WAS

1. Boston 1,019,930 417,370 1,437,300 71%

2. Los Angeles 222,100 899,830 1,121,930 20%

3. Chicago (ORD) 856,800 219,120 1,075,920 80%

4. Atlanta 746,130 313,010 1,059,140 70%

5. Orlando 636,930 388,890 1,025,820 62%

6. San Francisco 155,300 847,540 1,002,840 15%

7. Dallas/Ft. Worth 483,120 244,390 727,510 66%

8. Ft. Lauderdale 515,040 184,980 700,020 74%

9. Denver 320,480 356,260 676,740 47%

10. New York (LGA) 538,530 64,940 603,470 89%

11. Miami 440,840 101,430 542,270 81%

12. Minneapolis/St. Paul 343,340 106,720 450,060 76%

13. Seattle 240,860 193,210 434,070 55%

14. Las Vegas 181,140 241,510 422,650 43%

15. Tampa 273,990 130,090 404,080 68%

16. Houston (IAH) 284,760 103,720 388,480 73%

17. San Diego 133,420 240,270 373,690 36%

18. Kansas City 210,630 78,220 288,850 73%

19. Detroit 209,780 71,620 281,400 75%

20. Phoenix 173,910 100,520 274,430 63%

Average 399,352 265,182 664,534 60%

Source: OD1B database YE3Q2011.
EXHIBIT VX-R-13

Page 1 of 1

San Diego Is Not Any Applicant’s First

Choice For Slot Exemptions

Applicant Application Priority

Alaska Portland is Alaska’s priority.

Frontier Frontier seeks only one-stop, not nonstop, 

DCA service.

Southwest Southwest seeks only one-stop, not nonstop, 

DCA service.

Source: Applicant filings in DOT Docket OST-2012-0029.
EXHIBIT VX-R-14

Page 1 of 1

Air Canada’s Two Largest Claimed Canadian Connections, Which Account

For Almost 80% Of The Claimed Canadian Benefits, Involve Significant Backhauls

And Are Better Served Over Other Gateways

Calgary And Edmonton Are Better Served Over Other Gateways

Best Connecting 

Mileages

Mileage via 

YVR

YVR 

Disadvantage

Calgary (YYC) DL via MSP 1982 2794 812 Mi (41%)

UA via ORD 1997 797 Mi (40%)

AC via YYZ 2034 760 Mi (37%)

Edmonton (YEG) DL via MSP 2017 2870 853 Mi (42%)

UA via ORD 2031 839 Mi (41%)

AC via YYZ 2034 760 Mi (41%)

Calgary And Edmonton Account For 80 Percent

Of The Claimed Benefits

Airport

Daily Each Way

Scheduled Seat

Departures

Percentage of

Total Seat

Departures

Calgary, AB 21,424 51.24%

Edmonton, AB 11,596 27.74%

Subtotal 33,020 78.98%

Kelowna, BC 2,711 6.48%

Victoria, BC 2,583 6.18%

Other 12 Canadian Airports 3,497 8.36%

Total 16 Canadian Airports 41,811 100.00%

Sources: Great Circle Mapper (www.gcmap.com); OAG, Schedules iNet (www.oag.com) for 

March 2012.
EXHIBIT VX-R-15

Page 1 of 1

Victoria And Kelowna Are Small Connecting Points Not Far

From Seattle And Vancouver: Both Are Already Well Served Via

Alaska’s SEA-DCA Flights

Airport Distance From 

Seattle Service Via Seattle

Victoria, BC 211 Mi 2/day AS Nonstop to Nonstop

Kelowna, BC 98 Mi 2/day AS Nonstop to Nonstop

Sources: Great Circle Mapper (www.gcmap.com); OAG, Schedules iNet (www.oag.com) for 

March 2012.
EXHIBIT VX-R-16

Page 1 of 1

Air Canada’s Remaining Connections Involve Very Small Points

And Offer Few, If Any, Public Benefits

Airport

Daily Each Way 

Scheduled Seat 

Departures

Share of Airport 

Total

Prince George, BC 752 1.80%

Kamloops, BC 550 1.31%

Whitehorse, YT 505 1.21%

Nanaimo, BC 292 0.70%

Fort St. John, BC 286 0.68%

Cranbrook, BC 281 0.67%

Terrace, BC 244 0.58%

Castlegar, BC 155 0.37%

Penticton, BC 140 0.34%

Smithers, BC 138 0.33%

Prince Rupert, BC 118 0.28%

Sandspit, BC 37 0.09%

Source: OAG, Schedules iNet (www.oag.com) for March 2012.
EXHIBIT VX-R-17

Page 1 of 1

Alaska, Which Already Holds 25 Percent Of AIR-21/Vision 100 Exemptions, 

Would, If Its Application Were Granted, Hold Fully One-Third 

Of All Awarded Exemptions

Carrier

DCA Beyond-Perimeter

Exemptions Previously Awarded Share of Total Awarded

Alaska 6 25.00%

Frontier 6 25.00%

US Airways 8 33.33%

United 2 8.33%

Delta 2 8.33%

Total Awarded 24

Carrier

FAA 2012 Beyond-Perimeter

Exemptions Requested New Share of Total Awarded

Alaska 4 31.3%

Total Available for Award 8

Source: DOT Dockets OST-2000-7181 and OST-2012-0029.
EXHIBIT VX-R-18

Page 1 of 1

Alaska’s Actual Fares In DCA Are Very Close To The Industry Average And Much 

Higher Than Its Proposed Fares For DCA-PDX Or DCA-SAN 

Nonstop AS Market Alaska Actual Fares Industry Fares

DCA-LAX $227 $239

DCA-SEA $285 $273

Connecting AS Market Alaska Actual Fares Industry Fares

DCA-PDX $223 $262

DCA-SAN $310 $265

Alaska Proposed Nonstop 

Market (Proposed Fares)

Comparative Alaska Nonstop 

Market 

(Alaska Actual Fares) Differential

DCA-PDX ($169) DCA-SEA ($285) +68.6%

DCA-SAN ($179) DCA-LAX ($227) +26.8%

Source: OD1B database YE3Q2011 for passengers reported by Alaska Airlines and subsidiary 

Horizon Airlines; Alaska proposed fares based on Exhibit AS-D-9 to Alaska’s application and are 

peak day only.
EXHIBIT VX-R-19

Page 1 of 1

Alaska’s Experience On Its DCA-SEA and DCA-LAX Routes Suggests The Airline 

Will Rely Heavily On The Same Connecting Traffic Traveling On These Routes To 

Fill Aircraft For Its Proposed DCA-PDX And DCA-SAN Service

DCA-SEA

Local Pax/Total Pax

Per AS Flight

DCA-PDX

Total Pax Projected by AS

Per AS Flight

Count 93/139 141

DCA-LAX

Local Pax/Total Pax

Per AS Flight

DCA-SAN

Total Pax Projected by AS

Per AS Flight

Count 96/122 138

Source: Alaska Application at AS-D-8; AS-D-10.
EXHIBIT VX-R-20

Page 1 of 1

Among the Top 20 PDX O&D Markets, Washington, D.C. Ranks A Distant 16th, 

Even With Nonstop Daily IAD-PDX Service Provided By United 

Rank Market Annual O&D

1 PHX 478,100

2 LAS 468,510

3 DEN 435,920

4 LAX 416,590

5 SMF 362,220

6 OAK 349,490

7 SJC 324,760

8 SAN 311,330

9 SFO 279,340

10 SNA 269,150

11 SLC 262,190

12 ORD 221,810

13 HNL 209,510

14 SEA 200,500

15 OGG 200,100

16 WAS1 195,870

17 LGB 188,580

18 BOI 186,210

19 GEG 185,340

20 DFW 180,790

Source: OD1B database YE3Q2011.

 1 WAS count includes both DCA and IAD.
EXHIBIT VX-R-21

Page 1 of 1

All Of Alaska’s Portland-DCA Connecting Markets

Already Receive One-Stop Connecting Service Over Seattle

DCA Connecting Markets 

via PDX Served via SEA

Anchorage, AK Yes

Bellingham, WA Yes

Eugene, OR Yes

Medford, OR Yes

Redmond, OR Yes

San Francisco, CA Yes

San Jose, CA Yes

Spokane, WA Yes

Vancouver, BC Yes

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-22

Page 1 of 1

Alaska Provides Only

Very Limited East Coast Service At Portland 

East Coast PDX Market Alaska Service

Boston Yes

New York No

Philadelphia No

Washington, DC No

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-23

Page 1 of 1

Alaska Has Very Limited Operations At San Diego

Alaska’s Daily SAN Departures

Airport Jul-11 Jul-12

FAT 0.0 2.0

HNL 0.0 1.0

MRY 0.0 1.0

OGG 1.0 1.6

PDX 3.0 3.6

PVR 0.0 0.4

SEA 7.6 7.9

SJD 1.1 1.1

STS 0.0 1.0

Total 12.7 19.6

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-24

Page 1 of 1

Alaska’s DCA-SAN-HNL Schedule Is Not Convenient For Westbound Passengers 

And Extensive Connecting Service Exists For DCA-HNL Passengers

DCA-HNL Service

Option Carrier

Connection 

or OneStop Via Dep Time Arr Time

1 UA CNX IAH 0600 1302

2 UA CNX ORD 0700 1401

3 US CNX PHX 0700 1434

4 AA CNX DFW 0710 1430

5 UA 1 ORD 0734 1401

6 DL CNX ATL 0759 1510

7 UA CNX EWR 0830 1740

8 AA CNX DFW 0930 1640

9 US CNX PHX 1030 1748

AS Proposed HNL Arrival: 2330

HNL-DCA Service

Option Carrier

Connection 

or OneStop Via Dep Time Arr Time

1 AA CNX DFW 1645 1000

2 DL CNX ATL 1645 1009

3 AA CNX DFW 1855 1255

4 UA CNX ORD 1905 1152

5 UA CNX IAH 1920 1304

6 UA CNX EWR 1925 1417

7 DL CNX SLC 2055 1557

8 AS CNX SEA 2135 1637

9 UA CNX DEN 2200 1534

10 US CNX PHX 2250 1559

AS Proposed DCA Arrival: 1510

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-25

Page 1 of 1

Colorado Springs Is Only 73 Miles

From Denver, Which Has Four Daily Nonstop DCA Flights

Source: Innovata schedules via diio.net; Great Circle Mapper, www.gcmap.com.
EXHIBIT VX-R-26

Page 1 of 1

Colorado Springs Is The Closest Proposed Point

To Any Currently Served DCA Beyond-Perimeter Nonstop Point

City

Closest Airport 

with Nonstop DCA 

Service

Distance

Colorado Springs Denver 73 miles

San Diego Los Angeles 109 miles

Portland Seattle 129 miles

Austin Dallas/Ft. Worth 190 miles

Source: Great Circle Mapper, available at http://www.gcmap.com/. 
EXHIBIT VX-R-27

Page 1 of 1

Three of the Five Nonstop Routes That Frontier Serves, Or Will Serve, From 

Colorado Springs, Do Not Entail Daily Service And Four of the Five Cities Already 

Have Nonstop DCA Service

Note: Frontier’s COS-LAX/PDX/PHX/SEA services will not begin until May 2012, and, thereafter, only 

COS-PHX will be served on a daily basis.

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-28

Page 1 of 3

There Are Multiple DCA-SAN Flight Options Throughout The Day, In Addition To 

US Airways’ Recently Announced DCA-SAN Nonstop Service

DCA-SAN Service

Option Carrier

Connection 

or OneStop Via Dep Time Arr Time

1 US CNX CLT 0545 1011

2 AA CNX DFW 0600 1010

3 DL CNX DTW 0600 1041

4 UA CNX ORD 0600 1043

5 UA CNX IAH 0600 1050

6 AA CNX ORD 0610 1055

8 DL CNX MSP 0638 1115

9 UA CNX EWR 0651 1141

10 US CNX PHX 0700 1131

11 UA CNX IAH 0700 1210

12 AA CNX DFW 0710 1220

13 DL CNX MSP 0725 1332

14 AS CNX SEA 0755 1414

15 DL CNX ATL 0759 1256

16 UA CNX IAH 0800 1419

17 UA CNX ORD 0825 1258

18 F9 CNX DEN 0845 1424

19 AA CNX DFW 0930 1355

20 AA CNX ORD 1000 1430

21 UA CNX ORD 1025 1447

22 US CNX PHX 1030 1507

23 AA CNX DFW 1050 1500

24 UA CNX EWR 1117 1911

25 AA CNX DFW 1145 1635

26 B6 CNX BOS 1200 1938

27 DL CNX ATL 1300 1822

28 AA CNX JFK 1300 2005

29 F9 CNX DEN 1321 1931

30 US CNX PHL 1340 1855

31 AA CNX DFW 1359 1905

32 UA CNX IAH 1359 1955

33 AA CNX ORD 1410 1835

34 DL CNX MSP 1430 1930

35 UA CNX ORD 1437 2018

36 UA CNX EWR 1440 2034

37 DL CNX JFK 1441 2007

38 AA CNX DFW 1505 1950

39 US CNX PHL 1515 2057
EXHIBIT VX-R-28

Page 2 of 3

DCA-SAN Service (Cont’d)

Option Carrier

Connection 

or OneStop Via Dep Time Arr Time

40 UA CNX IAH 1525 2110

41 UA 1 ORD 1540 2018

42 US CNX CLT 1540 2038

43 DL CNX ATL 1600 2110

44 DL CNX DTW 1605 2127

45 AA CNX DFW 1650 2135

46 DL CNX SLC 1659 2243

47 US CNX PHX 1700 2118

48 UA CNX DEN 1700 2343

49 UA 1 ORD 1737 2355

50 UA CNX IAH 1743 2245

51 AA CNX ORD 1810 2250

52 F9 CNX DEN 1815 2230

53 AA CNX DFW 1825 2335

54 DL CNX MSP 1845 2323

55 DL CNX ATL 1900 2355

56 UA CNX ORD 1935 2355

SAN-DCA Service

Option Carrier

Connection 

or OneStop Via Dep Time Arr Time

1 DL CNX SLC 0615 1557

2 UA CNX ORD 0618 1550

3 AA CNX DFW 0620 1600

4 US CNX PHL 0620 1656

5 UA 1 DEN 0625 1605

6 AA CNX ORD 0625 1719

7 DL 1 MSP 0630 1622

8 US CNX PHX 0630 1559

9 F9 CNX DEN 0630 1654

10 DL CNX MSP 0630 1839

11 DL CNX ATL 0645 1710

12 UA CNX IAH 0655 1659

13 DL CNX JFK 0700 1821

14 DL CNX DTW 0730 1719

15 AA CNX JFK 0740 1830

16 AA CNX DFW 0745 1735

17 UA CNX EWR 0746 1827

18 DL CNX ATL 0800 1816

19 AS CNX SEA 0800 2155

EXHIBIT VX-R-28

Page 3 of 3
SAN-DCA Service (Cont’d)

Option Carrier

Connection 

or OneStop Via Dep Time Arr Time

20 UA CNX IAH 0817 1833

21 AA CNX DFW 0920 1905

22 US CNX PHX 0950 1931

23 AA CNX ORD 1000 2120

24 F9 CNX DEN 1021 2145

25 DL CNX ATL 1100 2115

26 AA CNX DFW 1105 2035

27 US CNX CLT 1115 2117

28 DL CNX DTW 1125 2113

29 UA CNX ORD 1131 2116

30 AA 1 ORD 1145 2120

31 UA CNX IAH 1145 2159

32 AA CNX ORD 1145 2300

33 US CNX PHX 1230 2158

34 DL CNX MSP 1230 2245

35 UA 1 IAH 1245 2259

36 AA CNX DFW 1305 2335

37 UA CNX ORD 1349 2347

38 DL CNX ATL 1350 2335

39 AA CNX DFW 1550 0100 (next day)

40 UA CNX EWR 2130 0756 (next day)

41 DL CNX JFK 2145 1024 (next day)

42 B6 CNX BOS 2150 0901 (next day)

43 US CNX PHL 2215 0823 (next day)

44 DL CNX ATL 2230 1009 (next day)

45 US CNX CLT 2235 1000 (next day)

46 UA CNX ORD 2245 0934 (next day)

47 DL CNX MSP 2255 1103 (next day)

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-29

Page 1 of 1

The Denver Area Already Has Extensive Nonstop SAN Service

Provided By Three Competing Carriers, Including Frontier

DEN-SAN Nonstop Service

Option Carrier Dep Time Arr Time

1 WN 0600 0735

2 UA 0807 0931

3 F9 0820 0941

4 WN 1000 1130

5 UA 1132 1254

6 F9 1305 1424

7 WN 1400 1530

8 WN 1745 1915

9 F9 1810 1931

10 UA 1921 2054

11 F9 2110 2230

12 WN 2140 2300

13 UA 2212 2343

SAN-DEN Nonstop Service

Option Carrier Dep Time Arr Time

1 UA 0625 0945

2 F9 0630 0954

3 WN 0650 1010

4 UA 0726 1046

5 F9 1021 1335

6 WN 1105 1420

7 UA 1126 1441

8 WN 1330 1640

9 F9 1505 1820

10 UA 1507 1819

11 WN 1555 1905

12 UA 1743 2055

13 F9 2006 2316

14 WN 2055 0010

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-30

Page 1 of 2

Frontier Should Not Receive Any Slot Exemptions 

Until Its Status is Resolved

Republic Hones Its Pitch To Sell or Spin Off Frontier

By JACK NICAS

Wall Street Journal, Feb. 7. 2012

Republic Airways Holdings Inc. is gearing up to make the pitch that its money-losing Frontier Airlines unit is a good 

investment.

Chairman and Chief Executive Bryan Bedford said the regional carrier is close to hiring financial advisers to help sell 

Frontier, which Republic purchased in bankruptcy court in October 2009 and decided to sell two years later. 

The Indianapolis-based carrier appointed new management to steer Frontier through the sale and recently 

achieved $120 million in annual cost savings to make the Denver-based unit more attractive to potential buyers. 

Frontier is talking to three financial advisers and could have a decision soon, he said. 

Mr. Bedford said the two most likely routes are: selling Frontier, entirely or in part to a private-equity firm, or 

spinning it off to Republic shareholders. 

"I want whatever is best for Republic shareholders," Mr. Bedford said in an interview with The Wall Street Journal. 

"I'm certainly not in a rush to reach a transaction."

Mr. Bedford said the chances another airline will acquire Frontier are "very, very low." Frontier doesn't fit well with 

many U.S. airlines and some potential buyers are tied up completing recent acquisitions, he said. JetBlue Airways

Corp., Spirit Airlines Inc. and Allegiant Air could each fit well with Frontier, but have shown little interest, he added.

Mr. Bedford said that, at the very least, Frontier must be "better capitalized" to handle the 80 aircraft it is 

scheduled to begin taking on in 2016.

In 2009, Mr. Bedford bought Frontier in a $1.1 billion gamble to diversify its business of flying smaller aircraft for 

other airlines because growth in that sector was slowing and customers were squeezing suppliers' margins. He also 

figured the industry would consolidate and bet a low-cost carrier would help Republic tap into an "attractive" 

segment of the market. 

But soon after, the new Frontier was slammed by high fuel costs and its passenger traffic fell to No. 3 in Denver, 

behind Southwest Airlines Co. and United Airlines. Frontier has lost $235 million in two years on a pretax basis, 

dragging Republic to $16.5 million in losses since it purchased the airline.

Since news of Republic's plans to unload Frontier emerged, Republic shares have risen nearly 130%. The stock 

finished off nine cents at $6.17 in 4 p.m. trading on the Nasdaq Stock Market.

Republic's plans for Frontier are to position the airline as an "ultra low-cost" carrier, a market now served 

profitably by Spirit and Allegiant Travel Co.'s Allegiant subsidiary, Mr. Bedford said. Frontier spends about 7.23 

cents to fly a seat a mile, excluding fuel, compared with about 5.64 cents for Spirit and Allegiant, the lowest in the 

industry. To close the gap, Mr. Bedford said Frontier will move to bigger aircraft and fly its existing fleet more 

hours per day. He said Frontier could reduce its unit cost to below six cents a seat mile by 2013.

Frontier, which is now led by former US Airways Group CEO David Siegel, will retain its in-flight entertainment 

services, Mr. Bedford said, including wireless Internet, live television and satellite radio on some flights. "We still 

like our customers," he said. "So we're not trying to alienate them."

 
EXHIBIT VX-R-30

Page 2 of 2

Frontier has also begun more aggressively analyzing routes for profitability, Mr. Bedford said, cutting and adding 

service where appropriate. Mr. Bedford said the strategy will allow the airline to hold revenues flat in 2012 while 

cutting capacity by 10% to 12%. Frontier also recently added new streams of revenue, such as operating charter 

flights for Apple Vacations Inc.

Meanwhile, Republic is addressing the increasing challenges for regional airlines. The CEO said demand among 

airline customers is strong for its larger 70-seat regional jets. But its 50-seat jets, which are costly to fly with oil 

prices at current high levels, have become unattractive assets. Republic has parked nine of those jets already and 

plans to ground another five of the aircraft this year, he said. 

Republic remains profitable and last week raised its fourth-quarter guidance to per share earnings of between 31 

cents and 36 cents, excluding big restructuring charges. It is expected to report its fourth-quarter results on Feb. 

28.

Republic sees opportunities the reorganization at American Airlines' parent AMR Corp., which hopes to outsource 

more flying to regional carriers like Republic. Other airlines, such as United Continental Holdings Inc., are 

negotiating contracts with their pilots, and are expected to also seek more authority to contract more flying to 

regional airlines, which saves mainline carriers money, he said.

Source: Wall Street Journal
EXHIBIT VX-R-31

Page 1 of 1

JetBlue Has Previously Abandoned

The Washington, DC (Dulles) – San Juan Nonstop Market,

As Have At Least Two Other Carriers

Carrier Inaugurated IAD-SJU Terminated IAD-SJU

American November 2009 April 2011

JetBlue December 2008 April 2010

US Airways March 2004 May 2007

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-32

Page 1 of 1

Southwest’s Asserted Consumer Savings Are Overstated 

DCA-AUS Market Analysis

Market Miles Passengers Average Fare Service

DCA-AUS 1,315 71,269 $ 168.63 Proposed Daily 

Nonstop

BWI-AUS 1,339 139,190 $ 212.64 2/Day Nonstop

IAD-AUS 1,295 11,620 $ 206.04 Connections

HOU-ONT 1,341 24,490 $ 229.28 Daily One-Stop 

HOU-SNA 1,352 22,100 $ 218.20 Daily One-Stop 

and Connections

DCA-SAN Market Analysis

Market Miles Passengers Average Fare Service

DCA-SAN 2,276 10,067 $ 196.41 Proposed Daily 

One-Stop

BWI-SAN 2,288 164,880 $ 235.01 2/Day Nonstop; 

Daily One-Stop

IAD-SAN 2,247 25,700 $ 223.24 Connections

BWI-ONT 2,277 22,950 $ 225.47 Daily One-Stop 

and Connections

BWI-RNO 2,279 26,890 $ 220.67 Daily One-Stop

Source: Southwest App. at WN-200; OD1B database and DOT T-100 data (YE3Q2011); Innovata 

schedules via diio.net.
EXHIBIT VX-R-33

Page 1 of 1

DCA Travelers Already Have Ample DAL Connecting Opportunities

DCA-DAL Service

Option Carrier

Connection 

or OneStop ViaDep 

Time

Arr 

Time

1 DL CNX MEM 0610 1025

2 UA CNX IAH 0800 1214

3 DL CNX MEM 1140 1515

4 UA CNX IAH 1210 1640

5 UA CNX IAH 1359 1841

6 UA CNX IAH 1525 2041

7 UA CNX DEN 1703 2244

8 DL CNX MEM 1710 2115

DAL-DCA Service

Option Carrier

Connection 

or OneStop ViaDep 

Time

Arr 

Time

1 UA CNX IAH 0600 1259

2 DL CNX MEM 0610 1203

3 UA CNX DEN 0912 1603

4 UA CNX IAH 1022 1656

5 DL CNX MEM 1150 1759

6 UA CNX IAH 1245 1833

7 UA CNX IAH 1339 2009

8 UA CNX IAH 1555 2159

9 DL CNX MEM 1630 2215

10 UA CNX IAH 1710 2259

Source: Innovata schedules via diio.net.
EXHIBIT VX-R-34

Page 1 of 2

DCA Travelers Already Have Ample HOU Connecting Opportunities, Including 

Several Options Provided By Southwest’s Wholly-Owned Subsidiary, AirTran

DCA-HOU Service

Option Carrier

Connection 

or OneStop ViaDep 

Time

Arr 

Time

1 DL CNX ATL 0600 0946

2 FL CNX ATL 0600 1000

3 DL CNX CVG 0625 1048

4 F9 1 MCI 0645 1055

5 DL CNX ATL 0700 1152

6 AA CNX DFW 0710 1145

7 AA CNX DFW 0930 1450

8 DL CNX ATL 1100 1517

9 DL CNX CVG 1125 1534

10 AA CNX DFW 1145 1615

11 FL (WN) CNX ATL 1243 1821

12 DL CNX ATL 1300 1729

13 AA CNX DFW 1359 1905

14 DL CNX JFK 1441 2232

15 DL CNX ATL 1700 2057

16 FL (WN) CNX ATL 1840 2223

17 DL CNX ATL 1900 2331

HOU-DCA Service

Option Carrier

Connection 

or OneStop ViaDep 

Time

Arr 

Time

1 DL CNX ATL 0600 1215

2 FL (WN) CNX ATL 0630 1159

3 DL CNX ATL 0710 1312

4 DL CNX CVG 0740 1259

5 AA CNX DFW 0820 1415

6 DL CNX ATL 0912 1505

7 AA CNX DFW 1015 1600

8 DL CNX ATL 1021 1607

9 FL (WN) CNX ATL 1035 1542

10 DL CNX JFK 1123 1816

11 AA CNX DFW 1215 1905
EXHIBIT VX-R-34

Page 2 of 2

HOU-DCA Service (Cont’d)

Option Carrier

Connection 

or OneStop ViaDep 

Time

Arr 

Time

12 F9 CNX DEN 1220 2145

13 DL CNX ATL 1227 1816

14 DL CNX ATL 1555 2213

15 DL CNX CVG 1609 2126

16 AA CNX DFW 1645 2200

17 AA CNX DFW 1750 2335

18 DL CNX ATL 1810 2335

19 FL (WN) CNX ATL 1856 2359

20 AA CNX DFW 1935 0100

Source: Innovata schedules via diio.net. 
EXHIBIT VX-R-35

Page 1 of 1

Sun Country Provides Extremely Limited

Service At Las Vegas, And No Connecting Opportunities

Source: Innovata schedules via diio.net; Great Circle Mapper, www.gcmap.com.
EXHIBIT VX-R-36

Page 1 of 1

Sun Country’s Traffic Results To Date For Its Only DCA Service

Are Below Industry Average

Source: DOT T-100 data.