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 ) pu rsuant 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 Senio r 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, S coutt & 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 , 20122 Table of Contents

I. INTRODUCTION

................................ ................................ ................................ ....... 2

II. VIRGIN AMERICA’S PROPOSED DCA

- SFO SERV ICE 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 Fo r 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. V irgin 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. Virgi n 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 Fligh ts.

................................ ................................ ................................ ................. 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 Sprin gs Proposal

................................ ................................ . 32
E. Air Canada’s Vancouver Proposal

................................ ................................ ...... 34
F. Sun Country’s Las Vegas Proposal

................................ ................................ ..... 37

IV. CONCLUSION

................................ ................................ ................................ ......... 39BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D

. C

.

__________________________________________ ) Application of ) ) VIRGIN AMERICA INC. ) ) D ocket 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

numbe r of passengers that current ly 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, t he Department is no longer requi red to allocate these slot exemptions

on the basis of satisfying the domestic network benefit s test , as was the case under AIR

21 1 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 o n 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 cr iteria, Virgin America’s application for four
beyond

- perimeter slot exemptions to provide competitive, nonstop service in the DCA

SFO market i s clearly superior to any of the other applications in this proceeding and
would produce the greatest public benef its. The DCA

- SFO market is the largest beyond

-

1 Wendell H. Ford Aviation Investment and Reform Act for the 21 st 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 4171 8 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 domesti c 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 th e critical lack of DCA nonstop service at some of the largest cities i n the We stern 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 size s 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 b eyond

perimeter slot exemptions to Virg in America.

Moreover, Virgin America’s proposal respond s directly to the needs of the DCA

SFO 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

hub s . 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.

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

smaller t han WAS

- SFO and th e se size differences become significantly greater when the

size of th e 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 one

third the size of Virgin Amer ica’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 m ultiple 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 a t 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 s econd 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 materializ e 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 bas is. 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 F rontier already operates three nonstop daily roundtrip5 DCA flights), with continuing service to SAN (which US Airways will shortly serve
nonstop from DCA) presents fewer public benefit s 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 2 012. 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. N one of the proposals will r esult 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 ap plicants are in significant 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 sl ot 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, pro vide the greatest public benefits of any of the
applicants in th is proceeding as well as result in domestic network benefits in the other6 SFO

- beyond markets that i t currently serve s , a number that will grow as Virgin America
expands at SFO, a s 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

Ai rport.

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 Secreta ry 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:

Noneth eless, neither the size nor the significance of the local market is a n 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 Wash ington

- 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 San7 Francisco

- DCA passenger deprives a connecting passenger the ability to

ac cess 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 t he needs of large local beyond

- perimeter markets that will enjoy the benefits

which will flow from DCA nonstop service, including
, mos t particularly
, SFO
, which
currently has no nonstop DCA service.

A. WAS

- SFO Is By Far The Largest Market For Which Beyond

Per imeter 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 p rovide service in

se ven 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

. T he
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 t o provide nonstop service and competition in the WAS

- SFO and DCA

- SFO

market s

. 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 t wice 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 i n the case of five of the proposed Washington, D

. C

. mark ets, the

WAS

- SFO market is at least five times greater in size than these much small er 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 m arkets that do not
currently have DCA nonstop service and i s 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 ma rket , 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 pot ential 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 fo r 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 43,4 22 10,132 Vancouver 27,181 29,265 2,084

Moreover, given that t he 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 potent ial 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

- per imeter slot exemptions to Virgin America is more than justified.
In addition to responding to th is very strong anticipated demand for nonstop DCA

SFO service, an award of four exemptions with which to provide nonstop DCA

- SFO
service would improve a critica l 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 th e 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 t he region’s national and global competitiveness.
As stated in the report , the Bay Area is the 19 th 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 lo cated 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 W ashington, D

. C

. and the innovation business sector in the Bay Area. T he 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,

compa red 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 capita l invested in

the United States. Id . at 14.

6 A vailable 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 enhance d nonstop travel options to and from
SFO in the manner contemplated by Congress in FAA 2012.

B. Virgin America’s Twice Daily Nonstop DCA

- S FO 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 slot

controlled 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 d eregulation 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 incumbent s

– i.e. , those carriers that have little or no presence at the slot

controlled 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 ena bles 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 brin g 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 recentl y, 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 well

time d , two daily roundtrip DCA

- SFO flights will h ave 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 signi ficant presence at DCA and flow DCA

- SFO traffic over their hubs
throughout the country. With their multiple hub flights, United and other large incumbent13 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.

Th ird, 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 WAS

SFO market. Virgin America has provided service in the IAD

- SFO market since shortly

after b eginning 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 positi ve effe ct
on its ability to compet e 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 servi ng our nation’s capital. As the Department stated, when making the14 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 ap plication ( 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 pres ence 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 pr emiums 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 findin gs is that while legacy carriers can still obtain a premium on average when competing with low

- fare carriers head

- to

- head on a non

stop 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 i mportant 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 e xemptions
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 fo r 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 DCA

DEN 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 particula rly, to its largest focus city, San Francisco.

P erhaps 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

. DCA

SFO 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 SF O.
Finally, Virgin America’s request for four beyond

- perimet er 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 Depa rtment

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

their hub market s. 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 hold s 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 DCA17 throughout the day with a total of 23 daily DCA

- SFO connecting flights and 17 daily SFO

DCA connecting flights

. Virgin America App. at VX

- 9. The Department is well aware of
prior studies that have recognized that a significa nt 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 beyond

perimeter 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
sign ificant 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 ef ficient 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 h igh 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 t he 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 Ame rica 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 emphasi s 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 m arkets remain listed factor s 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, the refore, provide important benefits to passengers traveling to or from these19 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 com peting 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 pr oposed 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 discusse d 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, “3 rd 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 as serted
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 applicati on, 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

sho uld 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 DCA

PDX 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. G iven the relatively smal l 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 holdi ng 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

l arger than the San Diego metropolitan area, and, as discussed in Section I I.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 proceedi ng, 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 its22 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, an d 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 wh ich 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 consequen ce, 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 f or

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 Alas ka
proposes in its application. VX

- R

- 18; Alaska App. at AS

- D

- 9. Alaska, in the contex t 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 Au stin 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 JetBlu e 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 Yor k 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 (more24 than any other applicant in this proceed ing) , and is able to compete for the exemptions at
issue in this proceeding because of the considerably expanded definition of “limit ed

incumbent” under FAA 2012.
Furthermore, any decisional consideration of downward pricing pressure that
JetBlue might po tentially 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 one

third 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

- R

11 and 3. And , among markets currently lacking nonstop DCA service at issue in this
proceeding, WAS

- SJU is smaller than all other proposed mar kets, 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 d isappointing 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 curre nt 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, “fore tells” 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. A lthough the Department ought to properly evaluate leisure

deman d 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 competitiv e 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 servic e 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 liv ing 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. A lthough JetBlue touts Cape26 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 f rom 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 t o
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 beyond

perimeter proposal. Indeed, un der 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 propos al), 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 he re.
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 netw ork 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 ins ufficient 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

ot her proposed airports, with the lone exception s 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 m arkets 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 A merica’s proposal should be granted.

C. Southwest’s Austin Proposal
Southwest is already the nation’s second largest airline when measured by

passenger s

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

for two within

- perimeter exemp tions) and nearly 72% of all domestic enplanements at

11 FAA, Pas senger Boarding (Enplanement) and All

- Cargo Data for U.S. Airports, CY2010 (latest year),

available at http://www.faa.gov/airports/planning_capacity/passenger_all cargo_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 exemption s to Southwest would only strengthen its foothold in the
Washington, D.C. region, without maximizing public benefits under 49 U.S.C. § 41718(g).

H istorically, 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 repor t 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

Telli ngly, 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 cla imed 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

- 20 0 . 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 avera ge 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 h as 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 that30 Southwest f orecast s 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 marke t.
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 f are 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

c omparable fares of $225 in the BWI

- ONT market and $ 22 1 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

- SA N 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 possi ble, because of these unresolved variables, to forecast the precise level of annual

traffic that Southwest wil l 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 43 rd nationally among airport passenger
enplaneme nts. 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 wo uld
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 a nd 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 connect ing 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 si ngle connection

service in the DCA

- HOU market through its wholly

- owned subsidiary, AirTran. VX

- R

34

. As a consequence, Southwest’s claimed traffic for its Dallas and Houston connecting
services, which is based on its connecting experience in the Philadel phia

- 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 beyond

perimeter service from DCA or are v ery small. Southwest App. at WN

- 108

. Ultimately,

17 Five of Southwest’s beyond Austin markets either a lready 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 Sou thwest 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 c ontested 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 fligh ts, 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 c our se, 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 Amer ica, 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, o ther than its
proposal to provide one stop DCA

- SAN service via COS, Front ier 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 har dly 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 com petitive 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 t hese 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 Front ier 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 that34 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 beyond

perimeter 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 i n its application, it
already operates 430 daily U.S. flights to and from 52 a irports. 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 a t 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 I AD 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 signif icantly 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 serv ice 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. I n 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 between36 third cou ntries 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

fac tor 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

f

acilitate 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 Canad a
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

ser vice 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 long

haul, transborder service intended to siphon off third country connecting traffic wou ld 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 P roposal
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 rece ntly

secured (and thereafter retained in the wake of an unfavorable court decision) within

perimeter exemptions for nonstop service between DCA and its focus city of Lansing,
Michigan.
Admittedly, new entrants and limited incumbents frequently lack conn ecti ng traffic
opportunities at DCA. H owever, 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 opp ortunity 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 ser vice 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 Department38 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 onli ne 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 beyond

perimeter DCA exemptions can (and sh ould) 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 Amer ica’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

Amer ica’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 travelin g 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 Seve nteenth 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 , 2012CERTIFICATE 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

. govi 

### 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

- 1 1
Top 20 Washington, D.C. O&D Markets VX

- R

- 1 2
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

- 1 4

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

- 1 5

Air Canada’ s Remaining Connections Involve Very Small Points And Offer Few, If Any, Public Benefits VX

- R

- 1 6ii 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 Exemption s VX

- R

- 1 7

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

- 1 8

Alaska’s Experience On Its DCA

- SEA And DCA

- LAX Routes Suggests The Airline Will Rely Heavily On The Sam e Connecting Traffic Traveling On These Routes To Fill Aircraft For Its Proposed DCA

- PDX And DCA

- SAN Service VX

- R

- 1 9

Among The Top 20 PDX O&D Markets, Washington, DC Ranks A Distant 16 th

, Even With Nonstop Daily IAD

- PDX Service Provided By United VX

- R

- 2 0

All Of Alaska’s Portland

- DCA Connecting Markets Already Receive One

- Stop Connecting Service Over Seattle VX

- R

- 2 1

Alaska Provides Only Very Limited East Coast Service At Portland VX

- R

- 2 2
Alaska Has Very Limited Operations At San Diego VX

- R

- 2 3

Alask a’s DCA

- SAN

- HNL Schedule Is Not Convenient For Westbound Passengers And Extensive Connecting Service Exists For DCA

- HNL Passengers VX

- R

- 2 4

Colorado Springs Is Only 73 Miles From Denver, Which Has Four Daily Nonstop DCA Flights VX

- R

- 2 5

Colorado Springs Is The Closest Proposed Point To Any Currently Served DCA Beyond

- Perimeter Nonstop Point VX

- R

- 2 6

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

- 2 7

There Are Multiple DCA

- SAN Flight Options Throughout The Day, In Addition To US Airways’ Recently Announced DCA

- SAN Nonstop Service VX

- R

- 2 8

The Denver Area Already Has Extensive Nonstop SAN Service Provided By Three Com peting Carriers, Including Frontier VX

- R

- 2 9

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

- 3 1iii Rebuttal Exhibit Exhibit No. Southwest’s Asserted Consumer Savings Are Overstated VX

- R

- 3 2
DCA Travelers Already Have Ample DAL Connecting Opportunities VX

- R

- 3 3

DCA T ravelers Already Have Ample HOU Connecting Opportunities, Including Several Options Provided By Southwest ’s Wholly

- Owned Subsidiary, AirTran VX

- R

- 3 4

Sun Country Provides Extremely Limited Service At Las Vegas, And No Connecting Opportunities VX

- R

- 3 5

Sun Country’s Traffic Results To Date For Its Only DCA Service Are Below Industry Average VX

- R

- 3 6EXHIBI T 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

- S AN

- 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 M etropolitan 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 Wit hout 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 (l atest year), available at http://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger ; Vancouver International Airport, YVR Passengers (Enpl aned + Deplaned) 1992

- 2012, available at http://www.yvr.ca/Libraries/Facts_and_Stats/1992_

- _2012_Enplaned

- Deplaned_Passengers.sflb.ashx

. For compa rative 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 T rue “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 Condit ions,” 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 C riteria For The Award Of These Eight Exemptions To New Entrants And Limited Incumbents

Carrier Beyond

perimeter domestic network benefits Increase competition in multiple markets Not reduce within

perimeter travel options Not Increase travel delays Enhan ce 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; mo st 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; DCA

PDX 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; DCA

COS would be a monopoly nonstop route YesEXHIBIT VX

- R

- 7 Page 2 of 2

Carrier Beyond

perimeter domestic network benefits Increase competition in multiple markets Not reduce within

perimeter 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 w ith 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

A laska 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 sched ules 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 DCA 1 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 DCA 2 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 22 34 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)

— Sa n 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 373,690 133,42 0 Portland 195,870 99,030 Austin 175,160 89,0 9 0 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 n onstop 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 market s at issue in this proceeding are adjusted to reflect th is 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 Adjusted 1 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 99,030 117,5 2 2 18, 492 Austin 89,0 9 0 105,096 16,0 0 6 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 P age 2 of 2

4. The average passenger load factor in all DCA markets is approximately 75 percent. DOT D omestic 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. Assumi ng 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 33 0 , 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 O f W AS 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 89,0 9 0 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 35 6,260 676,740 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 10 0,520 274,430 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 Portla nd 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 P age 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 Gat eways

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% Edmon ton, 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 A re 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 Circl e 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 O f 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 A warded 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 Av ailable 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 Travel ing 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 T otal 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 16 th



### , Even With Nonstop Daily IAD

- PDX Ser vice Provided B y 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 WAS 1 195,870 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 Connect ing 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

S ource: Innovata schedules via diio.net.EXHIBIT VX

- R

- 22 Page 1 of 1


### Alaska Provides Only Very Limited East Coast Service A t Portland

East Coast PDX Market Alaska Service

Boston Yes

New York No

Philadelphia No

Wash ington, DC No

S ource: Innovata schedules via diio.net.EXHIBIT VX

- R

- 23 Page 1 of 1



### Alaska Has Very Limited Operations A t 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

S ource: Innovata schedules via diio.net.EXHIBIT VX

- R

- 24 Page 1 of 1



### Alaska’s DCA

- SAN

- HNL Schedule Is Not Convenient For Westbound Passen gers A nd Extensive Connecting Service Exists For DCA

- HNL Passengers

DCA

- HNL Service

Option Carrier Connection or One

Stop 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 073 4 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 One

Stop 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

S ource: Innovata sche dules 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

Sou rce: 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 Clo sest 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 M apper, 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 Citi es 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 D ay , In Addition T o US Airways’ Recently Announced DCA

- SAN Nonstop Service

DCA

- SAN Service

Option Carrier Connection or One

Stop Via Dep Time Arr Time 1 US CNX CLT 0545 1011 2 AA CNX DFW 060 0 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 A S 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 14 30 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 2057EXHIBIT VX

- R

- 28 Page 2 of 3 DCA

- SAN Service (Cont’d)

Option Carrier Connection or One

Stop 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 1 743 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 One

Stop Via Dep Time Arr Time 1 DL CNX SLC 0615 1 557 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 3SAN

- DCA Service (Cont’d)

Option Carrier Connection or One

Stop 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, Inc luding 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 W N 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 1 555 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 Exemption s Until Its Status is Resolved

Republic Hones Its Pitch To Sell or Spin O ff 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 go od 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 Indianap olis

- 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. Be dford 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 so me 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 b e "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 hig h 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 Sto ck 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 Allegi ant 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 ai rcraft 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 fla t 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 t o 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 it s 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 s aid.

Source: Wall Street JournalEXHIBIT VX

- R

- 31 Page 1 of 1



### J etBlue 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

S ource: Innovata schedules via diio.net.EXHIBIT VX

- R

- 32 Page 1 of 1



### Southwest’s Asserted Consumer Savings Are Over stated

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 Co nnections

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 2,27 6 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 Connect ing Opportunities

DCA

- DAL Service

Option Carrier Connection or One

Stop Via Dep 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 170 3 2244 8 DL CNX MEM 1710 2115

DAL

- DCA Service

Option Carrier Connection or One

Stop Via Dep 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

S ource: Innovata schedules via diio.net.EXHIBIT VX

- R

- 34 Page 1 of 2


### DCA Travelers Already Have Ample HOU Connecting Opportunities , Including Several O ptions Provided By Southwest’s Wholly

- Owned Subsidiary, AirTran

DCA

- HOU Service

Option Carrier Connection or One

Stop Via Dep 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 115 2 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 One

Stop Via Dep 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 1905EXHIBIT VX

- R

- 34 Page 2 of 2

HOU

- DCA Service (Cont’d)

Option Carrier Connection or One

Stop Via Dep 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

S ource: 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 Ma pper, 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.