### BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________ ) In the Matter of ) ) Establishment of Slot Exemption Proceedings ) Docket DOT-OST-2012-0029 At Ronald Reagan Washington National Airport ) Pursuant to 49 U.S.C. § 41718 ) __________________________________________)

MOTION FOR LEAVE TO FILE AND SUPPLEMENT NO. 1 TO APPLICATION OF ALASKA AIRLINES, INC.
Megan Lawrence, Esq. Managing Director, Government and Community Relations Megan.Lawrence@alaskaair.com Kyle Levine, Esq. Deputy General Counsel and Managing Director, Legal Kyle.Levine@alaskaair.com ALASKA AIRLINES, INC. 19300 Pacific Highway South Seattle, WA 98188 Marshall S. Sinick, Esq. Marshall.Sinick@squiresanders.com Edward W. Sauer, Esq. Edward.Sauer@squiresanders.com Squire Sanders (US) LLP 1200 19 th 

### Street, NW, Suite 300 Washington, DC 20036 (202) 626-6651 Counsel for Alaska Airlines, Inc.

DATED: March 27, 2012

### BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________ ) In the Matter of ) ) Establishment of Slot Exemption Proceedings ) Docket DOT-OST-2012-0029 At Ronald Reagan Washington National Airport ) Pursuant to 49 U.S.C. § 41718 ) __________________________________________)

MOTION FOR LEAVE TO FILE AND SUPPLEMENT NO. 1 TO APPLICATION OF ALASKA AIRLINES, INC.
Alaska Airlines, Inc. (“Alaska”) respectfully files this motion for leave to file Supplement No.1 to its Application. 1 

### This Supplement, including the letters of support 2 

### attached to Alaska’s previously filed Application, contain several hundred letters of support from ten U.S. Senators, the entire Congressional Delegations of Alaska, Hawaii, Oregon and Washington and other individual southern California Congressmen, the Governors of Hawaii, Oregon and Washington, multiple state senators and representatives, the Mayors of Portland and San Diego and numerous surrounding cities, various municipal councilpersons and supervisors, chambers of commerce and economic development commissions, labor organizations, universities, military organizations, and many businesses and other local civic organizations. The appendices to this Supplement separately list each of the above individuals and businesses for whose support Alaska is indeed appreciative. Alaska is also attaching a separate CD which, along with the individual electronic messages already sent to the Department’s Docket Section, reflect support for Alaska’s proposals

1 Alaska expects to file additional supplements with further letters of support for its Portand-DCA and San DiegoDCA proposals. 2 The actual letters are being filed in CD format.

### from more than 14,000 individual customers and employees. Alaska is quite thankful for the

efforts of these individuals to inform the Department of their support for Alaska. Alaska requests that the Department consider this broad spectrum of support when deciding Alaska’s Application and its request to provide the first Portland-DCA nonstop service and still much needed San Diego-DCA nonstop service including the first through-plane service
in the Honolulu-DCA market. Respectfully submitted,

________________________________ Marshall S. Sinick, Esq. Marshall.Sinick@squiresanders.com Edward W. Sauer, Esq. Edward.Sauer@squiresanders.com Squire Sanders (US) LLP 1200 19 th 

### Street, NW, Suite 300 Washington, DC 20036 (202) 626-6651

DATED: March 27, 2012

### Letters of Support – Alaska’s San Diego-DCA Proposal

Honorable Barbara Boxer, US Senator and Honorable Dianne Feinstein, US Senator Honorable Brian Bilbray, US Congressman and Honorable Bob Filner, US Congressman Honorable Christine Kehoe, US Senator Honorable Joel Anderson, US Senator Mr. Brian W. Jones, Assembly of California Legislature Mr. Marty Block, Assembly of California Legislature Mr. Ron Roberts, Chairman, San Diego County Board of Supervisors Mr. Mike Kelley, Chairman, Imperial County Board of Supervisors Mr. Greg Cox, Vice Chairman, San Diego County Board of Supervisors Ms. Dianne Jacob, Supervisor, San Diego Board of Supervisors Ms. Pam Slater-Price, Supervisor, San Diego Board of Supervisors Mr. Bill Horn, Supervisor, San Diego Board of Supervisors Honorable Jerry Sanders, Mayor, San Diego, CA Mr. Marti Emerald, Councilmember, City of San Diego Honorable James C. Janney, Mayor, City of Imperial Beach, CA Honorable Sam Abed, Mayor, City of Escondido, CA Honorable Jerome Stocks, Mayor, City of Encinitas, CA Honorable Carl Hilliard, Mayor, City of Del Mar, CA Honorable Matt Hall, Mayor, City of Carlsbad, CA Honorable Don Higginson, Mayor, City of Poway, CA Honorable Mary Teresa Sessom, Mayor, City of Lemon Grove, CA Honorable Jim Wood, Mayor, City of Oceanside, CA Mr. Gary Felien, Councilmember, City of Oceanside Honorable Ron Morrison, Mayor, City of National City, CA Mr. Ruben Barrales, President & CEO, San Diego Regional Chamber of Commerce Mr. Marty Cafferty, President & CEO, San Diego Regional Economic Development Corporation Mr. Joseph Terzi, President & CEO, San Diego Convention & Visitors Bureau Ms. Carol Wallace, President & CEO, San Diego Convention Center Corporation Ms. Tracy Elliott Loper, Travel Manager, Enterprise & Supply Chain Operations, General Dynamics Mr. Jim Zortman, Sector Vice President, Life Cycle Logistics and Support, Northrop Grumman

### Mr. William Bold, Senior Vice President, Government Affairs, Qualcomm Incorporated

Mr. L.B. Blumberg, Executive Director, San Diego Military Advisory Council Ms. Bella Heule, President & CEO, World Trade Center San Diego Mr. Scott Hermes, General Manager, Sheraton San Diego Hotel & Marina Mr. Tuni Kyi, General Manager, Marriott San Diego Hotel & Marina Mr. John Blem, General Manager, Courtyard Inn Mission Valley Mr. Thomas J. Voss, President, The Grand, Del Mar Mr. John Gates, General Manager, Rancho Bernardo Inn, San Diego Ms. Lizzie Raudenbush, Manager of Business Development, Palomar, San Diego Mr. James A. Floros, Executive Director/CEO, Burn Institute Mr. Chuck Hansen, Community Relations Consultant, Viejas Enterprises Ms. Mary E. Lyons, President University of San Diego Ms. Karen S. Haynes, President California State University San Marcos Mr. Bob Brower, President Point Loma Nazarene University Mr. Craig M. Phelps, Executive Vice President for Strategic Initiatives, A.T. Still University of Health Sciences, Arizona Campus Mr. Richard S. Ledford, President/CEO, Ledford Enterprises Mr. Scott R. Brusseau, President, Newport National Corporation Mr. Dennis Visser, Managing Director, Cassidy Turley/BRE Commercial Ms. Lisa L. Dyson, Director of Conference Services, Tesol International Association Mr. Aaron Rios, Senior Manager, Public Affairs and Government Relations, Wal-Mart Stores, Inc. Mr. John Reilly, Park President, SeaWorld San Diego Mr. Bill Riedy, Executive Director, The Security Network, The Maritime Alliance Mr. George Karetas, president & CEO, Premier Food Services Management Group, Inc. Ms. Kristiina Vuori, President & Director, Sanford-Burnham Medical Research Institute Mr. Shandon Harbour, President, SDA Security Ms. Debra L. Reed, CEO, Sempra Energy Mr. Kent D. Brown, Vice President Engineering Business Unit, Serco Inc. Mr. Clark Crowford, VP Sales and Business Development N.A., Soitec Solar Inc. Mr. D. James Umpleby, President, Solar Turbines Incorporated Mr. Gregory S. Horowitt, Managing Director, T2 Venture Capital Ms. Anne Daniells, President/Owner, Torrey Pines Transportation

### Ms. Kate Ullrich, Travel Industry Sales Manager, USS Midway Museum

Ms. Colleen Arena, Assistant Director corporate Travel & Administration, Avid Mr. Jack Burger, Burger Construction Mr. Jeffrey W. Burges, President, Burges Property + Company Ms. Ingrid Croce, Owner/Restaurateur, Croce’s Restaurant and Jazz Bar Mr. Duane Roth, CEO, Connect Ms. Denise Jackson, President & CEO and Ms. Tina Gilmore, Director of Airline Relations, Balboa Travel Management Ms. Helen Brunell Mineau, Globe Travel, Helen’s Unlimited, Inc. Mr. Carl W. Hull, Chairman and CEO, Gen-Probe Incorporated Mr. Tom Gable, CEO, Gable PR Mr. Timothy E. Kelley, President/CEO, Imperial Valley Economic Development Corporation Mr. Mark A. Harrison, Vice President and Corporate Controller, Cubic Corporation Mr. Jay Alexander, Managing Director, Jones Lang LaSalle, Inc. Mr. Stephen M. Brigandi, Director, Government Relations, Jack In The Box Mr. Kyle Stavig, Chief Executive Officer, Myers Container LLC, Container Management Services LLC, General Steel Drum LLC Mr. Keith R. Solar, Buchanan Ingersoll & Rooney LLP Ms. Janice P. Brown, Brown Law Group Mr. Andrew Clark, President & CEO, Bridgepoint Education Mr. Joe Panetta, President & CEO, BIOCOM Mr. Daniel M. Bradbury, President and Chief Executive Officer, Amylin Pharmaceuticals, Inc. Mr. Timothy Caulfield, CEO, American Internet Services Mr. Ron Pepper, Retail Insite Commercial Real Estate Mr. Tom Gable, CEO, Gable PR Mr. Michael McNerney, Senior Vice President, Lowe Enterprises Real Estate Group Mr. Bruce Browne, President, Advance Plastics, International Manufacturing Solutions Mr. Jerry Engen, Senior Vice President Development, Westfield, LLC Mr. Hack Adams, Senior Vice President, Westcore Properties Ms. Shelley Valentine, Executive Vice President, Gary and Mary West Wireless Health Institute

### Letters of Support – Alaska’s Hawaii-San Diego-DCA Proposal

Honorable Daniel K. Inouye, U.S. Senator; Honorable Daniel K. Akaka, U.S. Senator; Honorable Mazie K. Hirono, U.S. Congresswoman; Honorable Colleen Hanabusa, U.S. Congresswoman Honorable Neil Abercrombie, Governor, State of Hawaii Mr. David Uchiyama, Vice President, Brand Management, Hawaii Tourism Authority Mr. John Monahan, President and CEO, Hawaii Visitors & Convention Bureau Ms. Laverne R. Omori, Deputy Director, County of Hawaii Department of Research and Development Ms. Stephanie P. Donoho, Tourism Specialist, County of Hawaii Department of Research and Development Ms. Vivian Landrum, President/CEO, Kona-Kohala Chamber of Commerce

### Letters of Support – Alaska’s Portland-DCA Proposal

Honorable John A. Kitzhaber, Governor, State of Oregon Honorable Christine O. Gregoire, Governor, State of Washington Ms. Kate Brown, Secretary of State, State of Oregon Mr. Barry Pack, Deputy Secretary of State, State of Oregon Honorable Brad Witt, State Representative, House of Representatives, OR Honorable Matt Wingard, State Representative, House of Representatives, OR Honorable Ed Orcutt, State Representative, House of Representatives, OR Honorable Jim Moeller, State Representative, House of Representatives, OR Honorable Sam Adams, Mayor, City of Portland, OR Honorable Mike Weatherby, Mayor, City of Fairview, OR Honorable Timothy D. Leavitt, Mayor, City of Vancouver, WA Honorable Craig E. Dirksen, Mayor, City of Tigard, OR Ms. Jeanette M. Bader, Program & Policy, Development Manager, Vancouver City Council Mr. Jeff Cutis, CEO, Portland Rose Festival Foundation Mr. J. Michael Goodwin, President & CEO, Oregon State University Mr. David R. Eatwell, Executive Director, West Columbia Gorge Chamber of Commerce Mr. R. Patrick Reiten, President & CEO, Pacific Power Ms. Malia H. Wasson, President, U.S. Bank-Oregon Mr. Larry Paulson, Executive Director, Port of Vancouver, USA Mr. Alan Alexander, Executive Director, Oregon Airport Management Association Mr. Michael C. Smith, Vice President of Convention Sales, Travel Portland Mr. Todd Davidson, Travel Oregon Mr. Dean Phelus, Director, Meetings and Professional Development, American Association of Museums Mr. Gregg S. Kantor, President & CEO, NW Natural Ms. Michelle Horton, Director of Administration and Meeting, The Ecological Society of America Mr. Ransford S. McCourt, President DKS Associates Mr. Scott C. Langley, President & CEO, Langley Investment Properties Mr. DJ Wilson, President & General Manager, DGW Media Group Mr. Joe Finkbonner, Executive Director Northwest Portland Area Indian Health Board Ms. Karen Waggoner, Events & Marketing Manager, NW Food Processors Association

### Mr. John E. Saunders, III, Executive Director, National Forum for Black Public Administrators

Mr. Michael P. Brogan, President & CEO, NACCO Materials Handling Group, Inc. Ms. Patricia Wood, Vice President, Royal Range of California, Inc. Ms. Kara T. Ruecker, Government Affairs & Member Relations Manager, Oregon Winegrowers Association

### Letters of Support – Labor Organizations

Alaska Airlines MEC ALPA Aircraft Mechanics Fraternal Association (National) Alaska Airlines MEC, AFA-CWA

### CERTIFICATE OF SERVICE

I hereby certify that one copy of the foregoing Reply Comments of Alaska Airlines, Inc. has this day been served on each of the following individuals via telecopier or email. susan.kurland@dot.gov ; todd.homan@dot.gov ; james.dann@dot.gov john.allen@faa.gov dan.weiss@coair.com ; steve.morrissey@united.com ; jonathan.linde@united.com rbkeiner@crowell.com carl.nelson@aa.com sascha.vanderbellen@delta.com ; jeff.morgan@delta.com jhill@dlalaw.com ; robert.land@jetblue.com jyoung@yklaw.com ; dkirstein@yklaw.com bob.kneisley@wnco.com ; leslie.abbott@wnco.com john.varley@virginamerica.com howard.kass@usairways.com ; benjamin.slocum@usairways.com john.fredericksen@suncountry.com agoerlich@ggh-airlaw.com patrick.rizzi@hoganlovells.com anita.mosner@hklaw.com rick.finn@portofportland.com hbrown@san.org Michael.Daum@cantwell.senate.gov Alexandra.Hackbarth@wyden.senate.gov James.Feldman@begich.senate.gov

______________________________ Marshall S. Sinick DATED: March 27, 2012

### BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________ ) In the Matter of ) ) Establishment of Slot Exemption Proceedings ) Docket DOT-OST-2012-0029 At Ronald Reagan Washington National Airport ) Pursuant to 49 U.S.C. § 41718 ) __________________________________________)

REPLY COMMENTS OF ALASKA AIRLINES, INC.
Megan Lawrence, Esq. Managing Director, Government and Community Relations Megan.Lawrence@alaskaair.com Kyle Levine, Esq. Deputy General Counsel and Managing Director, Legal Kyle.Levine@alaskaair.com ALASKA AIRLINES, INC. 19300 Pacific Highway South Seattle, WA 98188 Marshall S. Sinick, Esq. Marshall.Sinick@squiresanders.com Edward W. Sauer, Esq. Edward.Sauer@squiresanders.com Squire Sanders (US) LLP 1200 19 th 

### Street, NW, Suite 300 Washington, DC 20036 (202) 626-6651 Counsel for Alaska Airlines, Inc.

DATED: March 27, 2012

### TABLE OF CONTENTS

I. INTRODUCTION .............................................................................................................. 1 II. US AIRWAYS’ ANNOUNCEMENT OF SAN DIEGO-DCA NONSTOP SERVICE MAKES IT ALL THE MORE IMPORTANT THAT ALASKA PROVIDE MUCH NEEDED, WELL-TIMED, COMPETITIVE NONSTOP SERVICE IN THE SAN DIEGO-DCA NONSTOP MARKET................................................................................. 3 III. ALASKA’S PORTLAND AND SAN DIEGO PROPOSAL BEST SATISFIES THE FAA REAUTHORIZATION ACT CRITERIA. ................................................................ 5 Public Benefits – Low Fares, Higher Capacity and Service Options ................................. 5 Enhanced Travel Options & Domestic Network Benefits.................................................. 6 Increase Competition in Multiple Markets, No Increase in Travel Delays and Positive Impact on Overall Level of Competition............................................................................ 6 IV. THE DEPARTMENT SHOULD USE THIS PROCEEDING TO ENHANCE THE LEVEL OF COMPETITION AT DCA.............................................................................. 7 V. ALASKA’S PROPOSAL PROVIDES THE GREATEST PUBLIC AND NETWORK BENEFITS AND MOST EFFICIENT USE OF SLOT EXEMPTIONS OF ANY APPLICANT PROPOSAL. ................................................................................................ 8 A. Southwest.................................................................................................................8 B. Virgin America ......................................................................................................12 C. JetBlue....................................................................................................................16 D. Frontier...................................................................................................................20 E. Sun Country ...........................................................................................................21 F. Air Canada .............................................................................................................22 VI. CONCLUSION................................................................................................................. 23- 1 - 

### BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________ ) In the Matter of ) ) Establishment of Slot Exemption Proceedings ) Docket DOT-OST-2012-0029 At Ronald Reagan Washington National Airport ) Pursuant to 49 U.S.C. § 41718 ) __________________________________________)

REPLY COMMENTS OF ALASKA AIRLINES, INC.

I. INTRODUCTION Alaska Airlines, Inc. (“Alaska”) proposes to operate the first nonstop service between Portland, Oregon and Reagan Washington National Airport (“DCA”) and much needed additional, competitive nonstop service between San Diego and DCA. 1 

### While Portland is Alaska’s first priority, Alaska seeks authority to serve both routes and submits that Portland and San Diego, even after US Airways’ March 21 announcement, have the greatest low fare and DCA service needs when compared with the other cities for which service is being proposed. After having reviewed the submissions of all the other carriers in this proceeding, Alaska is firmly convinced that its service proposal is more compelling under the FAA Modernization and Reform Act (“FAA Reauthorization Act”) selection criteria than any other applicant’s proposal. Alaska’s proposal provides unmatched local market, low fare and network benefits as well as a more efficient use of slot exemptions than the other applicant proposals. Once US Airways commences San Diego service, Portland will become the largest market without

1 Alaska in its application characterized its San Diego-DCA proposal as offering the first nonstop service. US Airways announced on March 21 that it plans to initiate San Diego-DCA nonstop service starting in June. Notice of US Airways, Inc. of Beyond-Perimeter Service (DCA-SAN), Docket DOT-OST-2012-0029, March 21, 2012- 2 -



### nonstop service to DCA. 2 

### The San Diego market is larger than Portland and will derive substantial benefits from Alaska’s proposal even with US Airways’ nonstop service initiation. 3 

### These large markets, whether viewed collectively or individually, present the strongest consumer need among all of the markets addressed in this proceeding. Alaska is the only applicant to propose specific low fares for its services, and they are well below existing Dulles nonstop fares in the San Diego and Portland markets. 4 

### Further, Alaska’s vast West Coast network provides significant “beyond” market benefits to both the Portland and San Diego markets. 5 

### Importantly, Alaska will also make extremely productive and efficient use of any DCA slots it might be fortunate to receive, as it has done with its current DCA slots. 6 

### Alaska has strong DCA performance metrics including the highest load factor and completion rate using the large next generation B737-800 aircraft. 7 

### Alaska’s combination of high load factors, large aircraft and proposed service to long stage length markets represents the most efficient use of four of the only eight slots the Department is authorized to award. Alaska’s Portland and San Diego proposals would each generate almost twice as many RPMs as either Southwest’s Austin proposal or JetBlue’s San Juan proposal and 35% more RPMs than Virgin America’s San Francisco proposal. 8 

### Alaska would provide the same high quality and low fare service in the Portland and San Diego markets that Alaska has provided for years in the Seattle and Los Angeles-DCA markets.

2 AS-R-19 3 AS-D-10, AS-R-19, AS-R-35, AS-R-36 4 AS-D-9, AS-D-10 5 AS-D-5, AS-D-6 6 AS-D-11, AS-D-13, AS-R-37 7 Alaska’s proposal for both the Portland and San Diego markets is to use its 157-seat B737-800 aircraft. 8 AS-R-37- 3 -



### II. US AIRWAYS’ ANNOUNCEMENT OF SAN DIEGO-DCA NONSTOP SERVICE MAKES IT ALL THE MORE IMPORTANT THAT ALASKA PROVIDE MUCH NEEDED, WELL-TIMED, COMPETITIVE NONSTOP SERVICE IN THE SAN DIEGO-DCA NONSTOP MARKET. Alaska thoroughly reviewed its own San Diego-DCA nonstop proposal following the US Airways March 21 announcement of that carrier’s plan to initiate new San Diego-DCA nonstop service in June. Alaska’s review reaffirms that its proposed additional San Diego-DCA nonstop service will bring substantial service and low fare benefits to the San Diego market. Therefore, Alaska has not revised its traffic forecast, low fare offer, or estimate of the significant fare savings Alaska’s proposed service will provide to San Diego-DCA passengers. Among the material factors that reinforce the strength of Alaska’s San Diego-DCA proposal:

 Even including the additional capacity US Airways will provide, San Diego remains the second largest, 9 

### but the most underserved of any of the markets for which proposals have been submitted in this proceeding. With 126,000 O&D passengers, the San Diego-DCA market is much larger than the Portland/Austin/San Juan and Colorado Springs-DCA markets. 10



###  Alaska’s and US Airways’ proposed flights will operate at very different times of the day, fulfill different market needs, and actually complement each other. Alaska’s westbound San Diego-DCA flight is scheduled to depart DCA at 4:10 p.m., a late afternoon peak departure time, whereas US Airways proposes a seven hour earlier 8:55 a.m. morning departure. In the eastbound direction, Alaska’s San Diego flight is scheduled to depart at 7:10 a.m. and will satisfy the peak morning departure needs of the San Diego market. US Airways’ eastbound flight is a midday 12:30 p.m. departure. 11 

### Alaska’s flight is far better timed to serve San Diego-originating passengers while US Airways’ flight appears to be timed to serve DCA-originating passengers.

 Alaska’s record of offering low fares in the DCA market is in complete contrast to US Airways’ established pattern of charging a premium for its DCA services. A comparison of Alaska’s and US Airways’ average DCA fares confirms that US Airways’ DCA pricing model extracts a premium over the

9 San Francisco-DCA is the only larger market, but that market, unlike the San Diego market, already has substantial excess capacity as well as among the lowest fares. See infra at subsection V.B. pp.12-14. 10 AS-R-19 11 AS-R-36. Although US Airways’ March 21 Notice states it will switch from A319 to A320 aircraft on July 12, the current OAG schedule between June 8 th and July 11 th reflects even more different schedule times for US Airways’ service. For example, US Airways’ A319 aircraft will operate in the eastbound direction as a redeye flight departing San Diego at 11 p.m.- 4 - 

### Washington D.C. area (DCA/Dulles) industry average fare. US Airways’ DCA fare premium averages $49 and $11, respectively, for its Phoenix-DCA and Las Vegas-DCA flights. 12 

### In comparison, Alaska’s Los Angeles-DCA and SeattleDCA average fares are $28 and $3, respectively, below the same Washington D.C.-area industry average fares. This different approach to pricing will only increase the traffic forecast and projected consumer fare savings of Alaska’s service.

 Alaska’s San Diego-DCA proposal will also offer another unique feature—the only round-trip Honolulu-DCA single-plane service. That significant beyond-market benefit is not offered by US Airways.

 Alaska’s DCA operational performance is stronger than US Airways’ DCA operational performance. Alaska’s average DCA load factor is 90% compared to 74% for US Airways; Alaska’s on-time performance record (systemwide) is 88.2% compared to 79.8% for US Airways; and Alaska’s DCA completion factor is 99.4% compared to 97% for US Airways. 13



###  Alaska’s limited DCA slot portfolio, consisting of just six slots, pales in comparison to that of US Airways, the single largest DCA slot holder (308 slots). These are among the reasons why, even after US Airways’ announcement, it remains important that the large San Diego market receive the strong competitive nonstop service proposed by Alaska. The Department should not allow the San Diego-DCA market to become another protected US Airways DCA monopoly; instead it should assure that San Diego-DCA and Honolulu-DCA passengers receive the significant competitive benefits of Alaska’s service. Alaska’s San Diego-DCA service, if approved, would also be permanent in nature, as required by the Department. US Airways, on the other hand, is free to exit the San Diego-DCA market without the Department having any means to require that US Airways continue its
service. 14 

### Alaska looks forward to the opportunity to provide, on a permanent basis, the San Diego and Honolulu markets with the same outstanding service it has long offered its Los Angeles-DCA and Seattle-DCA passengers.

12 AS-R-35 13 AS-D-11, AS-D-13, AS-D-15 14 FAA Reauthorization Act, adding 49 U.S.C. sec 41718 (g)(3)- 5 -



### III. ALASKA’S PORTLAND AND SAN DIEGO PROPOSAL BEST SATISFIES THE FAA REAUTHORIZATION ACT CRITERIA. Alaska’s proposal to serve Portland and San Diego, the two largest Washington D.C. markets requiring service to DCA, presents the strongest possible case. The key elements of Alaska’s proposal are as follows: Public Benefits – Low Fares, Higher Capacity and Service Options



###  Alaska is the only applicant to propose specific low fares for its new services. 15 

### This fact alone takes on important decisional significance in light of the latest statutory revisions, which for the first time make explicit that the Department is to give consideration to low fares. 16



###  Alaska proposes Portland-DCA low fares of $149/$169, well below existing fares for Portland nonstop service to Dulles. 17



###  Alaska proposes San Diego-DCA low fares of $159/$179, well below existing fares for San Diego nonstop service to Dulles.

 In the Portland-DCA market, the impact of Alaska’s proposed service will produce an estimated passenger fare savings of $5.5 million or 18% 18 

### in the first year alone.

 In the San Diego-DCA market, Alaska’s proposed service will produce an estimated passenger fare savings of $10.6 million or 31% 19 

### in the first year alone.

 Alaska offers larger capacity aircraft than the majority of the other applicants. In the instances where applicants propose using larger aircraft (Southwest in Austin and Frontier in Colorado Springs), Alaska will still carry

15 AS-D-9 16 FAA Reauthorization Act adding 49 U.S.C. sec 41718 (g)(2) 17 Alaska’s low fare commitment for at least one year, as previously stated in Alaska’s application, is subject to the condition that the fares would be subject to further adjustment in the event of additional fuel price escalation. Application of Alaska Airlines, Inc. for Exemption, Docket DOT-OST-2012-0029, March 12, 2012, fn.2. While other applicants may now attempt to revise their proposals by putting forth specific fares in their rebuttal comments, the Department has a well-established policy of declining to accept such after-the-deadline proposals. See, e.g. U.S.- Ukraine Third Country Code-Share Opportunities Case , Order 2000-11-1, at 4 (request to reopen the record to gain an additional “bite at the apple” denied); U.S.-Lima Combination Service Proceeding , Order 95-8-48, at 4 (carrier denied the right to submit a revised service proposal after the direct exhibit date deadline). The D.C. Circuit has made clear that it is incumbent on agencies, particularly in “fast track” proceedings such as the instant proceeding, to enforce their own procedural rules. See, e.g

. Florida Institute of Technology v FCC , 952 F.2d 549, 550 (D.C.Cir. 1992); Public Utilities Commission of the State of California v FERC , 900 F.2d 269, 278 (D.C. Cir. 1990). 18 AS-D-10. The percentages reflect the amounts saved in comparison with what passengers would have paid if Alaska was simply matching the lowest current nonstop/one-stop fares offered in these markets. 19 AS-D-10- 6 - 

### more passengers because of the far greater passenger demand in the San Diego and Portland markets. 20



###  Alaska will make the most efficient use of four slots, given its high load factors, large aircraft and proposed long haul markets. 21 Enhanced Travel Options & Domestic Network Benefits



###  Alaska offers new nonstop service to Portland, now the largest DCA market without nonstop service, and San Diego, which even after US Airways’ entry will continue to have a significant need for peak hour, low fare service. Specifically, the only market in terms of passenger level that is larger than San Diego is San Francisco. However, comparing the ratio of local market demand to seats available in the San Diego-Washington D.C. and San Francisco-Washington D.C. markets, it is readily apparent that San Diego has a much higher ratio and therefore is in much greater need of additional nonstop service than San Francisco. 22 

### That need is only heightened by a comparative review of the San Diego and San Francisco fare levels. The average San Diego-Washington D.C. fare is 32% higher than the average San Francisco-Washington D.C. fare. 23



###  Alaska offers immediate network benefits for Pacific Northwest passengers connecting to 10 cities from Portland and, over time, even greater connecting network benefits because of Alaska’s position as the largest carrier at Portland. 24



###  Alaska offers the first through-plane service between Honolulu and DCA, conveniently connecting more than 125,000 annual Honolulu-Washington D.C. passengers to DCA. 25 Increase Competition in Multiple Markets, No Increase in Travel Delays and Positive Impact on Overall Level of Competition



###  Alaska’s Portland-DCA proposal will materially increase local market competition which today consists of time-consuming connecting service. 26 

### In the local San Diego-DCA market, Alaska’s service will similarly address the unfulfilled needs for peak morning and early evening departures. It will also constitute the first competitive nonstop service as well as provide the shortest elapsed time service in the market.

20 AS-R-18 21 AS-R-37, AS-D-10 22 AS-R-24 23 AS-R-23 24 AS-D-4, AS-D-5 25 USDOT DB1B YE 3 rd Quarter 2011 data 26 AS-R-34- 7 - 

###  Alaska’s Portland and San Diego proposals will also immediately increase competition in at least ten connecting markets beyond Portland and to the large Honolulu-DCA market, which Alaska will serve on a single-plane basis. 27



###  Alaska’s schedules are carefully designed to offer optimal arrival and departure times for the local market as well as Alaska’s beyond-Portland and beyond-San Diego through-plane and connecting passengers. 28


### IV. THE DEPARTMENT SHOULD USE THIS PROCEEDING TO ENHANCE THE LEVEL OF COMPETITION AT DCA. This proceeding presents the Department with an opportunity to increase competition at DCA by reducing the longstanding, historic slot imbalance at the airport. Alaska easily qualifies as a limited incumbent, operating just six slots at DCA, 29 

### far fewer, for example, than JetBlue or Southwest, also limited incumbents. Under the prior statutory definition of a limited incumbent, Frontier, JetBlue and Southwest would not even have qualified. These three carriers now qualify because of a change in definition for the purpose of separating the four largest slot holding carriers at DCA (the “incumbents”) so that only those four carriers would have the automatic right to convert within-perimeter slots to their beyond-perimeter market of choice.

U.S. Carrier DCA Operated Slots 30 

### US Airways 308 Frontier/Republic 123 American 87 Delta 75 United 46 JetBlue 34 Southwest 24 Shuttle America 14 Spirit 6 Alaska 6 Sun Country 2

27 AS-D-5, AS-D-6 28 AS-D-1, AS-D-3 29 As among the most limited of the limited incumbents, Alaska easily qualifies as a limited incumbent now defined as a carrier with forty or fewer DCA slots. In fact, since the statute now provides that slot exemptions are not to be counted against the qualifying number of slots for limited incumbent carrier status, Alaska’s statutory status is now that of a new entrant. 49 U.S.C. 41714(h)(5)(A) and (B), as amended by the FAA Reauthorization Act, P.L. 112-95. 30 FAA Office of Slot Administration- 8 -



### As the above chart shows, three of the other applicant carriers, namely JetBlue, Southwest and Frontier, have access to many times the DCA slots available to Alaska. The larger incumbent carriers, such as US Airways, American, Delta and United control even greater numbers. Since all of Alaska’s hubs are outside the perimeter, infrequent slot proceedings such as this are the only realistic means for Alaska to obtain additional beyond-perimeter access to
DCA. Alaska has participated in DCA beyond-perimeter slot proceedings consistently since 2001. Carriers like Alaska will likely only have an opportunity to increase their DCA operations once per decade. And, similarly, the Department’s opportunity to address the longstanding DCA slot imbalance problem—and its negative effect on competition—likely occurs only once per decade. In considering the competing applications in this proceeding, Alaska urges the Department to use this opportunity to allocate slots in a way that addresses the longstanding, historic slot imbalance and fosters the greatest level of new competition at DCA.
V. ALASKA’S PROPOSAL PROVIDES THE GREATEST PUBLIC AND NETWORK BENEFITS AND MOST EFFICIENT USE OF SLOT EXEMPTIONS OF ANY APPLICANT PROPOSAL. Alaska now addresses each of the other proposals and demonstrates that Portland and San Diego have the greatest unsatisfied needs for DCA nonstop service and that Alaska is the best
carrier to fulfill those needs.
A. Southwest Southwest proposes to use two DCA slot exemptions for service to Austin, with continuing one-stop service to San Diego. In comparison, Alaska’s proposal is stronger in virtually every respect – service to much larger markets, greater connecting opportunities, lower fares and significant consumer savings.- 9 -



### The Austin-DCA market, with 85,000 annual passengers, is much smaller than either San Diego-DCA (126,000 annual passengers) or Portland-DCA (96,000 annual passengers). Austin is 33% smaller than San Diego and 11% smaller than Portland. 31 

### If the combined DCA and Dulles markets are considered, the size disparity between the San Diego and Portland markets and the Austin market is even greater—by 116% in the case of San Diego and by 14% in the
case of Portland. 32 

### Moreover, Austin has the lowest Washington D.C. load factor of any of the proposed DCA markets at 79.9%, much lower than Portland (90.7%) and San Diego (90.1%). 33 

### Southwest’s passenger forecast modeling uses extraordinarily high service and fare stimulation factors that overstate the size of the Austin-DCA market when compared with historic evidence. Southwest’s 110% passenger stimulation factor produces a forecast doubling of the Austin-DCA market in just eighteen months. 34 

### In contrast, when looking at Southwest’s Oklahoma City-Baltimore market (similar stage length as Austin-DCA), which Southwest entered in 2007, the results are much different. In that case, the actual customer savings in the first year of service ($1.6 million) were only 13% of Southwest’s projected Austin-DCA forecast savings ($12.4 million). Further, the market stimulation was less than half while the fare reduction was only one-third of Southwest’s Austin-DCA projections. 35 

### Unlike Alaska, Southwest’s claimed consumer savings is not based on any fare commitment. Instead, Southwest projects consumer savings using an assumed Austin-DCA average fare derived from its system yield curve (that is, Southwest’s average system yield) for a hypothetical market with the same stage-length as Austin-DCA. 36 

### But that does not reveal the

31 AS-R-19 32 AS-D-2 33 AS-R-22 34 WN-202 35 AS-R-31, AS-R-32. Alaska’s average stimulation when entering new markets in 2010 was 121%. In contrast, Alaska estimates Southwest’s stimulation has been only 40%. 36 WN-121- 10 -



### actual fares Southwest would charge in the Austin-DCA market or what its average fare would be. This is in contrast to Alaska, which is the only applicant in this proceeding to propose specific fares for each of its markets. Further, Southwest’s estimated “average” Austin-DCA fare ($169) is not consistent with their actual fares in the Austin-Baltimore market. Even though the Austin-BWI and Austin-DCA markets have nearly identical distances, Southwest’s actual average Austin-BWI fare ($189) 37 

### is significantly higher than the estimated average Austin-DCA fare ($169). Southwest does not provide any explanation for the 12% difference. In fact, Southwest’s average fare between Baltimore and Oklahoma City, as well as Houston and San Antonio, are all higher than its assumed Austin-DCA fare. 38 

### Southwest’s Austin-DCA average fares are not likely to be as low as Southwest now claims. In addition to the smaller size of the Austin market and the lack of any specific fare commitment, Southwest offers very limited connecting opportunities at Austin. Southwest proposes only two connecting points from Austin—Houston and Dallas/Ft. Worth. Both of these cities are already well served from DCA on a nonstop basis, with a combined total of twenty daily DCA frequencies and with an average load factor of only 77%. 39 

### Any connecting service Southwest might offer to these cities from its single Austin flight would offer minimal, if any, competitive enhancements. 40 

### Southwest’s proposed one-stop San Diego service also lacks any appreciable consumer benefits. In fact, Southwest’s stated San Diego-DCA average fare of $196 raises questions similar to the unexplained difference between its proposed Austin-DCA fares and its actual Austin-BWI fares. Southwest’s actual San Diego-BWI average fare is $211 versus Southwest’s

37 .US DOT DB1B YE 3 rd Quarter 2011 38 AS-R-29 39 USDOT T-100 data year-ending November 2011 40 AS-R-30- 11 -



### now projected $196 average San Diego-DCA fare. 41 

### In comparison, Alaska offers specific $159/$179 nonstop San Diego-DCA fares. 42 

### Finally, from a competitive landscape perspective, Southwest is already among the larger DCA slot holders, operating twenty-four DCA slots compared with the six operated by Alaska. Southwest is the second largest limited incumbent carrier at DCA, behind only JetBlue (which itself recently acquired sixteen DCA slots, bringing its total to thirty-four). To the extent the Department desires to enhance the competitive posture of the smaller DCA carriers, an award to the one of the largest DCA slot operators would not contribute to that effort. Alaska’s proposal offers low fares, demonstrable consumer savings, nonstop service to larger primary markets than Austin and five times the connecting opportunities. 43 

### Alaska also offers amenities that Southwest does not, including the assignment of seats, a global frequent flyer program tied to Alaska’s ten international frequent flyer and codeshare partners, a 20- minute bag delivery guarantee, and the ability to connect bags with other carriers to the passenger’s final destination anywhere in the world served by Alaska’s codeshare and interline partners. Alaska also offers first class seats, fleet-wide WiFi, and well-appointed passenger lounges in addition to having an excellent on-time performance record. Alaska’s proposal to provide San Diego-DCA nonstop service (with single-plane service to Honolulu) at highly competitive fares will generate greater public benefits than Southwest’s one-stop San Diego-DCA service. Similarly, Alaska’s new Portland-DCA nonstop service will provide greater consumer benefits than Southwest’s proposed Austin service by providing nonstop service to a much larger market with more connecting opportunities and greater savings through low fares.

41 WN-122, USDOT DB1B YE 3 rd Quarter 2011 42 AS-D-9 43 AS-D-5, AS-R-30- 12 -



### B. Virgin America Virgin America proposes to operate twice-daily San Francisco-DCA service. Virgin America offers very limited connections (at San Francisco), proposes to use a relatively small 119-seat aircraft, and does not offer any fare proposal—neither specific low fares as Alaska has put forth nor forecast average fares. Moreover, San Francisco-Washington D.C. passengers already have extensive nonstop service options and comparatively low fares. 44 

### This is in contrast to Alaska’s offer to provide the first nonstop service to the largest unserved market (Portland) and much needed, well-timed competitive nonstop service in what is the largest underserved market (San Diego), using much larger aircraft and offering multiple connecting opportunities as well as through-plane service to Honolulu from San Diego. In evaluating Virgin America’s proposal, the Department should consider the high level of nonstop service available currently between Washington D.C. (IAD) and San Francisco, including multiple nonstop flights already operated by Virgin America. Virgin America will offer four daily roundtrip nonstop flights between San Francisco and IAD this summer. Between the IAD nonstop flights offered by Virgin America and other carriers, IAD will enjoy a minimum of thirteen daily nonstop roundtrip flights to San Francisco in the summer of 2012. In addition, United will shortly be offering one daily nonstop San Francisco flight in the DCAmarket. The comparative unfulfilled needs of the San Diego-Washington D.C. and PortlandWashington D.C. markets are quite different from those of the San Francisco-Washington D.C. market. This summer, there will only be four San Diego-Washington D.C. nonstop flights and just one in the Portland-Washington D.C. market. In contrast to Virgin America’s San

44 AS-R-23, AS-R-24- 13 -



### Francisco-DCA proposal, Alaska’s proposal will result in the introduction of a truly new and effective competitor in the San Diego-Washington D.C. market. 45 

### A review of the existing nonstop capacity levels in the San Francisco-Washington D.C. (IAD/DCA) market and comparable San Diego and Portland markets establishes that the San Francisco market is already very well-served. With fourteen daily Washington D.C. nonstop roundtrips, there already is significant capacity (the ratio of local O&D traffic to nonstop seats) in the San Francisco-Washington D.C. (DCA/IAD) market. San-Francisco has more than 1.5 million nonstop seats annually to Washington, D.C. When measured against total local O&D traffic demand for only 955,000 seats, that leaves more than 570,000 annual excess seats. This is in contrast to San Diego, which has only 83,000 excess seats per year while Portland, with only a single daily nonstop flight, has an annual shortage of 98,000 seats. 46 

### The comparative extent of the San Francisco market’s excess capacity is also evident from the fact that the San Francisco-Washington D.C.(IAD) market’s average market load factor, even before United’s addition of DCA nonstop service this May, is the fourth lowest of all the cities under consideration in this proceeding. Portland and San Diego rank first and second, respectively, in terms of the highest average load factor. 47 

### Virgin America does not provide any fare proposal, project any fare savings, and does not
set forth a traffic forecast. 48 

### While the Department has not explicitly required such projections in this proceeding, the explicit new “low fare” and “local market” benefits criteria of the FAA Reauthorization Act require the presentation of credible supporting information. 49 

### Virgin

45 Official Airline Guide Schedule 46 AS-R-24 47 AS-R-22 48 Nor does Virgin America provide a stimulation projection. In 2010, Alaska’s average stimulation in new markets was 121%. Alaska estimates that Virgin’s was only 41%. AS-R-32. 49 FAA Reauthorization Act adding 49 U.S.C. sec 41718 (g) (2)- 14 -



### America, however, has offered no information to confirm the bona fides of its low fare claim for its San Francisco-DCA proposal. The absence of that information takes on even more significance when it is considered that Virgin America’s actual San Francisco-IAD average fare is $225, in comparison with the lower average current San Francisco-DCA fare of only $197. 50 

### Virgin America has provided no credible empirical information to demonstrate that its proposal would produce consumer benefits that are comparable to those that will flow from the approval of Alaska’s application. The absence of that information may be attributable to Virgin America’s recognition that the San Francisco-DCA market already enjoys relatively low fares, 51


### traffic has already been stimulated, and passengers already have numerous options which will soon increase even further with United’s new nonstop service. It is in the San Diego-DCA and Portland-DCA markets where there is an urgent need for additional low fare competition—not in
the San Francisco-DCA market. Virgin America offers minimal connecting service at San Francisco. 52 

### Virgin proposes connections to only Los Angeles, Portland and San Diego, none of which would provide meaningful new consumer benefits. First, Los Angeles already enjoys nonstop DCA service. 53 

### Second, Portland needs and deserves nonstop DCA service. It does not need additional connecting service via San Francisco. Finally, with the San Diego-DCA market being only 15%
smaller than the San Francisco market 54 

### , the last thing San Diego needs is one additional

50 AS-R-25 51 USDOT DB1B Data YE 3 rd Quarter 2011. Existing average fares in the San Francisco-DCA market, even before United’s new nonstop service, are $197 compared with San Diego-DCA fares of $227 and Portland-DCA fares of $223. 52 AS-R-26 53 Los Angeles-DCA service will shortly have nonstop service operated by two carriers—Alaska and American. 54 AS-R-19- 15 -



### connecting flight. 55 

### What the San Diego market needs is nothing less than the new competitive nonstop service Alaska proposes. The small aircraft Virgin America proposes to use to serve DCA (119-seat A319 aircraft) is likely another reflection of the existing excess capacity in the San Francisco-Washington D.C. market. Virgin America’s aircraft is much smaller than Alaska’s 157-seat B737-800 aircraft, which on an annual basis will provide 28,000 more seats per roundtrip frequency. 56 

### There even appears to be some question as to whether Virgin America could consistently operate its A319 aircraft at DCA with a full passenger load. According to a Flight Global article by Dan Webb dated March 7, 2012, Virgin America’s CEO, Mr. Cush, stated that the thrust on Virgin America’s CFM56 engines will have to be upgraded to operate at DCA because of the airport’s short runway length, and that Virgin America is hopeful that the upgrade will be completed by May 2012. If that upgrade is not completed on a timely basis, Virgin America will likely be required to restrict sales, further decreasing available seats on what is already the second smallest aircraft proposed in this proceeding. The San Francisco-Washington D.C.-area market is by any objective measure already well-served and is characterized by far lower load factors than the Portland and San Diego
markets. 57 

### The San Francisco-DCA market already has lower average fares than both San Diego-DCA and Portland-DCA. 58 

### Virgin America has not demonstrated any reasonable

55 USDOT DB1B Data YE 3 rd Quarter 2011; AS-R-33 56 AS-R-18. In a recent carrier selection proceeding involving a U.S.-Mexico route, the Department concluded that aircraft size and the resulting capacity was a critical decisional factor. In selecting AirTran over Frontier for service in the Chicago-Cancun market, the Department emphasized that “AirTran’s service proposal would provide greater public benefits in terms of scheduled capacity and enhanced competition in the Chicago-Cancun market, and that a selection of AirTran would result in certain market structure benefits that would not be available with a selection of Frontier.” 2012 Chicago-Cancun Combination Service Proceeding , Order 2012-3-10, March 16, 2012, p.4 (emphasis added). The Department went on to conclude that any connections proposed by Frontier “would not outweigh the benefits of AirTran’s large schedule service capacity.” Id . p.5. 57 AS-R-22 58 USDOT DB1B Data YE 3 rd Quarter 2011- 16 -



### justification for adding capacity to a market which is already well-served and enjoys lower average fares, particularly when that request would have to be granted at the expense of cities with much greater needs.
C. JetBlue JetBlue, which is already one of the larger DCA slot holders, seeks two slots for service to San Juan—one of the smallest markets under consideration in this proceeding and one in which JetBlue would offer only limited connecting benefits. JetBlue also requests two additional slots to serve Austin, using the smallest aircraft of any competing applicant. Allocation of four slots to JetBlue, however, would generate few public benefits and represent an inefficient use of the only four roundtrip slot exemptions available in this proceeding. By JetBlue’s own admission, the San Juan-DCA market is the ninth largest without nonstop service. 59 

### This fact places San Juan well behind San Diego (the largest underserved market) and Portland (the largest unserved market) as well as behind a number of other cities at issue in this proceeding. San Diego-DCA traffic levels exceed those of San Juan by 133%; and Portland-DCA traffic levels exceed those of San Juan by 78%. 60 

### Even if JetBlue’s application were fully competitive with Alaska’s on all other bases, which it is not, the relative sizes of these three markets and the overall public benefits that will result from authorizing nonstop service strongly weigh in favor of San Diego and Portland over San Juan. San Juan’s fare levels also confirm that the market is already well-served. On a stage length adjusted basis, average fares in the San Juan-Washington D.C. market are $217—well below the average fares in the San Diego-Washington D.C. and Portland-Washington D.C.

59 Application of JetBlue Airways Corporation, Docket DOT-OST-2012-0029, March 2, 2012, p.23 60 AS-R-19- 17 -



### markets. The current San Diego and Portland average fares to Washington D.C. are in fact higher than San Juan’s existing fares by 42% and 17%, respectively. 61 

### The fact that the San Juan-DCA market is already well-served also means there is less opportunity for low fare market stimulation when compared to Portland and San Diego. However, even if stimulation opportunities were available, JetBlue’s stimulation record does not appear to compare to that of Alaska. In 2010, Alaska’s average stimulation in new markets was
121%. Alaska estimates JetBlue’s was 63%. 62 

### San Juan-DCA is primarily a leisure market. With San Juan being the point of sale for only 31% of San Juan-Washington D.C. traffic, there is relatively little demand in San Juan for nonstop DCA service when compared with Portland and San Diego. The point of sale for Washington D.C. traffic originating in Portland and San Diego is 56% and 45%, respectively,
which includes business and leisure travelers. 63 

### Since leisure travelers typically have more scheduling flexibility than business travelers, airport choice becomes a less important consideration. JetBlue’s high level of leisure traffic for its proposed San Juan flights suggests those passengers could easily be accommodated by existing nonstop service to IAD. Even aside from the weaknesses of JetBlue’s San Juan-DCA service proposal, there are indications that JetBlue may be having some difficulty efficiently utilizing all of the many DCA slots it already has. JetBlue’s seven daily Boston-DCA flights are operating at only a 75% load factor, less than its system-wide average load factor of 82%. 64 

### Yet JetBlue has just announced

61 AS-R-23 62 AS-R-32 63 AS-R-21 64 USDOT T-100 data year-ending November 2011, JetBlue Application, infra, p.8- 18 -



### the addition of three more Boston-DCA frequencies. In contrast to JetBlue’s experience, Alaska’s DCA load factor is 90%—the highest among all carriers serving DCA. 65 

### Likewise, JetBlue’s claims for its connecting services are not well supported. Although JetBlue argues its San Juan service will benefit a number of points beyond San Juan, it also admits that it is “primarily . . . a point to point carrier” and that nearly “90 percent of . . . [its] customers are point to point customers [.]” While JetBlue states that its interline relationship with Cape Air has helped it grow in San Juan and allows it to serve points beyond San Juan, the fact is that Cape Air uses extremely small aircraft which seat only nine passengers. Of the eight connecting opportunities identified in JetBlue’s application, five are operated on an interline-only basis with Cape Air. In fact, JetBlue’s application contains no mention or projection of the number of its connecting passengers. As a result, the credibility and value of these connections has not been established. Alaska’s analysis shows that its Portland-DCA service will provide 22times the volume of connecting passenger opportunities in comparison to JetBlue’s San JuanDCA proposal. 66 

### Similarly Alaska’s San Diego-DCA service will provide 76% more connecting passenger opportunities than JetBlue’s proposed San Juan-DCA service. 67 

### JetBlue also proposes extremely limited connections at Austin. JetBlue serves only two destinations west of Austin – San Francisco and Long Beach. Of these two points, none connect in the eastbound direction, and only Long Beach connects with JetBlue’s westbound flights. JetBlue’s service proposal also contemplates use of some of the smaller aircraft of any applicant in this proceeding. In the San Juan-DCA market, JetBlue proposes using A320 aircraft seating 150 passengers—fewer than Alaska’s 157-seat B737-800 aircraft, resulting in a comparative annual deficit of 5,000 seats for JetBlue. JetBlue’s seat deficit in the Austin-DCA

65 AS-D-11 66 AS-R-27 67 AS-R-27- 19 -



### market is even more striking where it proposes 100-seat Embraer E190 aircraft. This is the smallest aircraft proposed by any applicant, and will result in a JetBlue annual deficit of more than 42,000 seats compared to Alaska’s B737-800 157-seat aircraft. 68 

### Further, JetBlue’s acknowledged “conditional” interest in the Austin-DCA market is revealing in terms of the apparent limited interest JetBlue has in serving the Austin-DCA market. JetBlue states that it is only prepared to serve the Austin-DCA market if the Department also awards JetBlue the slots it has requested for San Juan-DCA service. 69 

### It is difficult to imagine what the economic and operational nexus is between the geographically disparate Austin and San Juan markets, which JetBlue also proposes to serve with very different aircraft. Finally, JetBlue already has 34 DCA slots—nearly six times the number of slots operated by Alaska. While the FAA Reauthorization Act permits JetBlue to apply for additional slots as a limited incumbent carrier, the fact remains that its DCA slot holdings place it only slightly behind United and among the six largest DCA operators. In this proceeding in which only four roundtrips are available, public policy considerations strongly favor that these new slots be awarded to the applicants whose service proposals will provide the greatest benefits to the largest number of consumers. JetBlue’s proposal does not meet that public policy benchmark. It contemplates service in smaller markets with undersized aircraft, offers almost no meaningful connecting opportunities and contains no promise of specific low fares. Alaska’s proposal in comparison offers the greater public benefits, providing transcontinental service to the largest unserved market and what until recently had been the largest unserved market, offering large aircraft and numerous connecting opportunities as well as proven low fares and substantial consumer savings.

68 AS-R-18 69 JetBlue Application, infra , p.1- 20 -



### D. Frontier The needs of the Colorado Springs-DCA market, the primary market that Frontier proposes to serve with nonstop service, are much less than the far larger Portland-DCA and San Diego-DCA markets Alaska proposes to serve. The Colorado Springs-DCA O&D market size is 31,000 passengers per year (only 42 per day in each direction) as compared to Portland and San Diego-DCA (96,000) and San Diego-DCA (126,000). Even when Colorado Springs-Dulles traffic is included, the market only increases to 68,000 annual O&D passengers. 70 

### With just four roundtrips available for new beyond-perimeter service, whatever benefits Frontier claims are overwhelmed by the service and fare benefits Alaska proposes for the Portland and San Diego
markets. Additionally, each of the beyond Colorado Springs cities mentioned by Frontier either already has, or likely shortly will have, its own DCA nonstop service—Denver, Los Angeles, Phoenix, San Francisco, and Seattle. 71 

### Frontier’s proposal also refers to Portland-DCA connecting service via Colorado Springs. Portland, like San Diego, is one of the prime West Coast-DCA markets Alaska proposes to serve with superior nonstop service. A further affirmation that Frontier’s claimed beyond network benefits would be de minimis is Frontier’s acknowledgement that it has yet to review its connecting schedules to determine which, if any, flights provide well-timed connections to Frontier’s Colorado Springs-DCA service. 72 

### Alaska, in contrast, undertook a careful evaluation of its beyond-market schedules to the thirty-three cities

70 AS-R-19, AS-R-21 71 Application of Frontier Airlines, Inc., p.18 72 In Frontier’s words, it acknowledges:

If Frontier received two of the exemptions to provide DCA-COS nonstop service, Frontier will examine schedule adjustments to enable connections to/from each of these points and the DCA flights. Frontier Application, infra, p. 13 [emphasis added]- 21 -



### Alaska serves from Portland and then pared its claimed connecting network benefits to ten particular cities that will immediately receive well-timed connecting service. The comparatively small size of the Colorado Springs-DCA market, Frontier’s choice to offer one-stop service in a market in which Alaska proposes service, and the minimal benefits associated with Frontier’s beyond market connecting benefits, 73 

### make Frontier’s proposal much less compelling than Alaska’s. Of even more significance is the widely reported fact that Frontier’s parent—Republic—
has announced that Frontier is for sale. 74 

### Although that fact is not acknowledged in Frontier’s application, an award of one of the four new and highly sought after DCA beyond-perimeter nonstop roundtrips would only serve to increase the sales proceeds Frontier’s parent would receive from an as yet unknown buyer. That is not a result the Department should encourage. E. Sun Country Sun Country’s proposal to become the second Las Vegas-DCA nonstop carrier is substantially weaker than Alaska’s proposals, as well as a number of the other competing applications. The questionable aspects of Sun Country’s proposal include its plan to use a small 129-seat B737-700 aircraft, which only adds to the diminished service benefits associated with Sun Country’s proposal. On an annual basis, Alaska’s San Diego or Portland nonstop proposal will introduce 115,000 annual seats in contrast to only 94,000 annual seats for Sun Country. 75 

### The Las Vegas-Washington, D.C. market, just as with the San Juan market, is also primarily a leisure market whose passengers do not require access to close-in DCA to anywhere near the

73 AS-R-28 74 See , e.g. Morningstar.com, dated Feb. 7, 2012, quoting statements from Mr. Bryan Bedford, the Chairman of Frontier’s parent, Republic. 75 AS-R-18- 22 -



### same extent as do San Diego and Portland market passengers. 76 

### In addition, the Las Vegas-DCA market already receives once daily US Airways’ nonstop service—a service that has experienced comparatively low load factors. 77 

### Another deficiency in Sun Country’s application is its admission that it is not interested in, and would not offer, any beyond market network benefits. 78 

### Sun Country’s lack of any network benefits and proposed small aircraft should disqualify its application from serious consideration.
F. Air Canada Since the Department has only four new DCA-beyond perimeter roundtrips to authorize, grant of Air Canada’s request to serve Vancouver would mean that a deserving beyond-perimeter U.S. city would be deprived of needed DCA nonstop service. It is difficult to justify elevating a non-U.S. city over a host of other beyond-perimeter U.S. communities which have until now been denied DCA nonstop service
. Air Canada already enjoys the unique privilege of being the only non-U.S. carrier holding within perimeter DCA slots. In fact, its sixteen DCA slots are more than twice the number held by Alaska. Air Canada’s unique status as a holder of DCA slots was the result of lengthy bilateral negotiations culminating in the first phase of U.S.-Canada open skies. DCA beyond perimeter slots did not even exist at the time the first phase of the agreement was signed. Therefore, Air Canada cannot now claim—nor has it—that the U.S.- Canada open-skies agreement requires that the U.S. now afford Air Canada further preferential foreign carrier status with respect to beyond perimeter slots which did not even exist at the time of the signing of the U.S.-Canada open-skies agreement. 79

76 AS-R-21 77 AS-R-22 78 Application of Sun Country, Docket DOT-OST-2012-0029, March 12, 2012, p.6 79 Annex II of the current second phase open-skies U.S.-Canada Air Transport Agreement expressly states that Air Canada’s access to DCA is subject to “the prevailing perimeter rule”. US-Canada Air Transport Agreement, entered into force on March 12, 2007, Annex II, Sec.2, para.1(a). This Annex II language is identical to Annex II in the now- 23 -



### Air Canada’s application also does not address any of the well-understood empirical measures for comparative market analyses in slot exemption proceedings. Not only has Air Canada failed to propose any low fares or a traffic forecast, but it has not provided any indication of the size of the Vancouver-Washington D.C. market. In sum, Air Canada has not carried its burden to satisfy the FAA Reauthorization Act’s selection criteria.
VI. CONCLUSIONAlaska’s proposal to provide nonstop service in the large Portland-DCA and San DiegoDCA markets is more compelling than those presented by the other applicants. Alaska’s proposals are a reflection of much that Alaska has accomplished in the last decade including its substantial growth, its industry leading financial returns, its 100% and ever expanding Boeing fleet and its excellent employee relations. It is also particularly important at this time to bring attention to the fact that Alaska is now the only established network carrier to successfully restructure outside of the bankruptcy process. That unique status means that Alaska’s employees have been spared much of the trauma of wholesale job terminations, pension defaults and massive bankruptcy-directed wage reductions. It further means that Alaska has spared the 96 communities it serves the difficulties and dislocations of service terminations and, in many instances, the troubling uncertainties of unsatisfied bond obligations. The widespread support Alaska has received for its application now includes letters from 10 U.S. Senators, the entire Congressional Delegations of Alaska, Hawaii, Oregon and Washington as well as several San Diego-area Congressmen, the Governors of Hawaii, Oregon and Washington and the Mayors of both Portland and San Diego. Alaska has also received

superceded first phase open-skies agreement entered into force on February 24, 1995. Nor has the prevailing 1,250- mile perimeter rule changed since 1995

.- 24 -



### welcome support from a number of organized labor groups, over 14,000 individual customers and employees and many businesses and civic organizations. 80


### WHEREFORE , for all the foregoing reasons, Alaska Airlines, Inc. hereby requests that the Department of Transportation grant it slot exemptions to permit it to provide nonstop service to Portland and San Diego from Reagan Washington National Airport, and that the Department grant such other and further relief as it may deem appropriate. Respectfully submitted,

________________________________ Marshall S. Sinick, Esq. Marshall.Sinick@squiresanders.com Edward W. Sauer, Esq. Edward.Sauer@squiresanders.com Squire Sanders (US) LLP 1200 19 th 

### Street, NW, Suite 300 Washington, DC 20036 (202) 626-6651

DATED: March 27, 2012

80 Alaska is separately filing a supplement to its application including voluminous letters of support from other state and municipal leaders, major universities and businesses, as well as letters from over 14,000 individual Alaska customers and employees.

### REBUTTAL EXHIBITS

AS-R-18: Alaska’s Proposed DCA Service Will Benefit the Greatest Number of Passengers AS-R-19: Portland is the Largest Unserved DCS Market AS-R-20: AS the Largest Unserved Market to DCA, Portland Deserves Nonstop Service AS-R-21: SAN & PDX Would Benefit More from DCA Service than LAS & SJU Given

that Demand in LAS & SJU Primarily Originates from WAS, is Predominately Leisure, and Can be Served Just as Well via Existing Nonstop Service to IAD AS-R-22: Portland and San Diego Have the Highest Historic Nonstop Load Factors of Any

Proposed Markets to Washington, DC AS-R-23: San Diego and Portland Have Higher Stage Length Adjusted Average Fares to

DC/IAD, Indicating a Greater Need for Service AS-R-24: San Francisco Already Has Significant Nonstop Capacity to Washington D.C.

When Compared to Portland and San Diego and Should Not Receive Further Service Ahead of San Diego and Portland AS-R-25: Based on Historic Fare Behavior, There is No Indication Virgin America will

Reduce Fares if Granted Slots for DCA-SFO AS-R-26: Virgin Provides No Meaningful Connecting Benefits AS-R-27: Portland and San Diego have Significantly More Connecting Passengers than

JetBlues’s Proposal to San Juan AS-R-28: Frontier’s Proposal Offers No Benefits for Connecting Passengers AS-R-29: Southwest’s Assumed DCA-AUS Fare is Inconsistent with Southwest’s Actual

BWI-AUS Fare and other BWI Markets of Similar Length AS-R-30: Southwest Provides Minimal Value to Connecting O&Ds as All Connecting

Cities Already Have Non-Stop Service AS-R-31: Southwest’s Actual Consumer Savings in Baltimore do no Support the Forecasted

Results in AUS-DCA AS-R-32: Alaska Has Stimulated More Traffic than Major LCC Applicants AS-R-33: There is no Benefit in Additional One-Stop San Diego Service to DCA AS-R-34: Nonstop DCA-PDX and DCA-SAN Service Provides Substantial Time Savings AS-R-35: US Airways Charges a Premium in Beyond Perimeter DCA Markets Whereas

Alaska Offers a Discount AS-R-36: Alaska will Operate Larger Capacity Aircraft, Serve More Passengers and

Operate a Schedule that Would Complement US Airways’ Proposal AS-R-37: With the Highest Load Factors and Larger Aircraft Flying the Longest Distances,

Alaska Proposals Utilize Beyond Perimeter Slots More Efficiently Than Any Other Applicant

## AS
‐ R
‐ 18: Alaska's Proposed DCA Service Will Benefit the Greatest Number of Passengers
Alaska Proposing Larger Capacity Aircraft than 5 of 7 Applications

Alaska Will Carry More Passengers than Any Other Applicant 115k 115k 110k
94k 88k 87k 73k

60 70 80 90 100 110 120 130 140AnnualSeatsperFlight

Notes: Source: Proposals 

### Even the Two Proposing Larger Capacity Aircraft 115k 115k 110k
94k 88k 87k 73k

60 70 80 90 100 110 120 130 140AnnualSeatsperFlight



### 103k 101k 98k 98k

90 95 100 105 110ForecastedOnboardAnnualPassengers

## AS
‐ R
‐ 19: Portland is the Largest Unserved DCA Market

Portland Has Replaced San Diego as the Largest Unserved DCA Market

149k

126k

96k 85k

54k

31k

20k 40k 60k 80k 100k 120k 140k 160kAnnualO&DPassengerstoDCA



# Announced Un Served

Notes: Source: Department of Transportation O&D Data ‐ Year

‐ End Q3 '11 Local O&D Market Passengers to DCA only U.S. domestic proposals only US Airways on March 21 announced plans to initiate DCA

‐ SAN service beginning June 2012 

### 149k

126k

96k 85k

54k

31k

0k 20k 40k 60k 80k 100k 120k 140k 160kAnnualO&DPassengerstoDCA



# Announced Un

‐ Served

## Nonstop Service AS
‐ R
‐ 20: As the Largest Unserved Market to DCA, Portland Deserves

96k 85k
54k 31k
0k 20k 40k 60k 80k 100k 120kDCAO&DPassengersinExcessofExistingNonstopCapacity

DCA Demand Nonstop Seats 96k 0 85k 0 54k 0 31k 0

Notes: Source: Department of Transportation O&D Data ‐ Year

‐ End Q3 '11 Source: OAG August 2012 nonstop capacity snapshot ‐ annualized U.S. domestic proposals only Local Market O&D Passengers to DCA only O&D Destination 

### DCA Demand vs. Nonstop Capacity

Colorado Springs Portland

Austin San Juan 

### 96k 85k
54k 31k
0k 20k 40k 60k 80k 100k 120kDCAO&DPassengersinExcessofExistingNonstopCapacity

### AS
‐ R
‐ 21: SAN & PDX Would Benefit More from DCA Service than LAS & SJU Given that Demand in LAS & SJU Primarily Originates from WAS, is Predominately Leisure, and Can be Served Just as Well via Existing Nonstop Service to IAD

Point
‐ of
‐ Origin Summary by Market (DCA/IAD) San Diego & Portland Have Far More Originating Passenger Demand

San Juan & Las Vegas Have a High Leisure Component 159k

104k 87k

46k 40 60 80 100 120 140 160 180

San Diego Portland Las Vegas San JuanAnnualPassengerstoDCA

31% JetBlue ‐ San Juan

SJU to WAS 44%

Alaska ‐ Portland

PDX to WAS

Notes: Source: Department of Transportation O&D Data ‐ Year

‐ End Q3 '11 159k

104k 87k

46k 40 60 80 100 120 140 160 180

San Diego Portland Las Vegas San JuanAnnualPassengerstoDCA

21%

79% Sun Country ‐ Las Vegas

LAS to WAS

WAS to LAS 31%

69% JetBlue ‐ San Juan

SJU to WAS

WAS to SJU 56% 44%

Alaska ‐ Portland

PDX to WAS

WAS to PDX

45% 55%

Alaska ‐ San Diego

SAN to WAS

WAS to SAN

## AS
‐ R
‐ 22: Portland and San Diego Have the Highest Historic Nonstop Load Factors of Any Proposed Markets to Washington D.C.

86% 91% 90% 89%

88%

86%

82%

80% 80% 82% 84% 86% 88% 90% 92%AverageWashingtonD.C.LoadFactor

DCA Nonstop

Notes: Source: Department of Transportation T

‐ 100 Data ‐ Year

‐ End Nov '11 Load Factor of Nonstop Flights to DCA/IAD 

### 86% 91% 90% 89%

88%

86%

82%

80%

78% 80% 82% 84% 86% 88% 90% 92%AverageWashingtonD.C.LoadFactor

DCA Nonstop

## AS
‐ R
‐ 23: San Diego and Portland Have Higher Stage Length Adjusted Average Fares to DCA/IAD, Indicating a Greater Need for Service Versus Las Vegas

Versus San Francisco $308

$253 $236

$200 $220 $240 $260 $280 $300 $320

San Diego Portland Las VegasSLAdjustedAvg.Fare

$308

$253 $234

$200 $220 $240 $260 $280 $300 $320SLAdjustedAvg.Fare

Notes: Source: Department of Transportation O&D Data ‐ Year

‐ End Q3 '11 Local Market Passengers/Fares to DCA/IAD ‐ Includes Nonstop and One

‐ Stop Itineraries (Stage Length Adj. to 1,930 miles) 

### Versus San Juan $308

$253 $236

$200 $220 $240 $260 $280 $300 $320

San Diego Portland Las VegasSLAdjustedAvg.Fare

$308

$253 $234

$200 $220 $240 $260 $280 $300 $320

San Diego Portland San FranciscoSLAdjustedAvg.Fare

$308

$253
$217 $200 $220 $240 $260 $280 $300 $320

San Diego Portland San JuanSLAdjustedAvg.Fare

## AS
‐ R
‐ 24: San Francisco Already Has Significant Nonstop Capacity to Washington D.C. When Compared to Portland and San Diego and Should Not Receive Further Service Ahead of San Diego and Portland
Nonstop Seats vs. Market Demand

0.47 1.23 1.60

0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80

Portland San Diego San FranciscoNonstopSeatstoPassengersRatioWashingtonD.C.(DCA/IAD)

Demand Seats Difference 186k 88k
‐ 98k 352k 434k 83k 955k 1531k 576k

Notes: Source: Department of Transportation O&D Data ‐ Year

‐ End Q3 '11 Source: OAG Schedule Data for August 2012 Local Market Passengers to DCA/IAD Portland

‐ DCA Capacity Shortage (Where Demand > Seats) is noted in red Total Seat Figures Includes Future US Airways Service to SAN and United service to SFO beginning Summer '12 Washington D.C. Excess Capacity Destination

Portland San Diego San Francisco 0.47 1.23 1.60

0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80

Portland San Diego San FranciscoNonstopSeatstoPassengersRatioWashingtonD.C.(DCA/IAD)

## AS
‐ R
‐ 25: Based on Historic Fare Behavior, There is No Indication Virgin America will Reduce Fares if Granted Slots for DCA
‐ SFO

Average Fare Comparison to Washington D.C.

$197 $200 $225

$180 $185 $190 $195 $200 $205 $210 $215 $220 $225 $230

Industry Average DCA

‐ SFO AS ‐ DCA

‐ LAX VX ‐ IAD

‐ SFOIndustryAverageFare

Notes: Source: Department of Transportation O&D Data ‐ Year

‐ End Q3 '11 Local Market Passengers to DCA/IAD ‐ AS/VX Data Limited to Non

‐ stop/Connecting Itineraries $197 $200 $225

$180 $185 $190 $195 $200 $205 $210 $215 $220 $225 $230

Industry Average DCA

‐ SFO AS ‐ DCA

‐ LAX VX ‐ IAD

‐ SFOIndustryAverageFareAS‐R‐26:VirginProvidesNoMeaningfulConnectingBenefitsDCASFOLosAngelesSanDiegoPortlandLAXPDXSANNotes:Source:OAGScheduleDataAug'12CircuityMaximumof1.3VirginAmericaConnectingPointsBeyondSFOApplicationforNonstopDCAServiceonAS,Non‐StopServiceonUSApplicationforNon‐StopDCAServiceonASNon‐StopDCAServiceonBothASandAADCASFOLosAngelesSanDiegoPortland

## AS
‐ R
‐ 27: Portland and San Diego have Significantly More Connecting Passengers than JetBlue's Proposal to San Juan

Total Potential Domestic Flow Passengers 

# 1,600k

125k 71k
0k 200k 400k 600k 800k 1,000k 1,200k 1,400k 1,600k 1,800kAnnualConnectingPaxtoWashingtonD.C.

Notes: Source: Department of Transportation O&D Data ‐ Year

‐ End Q3 '11 Connecting traffic based on proposed schedules, carrier applications (domestic data only) Local Market Passengers to DCA/IAD 

# 1,600k

125k 71k
0k 200k 400k 600k 800k 1,000k 1,200k 1,400k 1,600k 1,800kAnnualConnectingPaxtoWashingtonD.C.

## Connecting Passengers

Dst. Arr. Time Connect Missed By DEN 8:40 Yes

‐ LAX 21:36 No 10h 49m PDX 20:25 No 9h 38m PHX 13:50 No 3h 3m SEA 20:45 No 9h 58m

Dst. Dep Time Connect Missed By DEN 16:40 No 3h 4m LAX 7:00 No 12h 44m PDX 14:30 No 5h 14m PHX 9:55 No 9h 49m SEA 14:30 No 5h 14m

Notes: Source: OAG August 2012 Assumes a 4 hour maximum connect time and a 30 minute minimum connect time 

## AS
‐ R
‐ 28: Frontier's Proposal Offers No Benefits for

Current COS Arrivals 

### Proposed COS
‐ DCA Departure Time ‐ 11:17

Proposed DCA
‐ COS Arrival Time ‐ 19:14 Current COS Departures

### Comparison of Southwest Actual Average Fares vs. DCA
‐ AUS Proposal 

### AS
‐ R
‐ 29: Southwest's Assumed DCA
‐ AUS Fare is Inconsistent with Southwest's Actual BWI
‐ AUS Fare and other BWI Markets of Similar Length

$189 $186

$175 $174 $169

$155 $160 $165 $170 $175 $180 $185 $190 $195

Notes: Source: Department of Transportation O&D Data ‐ Year

‐ End Q3 '11 Local Market Passengers to BWI ‐ Includes Nonstop and One

‐ Stop Itineraries $189 $186

$175 $174 $169

$155 $160 $165 $170 $175 $180 $185 $190 $195AS‐R‐30:SouthwestProvidesMinimalValuetoConnectingO&DsasAllConnectingCitiesAlreadyHaveNon‐StopServiceDCASanDiegoDallasDallasHoustonSanDiegoNotes:Source:OAGScheduleDataAug'12CircuityMaximumof1.3SouthwestConnectingPointsBeyondAUS12PeakDayDCANon‐StopFrequenciesontwoCarriers8PeakDayDCANon‐StopFrequenciesApplicationforNon‐StopDCAServiceonAS,Non‐StopServiceonUSDCAAUSSanDiegoDallasHouston

### Support the Forecasted Result in AUS
‐ DCA

BWI
‐ OKC Actual AUS
‐ DCA Forecast
Savings Existing Passenger Savings $1.3m $8.0m Stimulated Passenger Savings $0.3m $4.4m Total Passenger Savings $1.6m $12.4m
Key Metrics Traffic Stimulation 46% 110% Fare Change (12%) (36%) Savings per Passenger $17 $71

Note: BWI

‐ OKC represents most recent addition from
metro

‐ Washington area to the Southwest region for WN

Notes: Source: USDOT DB1B for OKC

‐ BWI YE3Q08 vs. YE2Q07 Methodology , fees, and forecast referenced from WN application for AUS slots 

### AS
‐ R
‐ 31: Southwest's Actual Consumer Savings in Baltimore do no t

## AS
‐ R
‐ 32: Alaska Has Stimulated More Traffic than Major LCC Applicants

121%

63%

41% 41%

0% 20% 40% 60% 80% 100% 120% 140%AverageStimulationofMarketsLaunchedin2010

Notes: Source: Department of Transportation DB1B YTD 2011 vs. YTD 2009 Excludes seasonal markets, and markets that have since been discontinued Average stimulation in markets entered in 2010 121%

63%

41% 41%

0% 20% 40% 60% 80% 100% 120% 140%

Alaska Average JetBlue Average Virgin Average Southwest AverageAverageStimulationofMarketsLaunchedin2010



## 7 8 4 30 New Markets:Airline Stopover Point Daily R/T Daily Seats AMERICAN CHICAGO 0.5 160 DELTA MINNEAPOLIS 0.5 155 UNITED CHICAGO 0.5 120 UNITED DENVER 0.5 120 UNITED HOUSTON 0.3 106 TOTAL
‐ 2.3 661

Notes: Source: OAG Schedules August 2012 Assumes a 4 hour maximum connect time and a 30 minute minimum connect time 

## AS
‐ R
‐ 33: There is no Benefit in Additional One
‐ Stop San Diego Service to DCA

DCA
‐ SAN Direct Service Summary ‐ Aug'12 Snapshot 

### Ample One
‐ Stop Service Already Exists TodayAirline Shortest Cnx. Elapsed Time Vs. Nonstop ALASKA

‐ 5h 50m

‐ ALASKA SEATTLE 7h 40m +1h 50m AMERICAN DALLAS 7h 55m +2h 5m DELTA MINNEAPOLIS 6h 55m +1h 5m FRONTIER DENVER 7h 5m +1h 15m JETBLUE BOSTON 10h 8m +4h 18m UNITED CHICAGO 7h 0m +1h 10m US AIRWAYS CHARLOTTE 8h 28m +2h 38m

Airline Shortest Cnx. Elapsed Time Vs. Nonstop ALASKA

‐ 5h 45m

‐ AMERICAN DALLAS 6h 40m +0h 55m DELTA CINCINNATI 7h 10m +1h 25m FRONTIER DENVER 7h 7m +1h 22m JETBLUE BOSTON 8h 14m +2h 29m UNITED CHICAGO 7h 15m +1h 30m US AIRWAYS PHOENIX 7h 18m +1h 33m

Notes: Source: OAG Schedule on August 17, 2012 Assumes a 4 hour maximum connect time and a 30 minute minimum connect time 

## AS
‐ R
‐ 34: Nonstop DCA
‐ PDX and DCA
‐ SAN Service Provides Substantial Time Savings

DCA to PDX Time Savings ‐ Aug'12 Snapshot

DCA to SAN Time Savings ‐ Aug'12 Snapshot

## AS
‐ R
‐ 35: US Airways Charges a Premium in Beyond Perimeter DCA Markets Whereas Alaska Offers a Discount

Nonstop DCA Carrier Fare vs. Industry Average Washington D.C. Fare (DCA / IAD)

$49

$11

($3)

($28) ($40) ($30) ($20) ($10) $0 $10 $20 $30 $40 $50 $60

US ‐ Phoenix US ‐ Las Vegas AS ‐ Seattle AS ‐ Los AngelesAverageFarePremium/(Discount)



### Average Premium $30 Average Discount ($16)

Metric Alaska US Airways Beyond Perimeter L/F 90% 90% Beyond Perimeter Fare Premium ($16) $30 Proposed Gauge 157 150 DCA

‐ SAN Industry Average Fare $227 $227 Implied Fare $211 $257 Implied Passengers 103m 99m

Implied Savings $1.7m ($3.0m)

Notes: Source: Department of Transportation O&D Data ‐ Year

‐ End Q3 '11 Local Market Passengers to DCA/IAD ‐ Includes Non

‐ Stop and One

‐ Stop Itineraries 

### Estimated DCA
‐ SAN Consumer Savings $49

$11

($3)

($28) ($40) ($30) ($20) ($10) $0 $10 $20 $30 $40 $50 $60

US ‐ Phoenix US ‐ Las Vegas AS ‐ Seattle AS ‐ Los AngelesAverageFarePremium/(Discount)



### Average Premium $30 Average Discount ($16)

## and Operate a Schedule that Would Complement US Airways' Proposal

Depart Time Arrive Time Seats

DCA 8:55 SAN 11:18 150

SAN 12:30 DCA 20:23 150

Depart Time Arrive Time Seats

DCA 16:10 SAN 18:55 157 SAN 20:25 HNL 23:30 157

HNL 21:35 SAN 6:10 157 SAN 7:10 DCA 15:10 157 

## AS
‐ R
‐ 36: Alaska will Operate Larger Capacity Aircraft, Serve More Passengers

US Proposed Schedule

AS Proposed Schedule

Eastbound Westbound Westbound

Eastbound



### 118ds

Notes: Source: Proposals 

### 115k

110k

108 109 110 111 112 113 114 115 116 117 118

Alaska US AirwaysAnnualSeatsThousands

## More Efficiently Than Any Other Applicant AS
‐ R
‐ 37: With the Highest Load Factors and Larger Aircraft Flying the Longest Distances, Alaska Proposals Utilize Beyond Perimeter Slots

332k 322k

238k
207k 183k 182k 173k

103k 100k 150k 200k 250k 300k 350kModeledRPMsPerFlight

Notes: Source: Department of Transportation T

‐ 100 Data ‐ Year

‐ End Nov '11, Proposals Modeled RPMs based on proposed markets, proposed gauge, and carrier specific DCA load factors RPMs are per round

‐ trip 332k 322k

238k
207k 183k 182k 173k

103k 100k 150k 200k 250k 300k 350kModeledRPMsPerFlight- 25 - 

### CERTIFICATE OF SERVICE

I hereby certify that one copy of the foregoing Reply Comments of Alaska Airlines, Inc. has this day been served on each of the following individuals via telecopier or email. susan.kurland@dot.gov ; todd.homan@dot.gov ; james.dann@dot.gov john.allen@faa.gov dan.weiss@coair.com ; steve.morrissey@united.com ; jonathan.linde@united.com rbkeiner@crowell.com carl.nelson@aa.com sascha.vanderbellen@delta.com ; jeff.morgan@delta.com jhill@dlalaw.com ; robert.land@jetblue.com jyoung@yklaw.com ; dkirstein@yklaw.com bob.kneisley@wnco.com ; leslie.abbott@wnco.com john.varley@virginamerica.com howard.kass@usairways.com ; benjamin.slocum@usairways.com john.fredericksen@suncountry.com agoerlich@ggh-airlaw.com patrick.rizzi@hoganlovells.com anita.mosner@hklaw.com rick.finn@portofportland.com hbrown@san.org Michael.Daum@cantwell.senate.gov Alexandra.Hackbarth@wyden.senate.gov James.Feldman@begich.senate.gov

______________________________ Marshall S. Sinick DATED: March 27, 2012