BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

------------------------------------------------------------------------

Application of :

:

SOUTHWEST AIRLINES CO. :

: Docket DOT-OST-2014-0222

for an exemption pursuant to 49 U.S.C. § 40109 :

to engage in foreign scheduled air transportation :

of persons, property and mail between Houston :

Hobby International Airport and Cancun, Mexico City, :

Puerto Vallarta, and San Jose del Cabo, Mexico :

------------------------------------------------------------------------

CONSOLIDATED SURREPLY OF

UNITED AIRLINES, INC. AND SKYWEST AIRLINES, INC. AND 

MOTION FOR LEAVE TO FILE

Communications with respect to this document should be sent to:

Steve Morrissey

Vice President-Regulatory & Policy

UNITED AIRLINES, INC.

1225 New York Avenue, NW

Suite 1100 – DCAIZ

Washington, DC 20005

(202) 521-4373

steve.morrissey@united.com

Daniel A. Weiss

Managing Director-International

 Affairs and Regulatory

UNITED AIRLINES, INC.

233 South Wacker Drive

10th Floor – HDQIZ

Chicago, IL 60606

(872) 825-6828

dan.weiss@united.com

January 10, 2015

Thomas Newton Bolling

Vice President and Deputy General Counsel

Abby L. Bried

Associate General Counsel-Regulatory, 

 Alliances & International

James Conneely

Counsel-Regulatory

UNITED AIRLINES, INC.

233 South Wacker Drive

11th Floor – HDQLD

Chicago, IL 60606

(872) 825-8068

(872) 825-7415

(872) 825-8311

thomas.bolling@united.com

abby.bried@united.com

james.conneely@united.com

Gerald F. Murphy

Steven J. Seiden

CROWELL & MORING LLP

1001 Pennsylvania Avenue, NW

Washington, DC 20004

(202) 624-2500

gmurphy@crowell.com

sseiden@crowell.com

Counsel for

United Airlines, Inc.

and SkyWest Airlines, Inc.
BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

------------------------------------------------------------------------

Application of :

:

SOUTHWEST AIRLINES CO. :

: Docket DOT-OST-2014-0222

for an exemption pursuant to 49 U.S.C. § 40109 :

to engage in foreign scheduled air transportation :

of persons, property and mail between Houston :

Hobby International Airport and Cancun, Mexico City, :

Puerto Vallarta, and San Jose del Cabo, Mexico :

------------------------------------------------------------------------

CONSOLIDATED SURREPLY OF

UNITED AIRLINES, INC. AND SKYWEST AIRLINES, INC. AND 

MOTION FOR LEAVE TO FILE

I. INTRODUCTION.

Unlike Southwest,1 United, SkyWest and the City of Houston (“Houston”) are focused on 

a solution that will allow all carriers to serve the Houston-Mexico City/San Jose del Cabo 

markets without delay – and without disrupting existing services and harming consumers.2 

Southwest, in its Reply: (i) continues to ignore well-established DOT precedent requiring carrier 

selection proceedings; (ii) argues against the Department using extra-bilateral authority to grant 

Southwest’s Application while not disputing that doing so would allow all carriers to serve the 

markets in question; and (iii) fails to provide concrete assurances that Southwest will actually be 

 

1 Common names are used for airlines. 

2 United and SkyWest move, pursuant to Rule 6(c) of the Department’s Rules of 

Practice, for leave to file an otherwise unauthorized document. Good cause exists to allow this 

Surreply because it will clarify the position of United and SkyWest in light of information 

offered by Southwest and Houston in their Replies and provide a more complete record on which 

the Department will render a decision on Southwest’s Application. 
Consolidated Surreply of United and SkyWest

Page 2 of 8

able to commence its proposed services on October 15, 2015. Nevertheless, the fact remains that 

granting extra-bilateral authority to Southwest is the only alternative that will truly benefit all 

carriers, consumers and communities on both sides of the border, and is in the public interest.

II. SOUTHWEST CANNOT ESCAPE DEPARTMENT PRECEDENT OR DUE PROCESS 

THAT REQUIRES A CARRIER SELECTION PROCEEDING

The Department cannot simply withdraw and reallocate United’s and/or SkyWest’s 

designations without instituting a carrier selection proceeding. And there is clear and ample 

Department precedent to support that fact. See, e.g., Order 2014-12-9 (Tokyo Haneda slot 

allocations); Order 2007-11-23 (U.S.-Colombia frequencies); and Notice of Action Taken dated 

Feb. 13, 2004 in Docket DOT-OST-2003-16444 (Phoenix-Puerto Vallarta/San Jose del Cabo 

designations). Ironically, Southwest cites two Department decisions examining factors in carrier 

selection proceedings in an attempt to demonstrate that a carrier selection proceeding is not 

required here. See Southwest Answer at 5. This is nonsensical and does nothing to advance 

Southwest’s position. Southwest is free to argue the relative merits of its proposed services 

versus those already being provided by United and/or SkyWest in a carrier selection proceeding,3

but the Department may not forego holding such a proceeding – and due process – just because 

Southwest deems it an unnecessary formality. Southwest also conveniently conflates its own 

words with those of the Department when referring to the decision granting SkyWest exemption 

and designation authority for the Houston-Mexico City/San Jose del Cabo routes. See id.

(internal citations omitted).

 

3 While United and SkyWest reserve their rebuttal to the economic study Southwest 

cites in support of its Application for a proper carrier selection proceeding, if necessary, they 

point out that the study appears to have been done before Spirit entered the Houston-San Jose del 

Cabo market. Southwest Reply at 3 (citing Southwest Application at 4-5 and Exhibits 1-7). 

Accordingly, the study cannot accurately portray the purported effects of Southwest’s proposed 

services.
Consolidated Surreply of United and SkyWest

Page 3 of 8

Southwest’s proposed course of action would affect tens of thousands of passengers and 

is not something the Department can or should accomplish by fiat. Approximately half of 

United’s Houston-Mexico City passengers flew on United in one direction and its United 

Express partner in the other direction in 2014, with that figure increasing to nearly two-thirds in 

the Houston-San Jose del Cabo market. Yet Southwest would have the Department act as if 

SkyWest is not an airline that holds its own designations and United could simply conjure up its 

own regional jet aircraft and the crews to operate them at will: “United is and will continue to be 

able to provide an unlimited number of daily flights, using any gauge of aircraft, with the one 

designation it will retain on each route.” Southwest Answer at 3 (emphasis in original). As the 

nation’s largest regional airline – having nearly 11,000 employees, nearly 400 aircraft, and 

carrying approximately 27 million passengers each year – SkyWest resents Southwest’s 

implication that it’s a non-entity. It is SkyWest that operates the important regional jet services 

that consumers have come to rely on as a competitive and flexible alternative in the HoustonMexico City/San Jose del Cabo markets – competition that Southwest clearly wants to eliminate. 

Southwest may not like it, but due process dictates that the Department consider the significant 

attributes that SkyWest’s service brings to these markets in its own right in the context of a 

carrier selection proceeding.

As United has made clear, however, a carrier selection proceeding is a distant secondbest option that will unduly harm consumers. It makes little sense for the Department to hold 

such an unnecessary and costly proceeding when there is a viable alternative that will allow 

Southwest to serve these markets alongside United, SkyWest, and Spirit, and better satisfy the 

public interest. Arguing otherwise demonstrates callous disregard for the customers, coworkers 

and communities that would be impacted by needlessly withdrawing the designations held by 

United and/or SkyWest.
Consolidated Surreply of United and SkyWest

Page 4 of 8

III. GRANTING EXTRA-BILATERAL AUTHORITY TO SOUTHWEST WOULD 

PRESERVE LONGSTANDING UNITED AND UNITED EXPRESS SERVICES AND 

IS IN THE PUBLIC INTEREST

The Department should grant extra-bilateral authority4to Southwest to maximize 

competition and preserve longstanding United and United Express service offerings for 

consumers. Southwest’s anticipated startup date for its Houston-Mexico City/San Jose del Cabo 

services is just two and one-half months before the new U.S.-Mexico air transport agreement that 

will remove the designation limits in transborder markets is scheduled to go into effect. By 

contrast, United and its United Express partners have together been providing unparalleled

network connecting opportunities, fare and booking class options, and flexible time-of-day 

coverage in the Houston-Mexico City/San Jose del Cabo markets for well over a decade. See 

Orders 2000-5-31 and 1992-5-20 (United); and Notice of Designation dated Oct. 7, 2004 

(undocketed) and Dep’t. Action dated May 7, 2003 (undocketed) (United Express). Southwest 

may be a new entrant, but it is also a Johnny-come-lately. See, e.g., Southwest Answer at n. 6 

(bemoaning the fact that Spirit was first to the remaining Houston-San Jose del Cabo designation 

in September 2014). United and SkyWest welcome the competition that Southwest will bring, 

and make this point simply to illustrate that longstanding United and/or United Express services 

shouldn’t be disrupted to accommodate Southwest for a period of what may be less than 11 

weeks. 

 

4 United commends the creative suggestion of Houston and the Southwest Airlines 

Pilots’ Association (“SWAPA”) that the Department should “persuade the Mexican Government 

to withdraw its [informal] historic interpretation of the existing bilateral that a mainline carrier 

and its regional partner must each hold a designation even where all services are operated under 

the name of the mainline carrier.” Houston Answer at 3; see also SWAPA Answer at 3-4. 

Although the Mexican Government might characterize such action as extra-bilateral in any 

event, United and SkyWest support any alternative that will preserve their existing services and 

allow all competitors to serve the markets at issue.
Consolidated Surreply of United and SkyWest

Page 5 of 8

And Houston agrees. “Houston has expressed its strong support for authority to be made 

available to all carriers that wish to provide services. For the benefit of consumers and the public 

interest, the City also strongly supports new market entry, low-fare services and maximizing 

competition, while wishing not to disrupt or lose existing services.” Houston Reply at 2. Further, 

Houston supports the grant of extra-bilateral rights where necessary to enable all carriers to 

provide the services they wish in all Houston-Mexico markets without delay...[and]...hopes that 

the Department will explore with Mexico all options available to secure additional rights needed, 

including extra-bilateral authority.” Id. at 3. This strong sentiment is also shared by the 

Chairman of the Subcommittee on Trade of the House Ways and Means Committee: “It is not in 

the best interest of Houston or the traveling public to withdraw long-held rights granted to 

United or its United Express partners, and which benefit U.S. consumers who use IAH as an 

airport to access Mexico, for a period of only 2.5 months.” Letter from Congressman Kevin 

Brady (TX-8) to Anthony Foxx, Sec’y, U.S. Dept. of Transp. (Dec. 29, 2014) (Exhibit A to the 

United and SkyWest Answer).

Southwest does not dispute that a grant of extra-bilateral authority would allow all 

carriers wishing to serve the Houston-Mexico City/San Jose del Cabo markets to do so. See

Southwest Reply at 6-7. Moreover, the Department has demonstrated its willingness to use 

extra-bilateral authority no less than fifteen times in recent years to the benefit of both U.S. and 

Mexican carriers, including specifically to allow them to take early advantage of codeshare 

opportunities that would become available under the 1999 U.S.-Mexico aviation agreement. See 

United and SkyWest Answer at 5-6 (citations omitted). Southwest offers nothing more than selfserving speculation by suggesting that the Mexican Government would be unwilling to entertain 

using extra-bilateral authority in these unique circumstances or that the new U.S.-Mexico air 

transport agreement may not go into effect on January 1, 2016. See Southwest Answer at 6-7. 
Consolidated Surreply of United and SkyWest

Page 6 of 8

But the very recent history of the Department granting extra-bilateral authority to two Mexican 

carriers for 12 transborder routes (see United and SkyWest Answer at 5-6 (citations omitted)) 

and a freshly-signed air transport agreement intended to “expand opportunities for 

passenger...carriers to provide service between the United States and Mexico, and strengthen 

economic ties between the two countries” (Press Release, U.S. Dep’t. of Transp., United States, 

Mexico Reach Modernized Aviation Agreement (Nov. 21, 2014) at 1) stand in stark contrast to

Southwest’s unfounded assertions. Against this backdrop, United and SkyWest submit there 

could be no better opportunity for the Department to seek extra-bilateral authority to benefit U.S. 

carriers. The Department would also be hard pressed to explain to the hundreds of communities 

that have connecting service via United’s hub at Houston’s George Bush Intercontinental Airport 

why the extra-bilateral authority that has been readily granted to Mexican carriers was not 

available to assist U.S. carriers in these circumstances.

IV. SOUTHWEST MUST DEMONSTRATE THAT HOBBY WILL BE READY FOR 

INTERNATIONAL OPERATIONS IF IT MEANS DISRUPTING EXISTING UNITED 

AND/OR SKYWEST SERVICES

Southwest conspicuously fails to provide any confirmation that that construction on the 

new international terminal and Federal Inspection Facility (“FIS”) at Houston’s William P. 

Hobby Airport (“HOU”) will be completed, and that the FIS can be staffed with Customs and 

Border Protection (“CBP”) Officers, by October 15, 2015. The lack of such confirmation leads 

United and SkyWest to believe that there is no viable plan in place. If plans are indeed 

confirmed, Southwest would not dance around the issue as it does. The Department cannot 

possibly move forward with stripping away designations from United or SkyWest without 

definitive confirmation as to when HOU will be ready for international operations. But 

Southwest somehow deems this significant concern “outside the scope of this proceeding.” See

Southwest Reply at 7. While Southwest and Houston may arguably be able to assert that 
Consolidated Surreply of United and SkyWest

Page 7 of 8

“[c]onstruction of the new FIS facility is on schedule for a 2015 opening” (Houston Reply at 2; 

see also Southwest Reply at 8), they do not, and cannot, make any commitment on CBP staffing 

and resources, particularly when the agency has yet to be funded past February 27, 2015. See

Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235.

As Southwest well knows, granting Southwest’s application without extra-bilateral 

authority would also mean that United and/or SkyWest services would be needlessly sacrificed 

even if Southwest were unable to commence operations before the new U.S.-Mexico air 

transport agreement goes into effect on January 1, 2016. See, e.g., Notice of Action Taken dated 

Sep. 3, 2014 in Dockets DOT-OST-2014-0129 and DOT-OST-2014-0130 (requiring a 90-day 

dormancy startup condition). The public interest cannot abide such a result. Southwest would

also apparently have the Department withdraw United’s and/or SkyWest’s designations and 

force them to stop marketing, ticket sales and associated services immediately, regardless of 

HOU’s readiness for international service or Southwest’s actual ability to commence operations. 

But even assuming arguendo that the Department were to grant Southwest’s application without 

extra-bilateral authority, that would not be the case. Granting Southwest the underlying 

exemption authority to begin marketing and sales in the Houston-Mexico City/San Jose del Cabo 

markets would have no effect on United’s and SkyWest’s designations or exemption authorities 

through October 15, 2015, regardless of the Department’s ultimate decision on Southwest’s 

application. See, e.g., Notice of Action Taken in Dockets DOT-OST-2014-0129 and DOT-OST2014-0130 at 2 (noting United could begin marketing and selling SkyWest-operated HoustonMexico City services five months before SkyWest’s designation allowing operations would

become effective).
Consolidated Surreply of United and SkyWest

Page 8 of 8

V. CONCLUSION

For the foregoing reasons, United urges the Department to grant Southwest extra-bilateral 

authority for Southwest to commence its proposed Houston-Mexico City/San Jose del Cabo 

operations and preserve existing United mainline and SkyWest (d/b/a United Express) regional 

jet services to the benefit of United’s customers, coworkers and communities. Doing so is 

clearly in the public interest, as it is the only viable alternative that would enhance competition 

on these important U.S.-Mexico routes, provide a net gain in consumer benefits, and further the 

intent of the new U.S.-Mexico air transport agreement.

Respectfully submitted,

CROWELL & MORING LLP

____________________________

Gerald F. Murphy

Steven J. Seiden

gmurphy@crowell.com

sseiden@crowell.com

Counsel for

United Airlines, Inc. 

and SkyWest Airlines, Inc.

January 10, 2015
CERTIFICATE OF SERVICE

I certify that I have this date served the foregoing document on the following persons in 

accordance with the Department’s Rules of Practice.

robert.wirick@aa.com

howard.kass@aa.com

nssparks@fedex.com

gbleopard@fedex.com

kevin.montgomery@polaraircargo.com

rpommer@atlasair.com

rsilverberg@sgbdc.com

jjohnson@sgbdc.com

msinick@ssd.com

stephen.lachter@cozen.com

robert.land@jetblue.com

jhill@cooley.com

perkmann@cooley.com

dkirstein@yklaw.com

jyoung@yklaw.com

bob.kneisley@wnco.com

leslie.abbott@wnco.com

pjackson@swapa.org

matwood@cozen.com

anita.mosner@hklaw.com

jennifer.nowak@hklaw.com

sascha.vanderbellen@delta.com

chris.walker@delta.com

robert.cohn@hoganlovells.com

patrick.rizzi@hoganlovells.com

thomas.ting@suncountry.com

john.varley@virginamerica.com

rbtrinder@zsrlaw.com

paul.gretch@dot.gov

brett.kruger@dot.gov

susan.kurland@dot.gov

brian.hedberg@dot.gov

reese.davidson@dot.gov

todd.homan@dot.gov

peter.irvine@dot.gov

cristinasa@state.gov

info@airlineinfo.com

__________________________________

Steven J. Seiden

January 10, 2015