BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

____________________________________ ______ _ ) Application of ) ) S OUTHWEST A IRLINES C O

. ) ) Docket No. OST
- 2012
- f or an exemption from 14 C.F.R. Part 93 ) pursuant to 4 9 U.S.C. § 41714(d) ) ( DCA s lot s lides ) )

_____________________________________ ______ )

APPLICATION FOR EXEMPTION

Communication s with respect to this document should be addressed to:

Ron Ricks Robert W. Kneisley Executive Vice President

-- Associate General Counsel C hief Legal and Regulatory Officer Leslie C. Abbott Madeleine Johnson Senior Attorney Vice President General Counsel SOUTHWEST AIRLINES CO. SOUTHWEST AIRLINES CO. 1901 L Street, NW 2702 Love Field Drive Suite 640 Dallas, TX 75235

- 1611 Washington, DC 20036 bob.kneisley@wnco.com (202) 263

- 6284

July 3 , 20121 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

___________________________________________ ) Application of ) ) S OUTHWEST A IRLINES C O

. ) ) Docket No. OST
- 2012
- f or an exemption from 14 C.F.R. Part 93 ) pursuant to 4 9 U.S.C. § 41714(d) ) (DCA s lot s lides) )

___________________________________________ )

APPLICATION FOR EXEMPTION

On June 2 1 , 2012, Spirit Airlines , Inc. (“Spirit”) announced that it would sell four
inside

- perimeter 2100

- hour slots at Ronald Reagan Washington National Airport (“DCA”) to the highest bidder , for use beginning September 6, 2012. Bids were subsequently submitted, and o n June 28 Spirit notified Southwest Airlines (“Southwest”)
that it had submitted the highest bid

. On July 2 the FAA approved the transfer of the
four slots from Spirit to Southwest effective September 6. Southwest plans to use these slots to provide much needed low

- fare serv ice and compet ition between DCA and St.
Louis (“STL”) , currently a monopoly market with only limited regional jet service. However, the 2100 hour timing of all four of these slots precludes Southwest from offering an effective pattern of service between DCA and STL, and from serving points beyond STL with workable connections

. Moreover, as a limited incumbent carrier
with few DCA slots , Southwest does not have sufficient flexibility to inco rporate the four
2100 hour slots into its schedule with internal trades

. Accordingly, Southwest is hereby2

seeking an exemption to “slide” these slots to more practical and competitively

- viable
times

. In fact , none of these slots are currently being operated in the 2100 hour, as Spirit previously received Department approval to slide three of the slots to earlier
hours , and traded the fourth

. 1 However, as slot slides are not transferable between
carriers , Southwest is seeking slides for these four slots in its own right.
Pursuant to 4 9 U.S.C. § 41714(d), the Department of Transportation is authorized, under circumstances “determined by the Secretary to be exceptional, ” to grant air carriers exemptions to reassign slot times to different hours as long as such exemptions do not: (A) result in an increase in the total number of slots per day at DCA ; (B) result in an increase in the total number of slots from 7:00 am to 9:59 p m ; (C) increase operations in any one - hour period by more than two operations; (D) result in the withdrawal or reduction of slots operated by an air carrier; or (E) result in a net increase in noise impact on surrounding communities resulting from changes in timing of operations permitted under this subsection

. I n accordance with 49 U.S.C. § 41714(d), Southwest hereby requests an exemption from 14 C.F.R. 93 for the following reassignment of its newly acquired 2100
slots to times that will enable Southwest to offer a viable schedule and effective low

- fare competition :

1 Order 2003

- 9

- 30, Applications of ATA Airlines, Spirit Airlines, Colgan Air, Chautauqua Airlines (Sept. 30, 2003).3

Slide Request Effective September 6, 2012
Slot Number Current Time Requested Time City Pair
1383 2100 1100 STL

- DCA
1535 2100 1200 DCA

- STL
1536 2100 1800 STL

- DCA

1242 2 2100 1800 DCA

- STL

As shown herein , Southwest’s application satisfies all applicable criteria to support the grant of an exemption for the above

- requested slides. Southwest requests that the Department act on this application as expedit iously as possible d ue to the short timeframe available for marketing the new DCA

- STL flights before the September 6

trans fer date established by Spirit

. The new flights cannot be advertised until flight
times are confirmed , and hence Southwest cannot begin marketing the flights until this application is acted upon. 3

I. Southwest ’s Inability to Offer a Viable DCA
- STL Schedule Without the Requested Slot Slides Warrants an Exemption
Southwest , a limited incumbent at DCA pursuant to the statutory definition in 49
U.S.C. § 41714(h)(5)(B) , as amended by the FAA Modernization and Reform Act of
2012 , held only 18 slots at DCA prior to t his transaction

. 4 Therefore, in contrast to the

2 Slot #1242 is currently traded for a 2200 hour slot until October 27, 2012. Therefore, on an interim basis Southwest will use a 0700 slot (slot #1099) for its proposed slide u n t i l October 27, 201 2, when slot #1242 would revert to a 2100 slot and would be eligible for reassignment under § 41714(d)

. 3 Southwest is concurrently requesting a short term waiver from the FAA’s slot usage rules to enable Southwest to begin DCA

- STL service at a later date in September 2012. However, the FAA’s action on that request is uncertain, and in no way diminishes the need for expeditious handling by the Department of the instant exemption request so that Southwest can advertise and sell the flights as soon as p ossible

. 4 Southwest also holds eight city

- specific DCA slot exemptions that cannot be transferred between markets and are not included in the limited incumbent cap of 40 slots, see 49 U.S.C. § 41714(h)(5)(B)(i).4

dominant DCA carrier with hundreds of slots at its disposal, Southwest does not have the ability to trade slots from its existing portfolio to create a viable DCA

- S TL schedule

. Moreover , it is unlikely that another DCA carrier would be willing to trade optimal slot
times for less desirable 2100 slots

. In previous slot slide proceedings, DOT has found that similar facts present “exceptional cir cumstances” within the meaning of the statute. For example, i n its 2003 proceeding granting slot slides to four carriers from the 2100 hour to more viable times throughout the day, the Department stated : We agree that 2100 hour slots have little or no utility to a carrier that has no other slots. While other alternatives may exist that could enable these carriers to offer viable service, none are as practical or sure as the approach they have pursued here

-- that of seeking authority under section 41714(d) to move 2100 hour slots to other available times. Moreover, if a grant of that authority is denied here, carriers may face the choice of either operating their service at a loss or relinquishing the slots to FAA, at least temporarily frustrating the purpose for which the FAA’s slot lottery was instituted. Precisely because the flexibility of these limited slot holders is so constrained, their circumstances are exceptional. 5 Similarly, without an exemption from the Department to re

- time its four 2100 slots,
Southwest w ill be unable to offer a viable schedule, provide new low

- fare competition in its planned market , and maximize the public benefits from using these slots. Moreover, South west ’s plan to initiate the only low

- fare service between DCA

STL in competition with an incumbent monopoly carrier also supports the grant of an exemption . In granting past slide requests, DOT has recognized the “competitive spur”
that low

- fare carriers provide at DCA as an element of the “exceptional circumstances

The above

- noted holdings include those of both Southwest Airlines and its wholly

- owned subsidiary AirTran Airways. 5 Order 2003

- 9

- 30, Applications of ATA Airline, Spirit Airlines,, Colgan Air,, Chautauqua Airlines , ( Sept

. 30, 2003 ) , at p. 6 (emphasis added); see also, Order

- 2000

- 7

- 20, Applicat ion of Midwest Express Airlines , July 14, 2000, at p. 4 (“our authority to grant exemptions for slot slides at Regan National is applicable only in limited circumstances to meet the specific needs of carriers holding a limited number of slots at the airpor t.”).5

criterion.” 6 Southwest has a long record of providing robust, sustained low

- fare competition including at airports where it has a relatively small presence

. I n order to maximize the public benefits from these scarce slot resources, Southwest proposes to offer one DCA late morning arrival /midday departure and one
DCA late afternoon arrival /early evening departure

. T his schedule not only would provide consumers with business

- friendly travel times to meet market demand but also
would facilitate connections beyond STL that will improve acces s to DCA for several
other cities

. The Department has consistently recognized both of these factors as
demo nstrating exceptional circumstances as well. 7

II. Grant of the Requested Slides Will Enable Southwest to Provide Low
- Fare Competition and Significant Consumer Benefits in the DCA
- STL Market
Southwest ’s proposal for sliding its four newly acquired slots will provide much
needed low

- fare competition and superior service in the DCA

- STL market

. Currently,
American Airlines provides the only nonstop service on this route with three daily flights

on 64

- seat CR7 aircraft

. 8 In contrast, Southwest proposes to operate two nonstop roundtrip flights per day with mainline 737

- 700 aircraft having 137 or 143 seats, more
than twice that of American ’s aircraft

. In other words, w ith one

- third fewer slots, Southwest would actually of fer over 40% more seats in the market as American. Southwest’s competition will thus not only provide far better utilization of scarce slot

resources, but in so doing will offer major benefits to travelers in a greatly under

- served
market.
Southwest’s requested slides w ill also facilitate numerous beyond

- STL

6 Order 2003

- 9

- 30 , supra, citing Order s 97

- 10

- 16 and 98

- 4

- 22. 7 Order 2003

- 9

- 30, supra, citing Orders 99

- 11

- 4, 2000

- 10

- 32, 2000

- 2

- 33, and 2000

- 7

- 20

. 8 Official Airline Guide (OAG); Schedule for Sept. 10, 2012.6

connections that will improve access to DCA from several additional cities . Southwest currently serves 36 nonstop destination s from STL, and a significant number of these
will conveniently connect to Southwest ’s proposed STL

- DCA flights. I n contrast, 2100 hour (9 pm) slots at DCA would offer minimal if any connecting possibilities even if they were otherwise viable, which they are not

. III. Southwest’ s Request Meets All Statutory Criteria For Granting Slot Reassignments at DCA In addition to presenting exceptional circumstances, Southwest’s application fully satisfies each of the criteria established by Section 41714(d) for grant of an exemption
from DCA slot rules:
First , approval of Southwest’s request will not increase the total number of daily
slots at DCA. The requested slides will simply move existing slots to time periods that provide more convenient travel options for the public and will allow Southwest, a limited incumbent, to compete more effectively with larger DCA carriers.
Second , the reassignment will not increase the total number of DCA slots
between 7:00 a m and 9:59 pm EST but will instead simply re - time slots that already fall

w ithin this timeframe.
Third , the slides that Southwest is requesting will not increase the number of operations at DCA in any one - hour period by more than two operations . Southwest has worked closely with the FAA ’s Slot Administration Office to assure t hat its request ed slot times are currently available for reassignment under 41714(d) and will not exceed the

two

- slide

- per - hour limit. 9

9 In fact, in the 1800 hour Southwest is proposing to replace the two slides that Colgan Air operated in that hour until January 2012 when it discontinued that service

. Therefore, Southwest’s requested slides will largely maintain the operational status quo at DCA

.7

Fourth , granting Southwest’s application will not result in the withdrawal or reduction of slots operated by any other air carrier and will in fact have no operational impact on other airline s at DCA.
Fifth , the requested reassignments will not result in a net increase in the noise impact on surrounding communities

. Southwest will use single

- aisle Boeing 737 air craft
that are Stage III noise compliant . In addition, Southwest is proposing to move flights currently designated for the 9 to 10 pm evening hours to times earlier in the day, which
may have less perceived noise impact on the surrounding communities. WHEREFORE, Southwest respectfully requests that the Department grant an exemption permitting the reassignment of its 2100 hour DCA slots to the 1100, 1200,
and 1800 slot hours as specified in this Application. Because of the September 6, 2012

start

- up date for this service, Southwest requests that the Department act on this application as quickly as possible so that Southwest can promptly begin marketing and
sales of these important new flight opportunities

.
Respectfully submitted ,

_____________________ Robert W. Kneisley

July 3 , 2012C ERTIFICATE OF SERVIC E

I hereby certify that on July 3 , 2012 , a copy of the foregoing was served via e

mail on the following persons: anita.mosner@hklaw.com (Air Canada) msinick@ssd.com (Alaska Airlines) carl.nelson@aa.com (American Airlines) robert.wirik@aa.com (American Airlines) sascha.vanderbellen@delta.com (Delta Air Lines) robert.cohn@hoganlovells.com (Frontier Airlines) patrick.rizzi@hoganlovells.com (Frontier Airlines jhill@dowlohnes.com (JetBlue Airways) robert.land@jetblue.com (JetBlue Airways) dkirstein@yklaw.com (Spirit Airlines) jyoung@yklaw.com (Spirit Airlines) John.Fredericksen@suncountry.com (Sun Country Airlines) dan.weiss@united.com (United Air Lines) howard_kass@usairways.com (US Airways) benjamin.slocum@usairways.com (US Airways) barbara.russell@virginamerica. com (Virgin America) susan.kurland@dot.gov robert.letteney@dot.gov todd.homan@dot.gov bob.go ldner@dot.gov jim.dann@dot.gov brian.ctr.meehan@faa.gov
John E. Potter President and Chief Executive Officer Metropolitan Washington Airports Authority john.potter@mwaa.com
Rhonda K. Hamm

- Niebruegge Director Lambert

- St. Louis International Airport 10701 Lambert International Boulevard St. Louis, MO 63145 RKHamm

- Niebruegge@flysti.com

__________________________ Dorothy C. Sauvinet