Exemption No s

. 15867 and 15869

UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION WASHINGTON, DC 20591

In the matter of the petitions of Regulatory Docket Nos. AMERICAN AIRLINES, INC. and FAA

- 2015

- 3491 DELTA AIR LINES, INC. FAA

- 2015

- 3932

for an exemption from § 93.123(a) of Title 14, Code of Federal Regulations

GRANT OF EXEMPTION ; DENIAL OF EXEMPTION

On August 11, 2015 and September 15, 2015, American Airlines, Inc. (American) and Delta Air Lines, Inc. (Delta)

, respectively , petitioned the Federal Aviation Administrati on (FA A) for an exemption from § 93.123(a) of Title 14, Code of Federal Regulations (14 C

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. ) permitting the operation of one round trip flight (two slots) for service between Ronald Reagan Washington National Airport (DCA) and Lansing Capital Region International Airport (LAN).

The petitioners request relief from the following regulation s:
Subparts K and S of 14 C

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. part 93 (the High Density Rule or HDR) prescribe special air traffic rules for high

- density traffic airports, which apply to DCA. Section 93.123(a) limits, in relevant part, the number of instrument flight rules (IFR) oper ations per hour at DCA to 37 for air carriers

, 11 for commuter carriers and 12 for other operations (such as general aviation)

. Background

In 20 0 4, p ursuant to authority vested in the Secretary of Transportation under 49 U.S.C. 41718(b), 1 t he U.S. Department of Transportation (DOT) granted two slot exemption s (AIR

- 21

1 Section 41718 of Title 49 directs t he Secretary to grant up to 20 within

- perimeter exemptions , 32 beyond perimeter exemptions, and two slot slide exemptions per hour from the slot requirements at DCA to allow flights in excess of the caps at 14 C

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. part 93

. See Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR

21), Pub. L. 106

- 181, Sec. 231 (Apr. 5, 2000), as amen ded by the Vision 100

– Century of Aviation Reauthorization Act of 2003, Pub. L. 108

- 176 (Vision 100)

, and FAA Modernization and Reform Act of 2012, Pub. L. 112

- 95, Sec.2 Exemption s ) to Midwest Airlines (Midwest) for nonstop service between DCA and Kansas City. 2 After Republic Airways Holdings, Inc. (the parent company of Republic Airline Inc. ) acquired Mi dwest in 2009, Republic Airline Inc. (Republic) informed the Department of its intention to use th e AIR

- 21 E xemption s granted to Midwest to continue DCA

- Kansas City service

. 3 DOT subsequently concluded that Midwest “improperly transferred” its AIR

- 21 E xe mption s to R epublic, and withdrew the m. DOT then initiated a competitive selection process to reallocate the AIR

- 21 E xemption s

. Upon conclusion of the competitive selection process, DOT issued Order 2010

- 12

- 16, which awarded the AIR

- 21 E xemption s to Sun Country, a new entrant at DCA, for daily nonstop service to LAN. 4

Republic sought judicial review of DOT O rder 2010

- 12

- 16

. In January 2012, the U.S. Court of Appeals for the District of Columbia vacated D OT O rder 2012

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- 16 and ordered the AIR

- 21 E xemption s returned to Republic. 5 In light of the D.C. Circuit Court’s ruling and because all available AIR

- 21 exemptions had been allocated

, Sun Country petitioned the FAA for an exemption from 14 C

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. part 93 that would allow it to continue service between DCA and LAN

.

The FAA may grant exemptions from part 93 when the Administrator determines that an exemption is in the public interest and will not adversely affect safety ( 14 C

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. § 11.81 )

. Based on the unique and extraordinary circumstances sur rounding Sun County’s request for an exemption from the FAA, in 2012, the FAA determined that the public interest w as served by granting Sun Country an exemption to preserve the DCA

- LAN service , which Sun Country had obtained as a new entrant at DCA

. 6 Moreover, Sun Country would have lost its only access at DCA suffering undue harm for relying on the original DOT exemption, but for the relief provided under the FAA exemption. Although FAA exemptions generally are not route

- or market

- specific , the FAA f ound that an exemption for the DCA

- LAN service was in the public interest because “the loss of Sun Country’s DCA

- LAN service [due to the Republic Airlines decision] could detrimentally impact the travelling public.” 7 In addition, the FAA found that an

exem ption would serve the public interest of preserving existing service at DCA; 8 and that “the

414 (Feb. 14, 2012). Exemptions from the Secretary must be allocated to carriers throu gh a competitive process. If a carrier no longer operates the service for which the Secretary awarded exemptions, the Secretary reallocates the exemptions in a new competitive proceeding.
2 DOT Order 2004

- 4

- 2 (Apr. 1, 2004).
3 See DOT Order 2010

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- 16 (Dec. 10, 2010) (discussing the facts surrounding Republic’s AIR

- 21 E xemptions under 49 U.S.C. 41718).
4 DOT Order 2010

- 12

- 16 (Dec. 10, 2010). Sun Country began round

- trip operations between DCA and LAN pursuant to its AIR

- 21 E xempti on s o n April 1, 2011

. 5 Republic Airlines, Inc. v. U.S. Dep’t of Transp.

, 669 F.3d 296 (D.C. Cir. 2012). After the Republic Airlines decision, DOT restored Republic’s AIR

- 21 Exemption s

. DOT Order 201 2

- 3

- 8 (Mar. 13, 2012). Rep ublic surrendered its AIR 21 Ex emption s in 2014, and DOT subsequently reallocated them to Southwest Airlines Co. DOT Order 2014

- 12

- 10 (Dec. 15, 2014).
6 FAA Exemption No. 10466.
7 Id.
8 Id.3 flying public reasonably relied on continued DCA

- LAN service

. ” 9 Thus

, by FAA Exemption No. 10466, the FAA granted an exemption to Sun County specifically for the continuation of the nonstop DCA

- LAN scheduled service permitted under DOT Order 2010

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. FAA Exemption No. 10466 s tated that t he exemption “will be rescinded if Sun County discontinues scheduled operations” at DCA.

In 2014, upon petition by Sun Country, t he FAA extended FAA Exemption No. 10466 through March 31, 2019, permitting the continuation of the DCA

- LAN flight for an additional five years. 10 On May 1, 2015, however, Sun Country notified FAA of its intent to cease its DC A

LAN service, and sur render the exemption on November 16, 2015. Sun Country discontinued service under the exemption effective October 1, 2015. Consequently, b y its terms, FAA Exemption No. 10466, as extended by FAA Exemption No. 10466A, expired

.

O n August 11, 2015 and September 15, 2015, respectively

, American and Delta submitted p etitions to the FAA for an exemption from part 93 to operate one nonstop round trip between DCA and LAN. At this time, all AIR

- 21 E xemptions a re allocated to carriers;

c onsequently, these peti tions are being sought solely on the basis of the FAA’s exemption authority.

The FAA published a summary of American’s and Delta’s p etition s for comment in the Federal Register

. See 80 F ed. R eg. 52359 (Aug. 28, 2015) and 80 F ed. R eg. 58529 (Sep t . 29, 2015). The comment period for American’s and Delta’s petition s closed on Septe mber 17, 2015 and October 19, 2015 , respect i vely . The FAA received 187 comments on American’s and two comments on Delta’s petition. 11

The petitioners support their requests with the following information:

American’s Petition

American petitioned the FAA for an exemption to continu e nons top service between DCA and LAN

, like that o perated by Sun Country pursuant to Exemption No. 10466A. 12 American indicated that its proposed service would provide even greater benefits to the Mid

Michigan community than that provided by Sun Country because American has the flexibility to add larger aircraft into the market as American recaptures LAN traffic using other airports and

wou ld work with the FAA to facilitate necessary trades in order to offer more convenient times for business travelers. 13 American also pledged that it would initiate service between LAN and

9 Id.
10 FAA Exemption No. 10466A.
11 The FAA notes that some comments were posted to the dockets for both petitions after the close of the comment period. The FAA has considered all comments submitted, including late

- filed comments, in arriving at this decision.
12 American cites several hist oric al FAA regulatory exemption decisions

, as well as statutory exemption decisions and other related actions taken by DOT in support of its position.
13 American ’s petition indicates it would begin service using a Bombardier CRJ

- 700 aircraft offering 67 s eats.4 Chicago O’H are International Airport (ORD) if it is granted the DCA ex emption it seeks. American point ed out that Delta maintains a fairly dominant position in Michigan and that American would provide “new competition” for th e state and region.

In further support of its request, American asserted that its proposal offered the same benefits to the Mid

- Michigan community as identified by the Department in support of its decision to grant Sun Country the AIR

- 21 Exemption s , and, also

, that supported the FAA ’s decision to maintain Sun Country’s access to DCA pursuant to an exemption after the D.C. Circuit’s decision in Republic Airlines

. American contend ed an exemption would generate significant benefit in the public interest and that “[i]t would be unfair and greatly injurious to its economy if Mid

- Michigan were to lose a service first awarded to...Sun Country by the DOT over four years ago.” American also note d its service proposal would “ maintain [] the only [nonstop] service Mid

- Michigan has to [any of ] the three airports in the Washington, DC region ;

. . . ; and, allow [] th e Mid

- Michigan region to continue to rely upon service it has supported for the past four years.” Moreover, American note d that there would be no net increase in operations at DCA if the relief requested is granted , a nd a n exemption would not adversely affect aviation safety

. American requested that the FAA either grant them a new exemption or a mend FAA Exemption No. 10466A to substitut e American for Sun Country . American also asked that the FAA grant American ’s request for an exemption by September 10, 2015 or grant it pendente lite ( i.e. temporary ) authority that would enabl e American to begin service as soon as possible after Sun Country’s cessation of service while the FAA considered its application

.

Delta’s Petition

Although Delta questioned whether “the exemption relief granted by FAA to Sun Country as a new entrant at DCA is available to DCA incumbents,” Delta similarly petitioned the FAA for an exemption that would permit it or its “Delta Connection” partners to provide nonstop DCA

- LAN service

. Delta assert ed that “[t]o the extent FAA is willing to consider such applications, Delta would be the superior public interest choice.” Delta “urge [d] the FAA, in conjunction with [DOT] , to establish a carrier selection case for the allocation of this DCA capacity, should it be available.”

In support of its petition, Delta state d that “due to its limited slot holdings...it cannot commence Lansing services without unacceptable harm to its current DCA network” and because “ Delta and its partners operate 49 daily departures at DCA, compared to 235 for American..., Delta is in much greater need of exemption authority than American...

. ” Delta noted that it “has a strong commitment to Lansing...” and its “proposal provides well

- timed services to m eet the needs of DCA

- Lansing travelers.” Delta also contended that “unlike American, virtually 100 percent of Delta’s DCA

- LAN capacity will be dedicated to local passengers who reap the most important benefits of nonstop service.” Delta included a service proposal for u se of the slot authority, should an exemption be available.5 Comments on American’s and Delta’s Petition 14

All of the commenters except one (JetBlue) supported the continuation of the DCA

- LAN service initiated through the AIR

- 21 Exemption s and continued by the FAA exemption. JetBlue Airways Corporation (JetBlue) was the only air carrier to submit an answer to both American’s and Delta’s petitions for relief , and opposed both petitions

. Delta and American also each submitted comments opposing the other’s petition. The Lansing Regional Chamber of Com merce characterized the loss of nonstop service between LAN and DCA as “a serious blow ”
to the greater Lansing business community

. The City of Lansing’s Mayor, V i rg Bernero, commented that “[i]t is critical that our government leaders, employers and workforce have easy and direct access to the nation’s capital.” The Capital Region Airport Authority (CRAA) emphasized that “[d]efined [c]ommunity [n]eed” was the basis fo r DOT’s original awa rd of Sun Country’s statutory slot exemption for service to LAN. The CRAA stated that “the loss of airport revenue from the Sun Country service to DCA, is creating a significant financial challenge” for the airport and the related “ loss of airline competition out of Lansing is predicted to greatly increase air fares out of Lansing to DC ...further reducing [LAN] use and [LAN] revenues. ”

Of the comments submitted in response to American’s and Delta’s petitions, the overwhelming majority exp ressed strong support for American. The CRAA requested the immediate “approval of the continuation of the LAN

- DCA service as proposed by American.” The CRAA also commissioned and submitted a study by Trillion Aviation, Inc. analyzing American’s and Delta’s proposals’ relative benefits to the Mid

- Michigan travelling public. The study concluded that American’s proposal for LAN service provided the greatest benefit to the Lansing area

. 15 Additionally, t he Lansing Regional Chamber of Commerce fully supported Ame rica n ’s proposal , allowing continuation of service to one of the top destinations for air travel in the Mid

- Michigan business community

. Several Mid

- Michigan business es , including PNC Bank, Caddis Insurance Service, and the Farm Bureau Insurance of Michiga n, support ed increased service offerings at LAN, stating their belief that American’s service proposal would offer an “improved schedule for those travelers who wish to make the DCA round trip in one day.”

Delta and JetBlue oppose d Amer ican’s petition b ased, in large part, on American’s already dominant position at DCA and on the unique circumstances of the FAA’s decision to

14 Comments were submitted by pri vate businesses in the Mid

- Michigan region; Michigan governmental and educational institutions; the Capital Region Airport Authority and other airport operators in Michigan; city, state and federal officials, including United States Senator Gary Peters (D

– Michigan) and United States Representatives Michael Bishop (R

– 8 th District of Michigan), Tim Walberg (R

– 7 th District of Michigan), and John Moolenaar (R

– 4 th District of Michigan); and 133 individuals. One comment included a petition with over 1,000 signatures in support of American’s petition.
15 Among the aspects of the service proposals considered in calculating the economic benefits was American’s offer to operate “almost 4x as many seats [as Delta], offering service to [two] hubs,” specifically DCA and ORD. See Trillion Aviation, Inc. LAN

- DCA Route Analysis: American Airlines vs. Delta Air Lines Proposals (September 18, 2015) available at http://www.regulations.gov/#!documentDetail;D=FAA

- 2015

- 3491

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.6 grant Sun Count r y ’s exemption. Delta questioned whether providing such exemption relief to large DCA incumbent carriers wo uld be in the public interest. JetBlue also suggested that an exemption for American to operate LAN

- D CA service would deviate from FAA precedent

, which only involved exemptions for carriers that lost slots due to circumstances beyond the carriers ’ control. JetBlue further stated that “Delta has recently sold some slots at DCA,” and yet it remains “the second largest carrier at DCA.” Therefore, from JetBlue’s perspective, both American and Delta have adequate slot holdings to operate LAN

- DCA service without the FAA’s grant of an exemption

. In its response, American generally assert ed that FAA’s sole concern should be the need to preserve the established air service for the travelling public of M id

- Michigan , and noted that the public would also benefit from increase d competiti on at LAN

. With respect to comments that American has sufficient slot holdings at DCA to establish service to LAN without an exemption, American replied that “[i] ncumbency does not ref lect the availability of a slot. ”

JetBlue and Amer ican commented on De lta’s p etition

. JetBlue oppos ed Delta’s petition for the same reasons cit ed in its comm ents opposing the American petition. American reiterated that its proposal for service would provide the greatest benefit to the traveling public

. Th e Mid

Michigan Business Travel Coalition also commented on Delta’s proposal to express their preference for the service proposed by American, while noting that they appreciate Delta’s commitment to the Lansing community and indicated their interest in work ing with Delta to expand Delta’s service offerings at LAN.

The FAA's analysis is as follows:

Both American and Delta petitioned the FAA for an exemption from 14 C

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. part 93 for nonstop DCA

- LAN service

. We note that, b y its terms, FAA Exemption No. 10466A expired when Sun Country ceased ope ration of its DCA

- LAN service. FAA Exemption No. 10466A was not transferable 16 and the operations authorized by the exemption are not part of the pool of permanent slots available at DCA. Therefore, to the extent th at either American or Delta has petitioned to be substituted as the exemption holder in FAA Exemption No. 10466A and assume the terms of FAA Exemption No. 10466A, the relief requested is not available.

American also requested that the FAA grant pendente lite authority to allow it to temporarily operate DCA

- LAN service until the FAA decided its petition for exemption

. The FAA has not historically granted such authority . Generally (c onsistent with 14 C

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. part 11 and subject to certain exceptions) , the FAA publishes petitions for exemption in the Federal Register and considers all comments submitted before arriving at a decision

. 14 C

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. §§ 11.85

- 11.87.

16 Delta’s opposition to American’s petition acknowledged this outcome when it noted that FAA Exemption No. 10466 A was specific to Sun Country

.7 Public Interest

Petitioners seeking an exemption from the FAA must show (1) why granting the request would be in the public interest and (2) why granting the request would not adversely affect safety or would provide an equivalent level of safety. 17 Safety generally is not at issue in FAA exemptions from part 93, because a ir traffic control procedures ensure the safety of operations conducted at the airport within the context of the total number of operations authorized.

As an initial matter, given the unique circumstances surrounding the DCA

- LAN service at issue in th ese exemption petition s , the FAA finds granting an exemption to American for DCA

- LAN service is in the public interest. Th e FAA generally do es not consider service to particular markets in its slot decision

- making, 18 and prior exemption decisions have refrained from finding that benefits that may accrue to a particular community from the operation of a specific route qualify as the “public interest

. ” 19 T he history of this particular service , however, is extraordinary

. The unusual circumstances surrounding Mid

- Michigan’s gain, and subsequent loss by D.C. Circuit Court decision, of the only nonstop access to the Washington, D.C. area from LAN factored into the FAA’s finding 20 that FAA Exemption No. 10466 was in the public interest, in part, because of the travelling public’s reliance on the service and the harm to the travelling public that could result from its cessation. 21

With respect to the petitions before us, the FAA finds that granting an exemption to American to r einstate the DCA

- LAN service is i n the public interest consistent with the original rationale for FAA Exemption No. 10466 granted to Sun Country . The travelling public has come to rely on the DCA

- LAN service and an exemption will mitigate hardship on the t ravelling public resulting from Sun Country’s cessation of its DCA

- LAN service that the community had expected to continue until 2019

. See FAA Exemption No. 10466 (granting an exemption to prevent a “detrimental impact [on] the travelling public”). Further more, a grant of an exemption will not increase operations at DCA above the level that existed prior to Sun Country’s cessation of its DCA

- LAN service.

17 14 C

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. § 11.81

. 18 See FAA Exemption No. 7370 (noting that FAA does not consider marketplace when allocating permanent slots, except as needed for Essential Air Service).
19 See e.g., FAA Exemption No. 8112, 8139, and 8589.
20 See FAA Exemption No. 10466 (noting that DOT has specific authority to grant exemptions to provide increased market access at DCA under 49 U.S.C. § 41718, but finding that “this authority does not override the FAA’s authority

... to grant exemptions from its rules when those exemptions are in the public interest”).
21 Given LAN’s central location within the state of Michigan, it serves individuals far outside of the immediate Lansing area. LAN is “within a 90

- minute drive of an overwhelming majority of the State’s entire population and is an important eco nomic center within the DCA perimeter.” DOT Order 2010

- 12

- 16.8 We cannot conclude, however, that granting multiple exemptions for DCA

- LAN service would be in the pub lic interest. 22 While the public interest supports an exemption to continue DCA

- LAN service, any additional public interest that might accrue from granting multiple exemptions do es not outweigh the strong public interest in maintaining the integrity of the slot rules and accompanying limitations , which are important to the efficient operation of the national airspace system as a whole. This is particularly true given that more than one exemption would increase operations at DCA above the level that existed prior to Sun Country’s cessation of service

. 23

Having found that an exemption for DCA

- LAN service is in the public interest, the FAA must consider whether the exemption should be granted in reply to American’s or Delta’s petitions. Both carriers proposed one daily nonstop round trip from DCA to LAN using comparably sized aircraft that would depart LAN in the early morning and return in the evening. American’s petition , however, had the overwhelming support of the commenters. In fact, a ll
commenters , 24 except Delta and JetBlue, strongly endorsed American’s petition. The support of the travelling public is vital to fulfillment of the public interest upon which this exemption will be granted. Here, the community has clearly expressed its support for American’s DCA

- LAN service, a factor that was not present with respect to Delta’s proposal. Thus, the FAA finds that American’s petition should be granted, and, therefore, Delta’s petition must be denied.

The FAA recognizes, though, that American ha s extensive slot holdings at DCA, and further, that a n FAA exemption i s not meant to support the public’s reli ance on a route indefinitely. U pon the expiration of this exemption as provided below , American must use its

own slot holdings (rather than an exemption) if it wishe s to continue DCA

- LAN service

. 25

22 JetBlue assert ed that the FAA must forestall consideration of American’s and Delta’s pending proposals while we solicit proposals from any other party that may be interested in providing DCA

- LAN service. While Delta argued that the FAA must “weigh the merits of the mutually exclusive compet ing applications.” American’s and Delta’s petitions were publicly avai lable in dockets at www.regulations.gov an d public comment was solicited. 14 C

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. § 11.85. As evidenced by Delta’s petition, any carrier could have submitted a petition for exemption for DCA

- LAN service upon seeing American’s petition. Furthermore, t he record in this matter involves various pleadings, and responsi ve pleadings, from the petitioners , and almost two hundred public comments. The FAA has consolidated its consideration of the respective proposals of American and Delta, and carefully assessed a ll of the submissions in the record for this matter. Nothing further is required. See

, e.g. , Western Radio Services Co, Inc. v. Glickman , 123 F.3d 1189, 1193 ( noting that Ashbacker requires “consolidated consideration of mutually exclusive license applications”); Exemption No. 81 12 (Aug. 14, 20 03).
23 The FAA notes that neither American n or Delta, no r any of the commenters voiced support for granting both petitions.
24 Except for American, Delta, and JetBlue, all of the commenters were civil officials, businesses, and individuals

. 25 Going forward, the travelling public and American have clear notice of the limited nature of this exemption. The
two

- year term of this exemption will afford American time to reassess its DCA operations should it wish to continue the LAN

- DCA service upon e xpiration of this exemption. It also permits Lansing time to assess alternative operations that would not require a slot exemption. T hus, the FAA does not believe that the public interest would continue to support an exemption from part 93 for DCA

- LAN serv ice upon expiration of this exemption.9 The FAA’s Decision:

In conside ration of the foregoing, and pursuant to the authority contained in 49 U

. S

. C

. 106(f), 40113, and 44701 , delegated to me by the Administrator, Delta’s p etition for an exemption from 14 C

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. § 93.123 is hereby denied.

In further consideration of the foregoing, I find that a grant of exemption to American is in the public interest and woul d not adversely affect safety. Pursuant to the authority contained in 49 U.S.C. 106(f), 40113, and 44701 , delegated to me by the Administrator, American is gra nted an exemption from 14 C

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. § 93.123(a) for the period beginning June 29, 2016

, and terminating June 29, 2018

, unless sooner superseded or rescinded, subject to the following conditions and limitations:

(1) A maximum of two total daily air carrier operations may be conducted under this exemption.

(2) Operations authorized by this grant of exemption may be conducted only in the following local hours: 1000 and 1100 . The time periods of each operation may be adjusted by the FAA if necessary for air traffi c control purposes.

(3) This exemption authorizes operations only by American (including its regional partners), but by no other carrier.

(4) American must use this exemption for nonstop DCA

- LAN scheduled service. American must contact the FAA Slot Administratio n Office to confirm the scheduled operations and their frequencies under this exemption. The Slot Administration Office will then provide slot identification numbers.

(5) This exemption will be rescinded if American discontinues DCA

- LAN scheduled operations.

(6) The operations authorized under this exemption are not part of the pool of permanent slots at the airport. However, these operations, while in effect, are subject to the provisions of 14 C

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. part 93, subparts K and S, except that the authority may no t bought, sold, leased, or otherwise transferred, except through air carrier merger or acquisition. American may engage in temporary one

- for

- one trades of the authority to meet operational needs subject to the reporting requirements of subparts K and S.

I ssued in Washington, DC, on March 31, 2016.

/s/ Reg inald C. Govan Chief Counsel