BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, DC 20590 

 

 ) 

Establishment of Slot Exemption Proceeding ) 

At Ronald Reagan Washington National Airport ) Docket 

Pursuant to 49 USC §41718 ) DOT-OST-2012-0029 

 ) 

Consolidated Response of JetBlue Airways Corporation

Communications with respect to this document should be addressed to: 

 

James Hnat Jonathan B. Hill 

General Counsel J. Parker Erkmann 

JetBlue Airways Corporation Dow Lohnes PLLC 

27-01 Queens Plaza North 1200 New Hampshire Ave., NW 

Long Island City, NY 11101 Suite 800 

Washington, D.C. 20036 

 (202) 776-2000 

 jhill@dowlohnes.com 

 perkmann@dowlohes.com 

Robert C. Land 

Senior Vice President for Government Counsel for 

Affairs & Associate General Counsel JetBlue Airways Corporation 

JetBlue Airways Corporation 

P.O. Box 1927 

Rockville, Maryland 20849-1927 

(301) 279-9727 

 

March 27, 2012 
1

BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, DC 20590 

 

 ) 

Establishment of Slot Exemption Proceeding ) 

At Ronald Reagan Washington National Airport ) Docket 

Pursuant to 49 USC §41718 ) DOT-OST-2012-0029 

 ) 

Consolidated Response of JetBlue Airways Corporation 

I. Introduction 

Of all the Applications submitted in this docket, one stands out from the rest: 

JetBlue’s proposed service to San Juan, Puerto Rico’s Luiz Munoz Marin International 

Airport (“SJU”). While the air carriers seeking the 16 available exemptions intend to fly 

west from DCA, only JetBlue’s primary Application proposes to fly south. Not only will 

JetBlue’s proposal introduce nonstop DCA service to an entire region completely 

unserved from DCA today, the Caribbean, but it will inject JetBlue’s low fare, high 

service brand of competition into a city pair (WAS-SJU) currently served by a single 

high cost mainline carrier from Dulles International Airport (“IAD”). Indeed, JetBlue’s 

Application is ground-breaking in several respects: 

 JetBlue’s proposed SJU service would be the first and only service between 

WAS and SJU offered by a low-cost carrier. 

 JetBlue’s proposed connecting services would reach cities and regions of the 

country that no other carrier in this proceeding even proposes to serve, or which 

any applicant or prior beyond-perimeter exemption recipient has proposed to 

serve. 
2

 JetBlue proposes to open an entirely new domestic gateway to the Caribbean, 

driving tourist traffic from the Washington area to domestic resort destinations in 

Puerto Rico, the U.S. Virgin Islands and the Caribbean, bolstering the U.S. 

economy. 

 JetBlue proposes to connect the nation’s capital to territorial and state capitals, 

unlike any other carrier in this proceeding.1 

The other Applications in this proceeding offer more of the same, flying to the west 

coast or to mountain destinations that are at best complimentary and at worst 

duplicative of what is already available from multiple carriers from the Washington 

market and DCA in particular, diverting traffic (for the most part) from existing service 

and not generating new traffic. 

Figure 1: JetBlue’s SJU Proposal is Unique 

In addition, JetBlue’s proposes to introduce its unique product to travelers from 

the nation’s capital to the capital of Texas in a market that is, as also reflected by 

                                                            

1

 Southwest’s proposed nonstop Austin service duplicates JetBlue’s proposed nonstop 

service to Austin. 
3

Southwest’s Application in the same market, in need of effective and consistent 

competition. JetBlue is in the best position to deliver this competition. 

 JetBlue has made unprecedented investments in growing its low-fare service at 

DCA. Indeed, by winning the FAA-directed slot divestiture auction with a $40 million 

bid, JetBlue has uniquely demonstrated in the boldest fashion possible its long-term 

commitment to competing and expanding its low-fare DCA service. The Department 

should not overlook this level of commitment. While the other applicants in this 

proceeding seek to add services opportunistically that they believe will be profitable due 

to the constraints on entry imposed by the High Density Rule, only JetBlue has shown 

such a commitment to DCA and its presence in Washington by investing its money to 

gain competitive access. 

JetBlue’s proposed services to SJU and AUS represent sustainable services that 

will provide unique benefits to the traveling public. These proposed routes reflect 

JetBlue’s long term commitment to Washington and will be sustainable in the long-run. 

Unlike any other carrier, JetBlue has committed valuable assets and a significant 

amount of cash to acquire a portfolio of slots in two transactions2 to gain access and 

establish a meaningful, but still modest, operating base at DCA. Indeed, the only 

reason JetBlue has access to DCA is its willingness to invest in the airport. The chart 

below shows that JetBlue would have no DCA slots at all if it had not decided to pay for 

access. 

                                                            

2

 In addition to its winning slot auction bid, JetBlue traded valuable slot interests at 

John F. Kennedy International Airport (“JFK”) and a commercial agreement for the right 

to use 8 pairs of DCA slots held by American Airlines. 
4

Figure 2: JetBlue DCA Slot Holdings 

To enable JetBlue to continue to grow its DCA presence and offer a meaningful choice 

to mainline and other incumbent carriers, the Department should recognize this unique 

commitment as it assesses the merits of the Applications in this proceeding. 

II. JetBlue’s Application Provides the Most Public Interest Benefits. 

Of all the Applications submitted in this proceeding, JetBlue best satisfies the 

statutory criteria for the award of these exemptions and provides the most public 

interest benefits, not just benefits to the carrier itself. 

A. JetBlue’s Proposed DCA-SJU Service Provides Significant Public 

Interest Benefits Consistent with the Statutory Criteria. 

Section 414 of FAA 20123

 directed the Department to consider seven criteria 

when awarding the exemptions at issue in this proceeding.4

 Upon review of the 

                                                            

3

 FAA Modernization and Reform Act of 2012, Pub. L. No. 112-95, 126 Stat. 11 (Feb. 

14, 2012) (“FAA 2012”). 
5

competing Applications in this proceeding, it is apparent that JetBlue’s Application to 

San Juan best satisfies them. Indeed, JetBlue’s proposal portends public interest 

benefits that no other Application can deliver. 

1. JetBlue’s SJU-DCA Service Will Expand the Domestic Network 

Benefits Like No Other Proposed Service in this Proceeding. 

In terms of expanding the domestic network and increasing competition in 

multiple markets, JetBlue’s SJU-DCA Application stands alone. JetBlue’s proposed 

capital-to-capital service simply takes beyond-perimeter service in a different direction 

and proposes to serve a market and region that currently receives no service 

whatsoever from DCA.5

 The diagram below depicts the service proposed in the 

competing Applications in this proceeding. 

                                                                                                                                                                                                4

 The Department summarized the criteria that the granted exemptions must satisfy as: 

(A) provide air transportation with domestic network benefits beyond 

the 1,250 mile perimeter; (B) increase competition in multiple markets; 

(C) not reduce travel options for communities served by small hub 

airports and medium hub airports within the 1,250 mile perimeter; (D) 

not result in meaningfully increased travel delays; (E) enhance options 

for nonstop travel to and from the beyond-perimeter airports that will be 

served; (F) have a positive impact on the overall level of competition in 

the markets that will be served; or (G) produce public benefits, 

including lower fares, higher capacity, and a variety of service options. 

Order 2012-2-21, DOT-OST-2012-0029 (Feb. 24, 2012), at 3. 

5

 The only “southern” service even resembling JetBlue’s proposed SJU service today is 

US Airways’ seasonal (10 months per year) service to Nassau (“NAS”) in the Bahamas. 

JetBlue’s proposed DCA-SJU service is far superior. The daily year-round service will 

be provided on larger aircraft featuring JetBlue’s award-winning customer service. In 

addition, JetBlue’s SJU service offers the prospect of connecting service, whereas US 

Airways offers no connections through NAS. 
6

Figure 3: JetBlue’s Capital-to-Capital Proposals Provide Unique Benefits

Not only is JetBlue’s proposed nonstop service unique, but so are the proposed 

domestic network benefits. While some of the services proposed in the competing 

Applications will introduce new nonstop routes to DCA, the proposed connections offer 

nothing new. No existing beyond-perimeter service or application can serve JetBlue’s 

proposed one-stop domestic connections from DCA, including to St. Thomas, VI 

(“STT”); St. Croix, VI (“STX”); Vieques (“VQS”), PR; and Mayaguez (“MAZ”), PR. 

Indeed, the one-stop connections from DCA to VQS and MAZ will be the first of their 

kind. To the extent that these points can be served from connecting points within the 

DCA perimeter, JetBlue’s proposed service will result in shorter travel times to the 

benefit of the traveling public while simultaneously stimulating demand and growing the 

capital to capital market of DCA-SJU. 6 See JetBlue Application at Exhibit H. 

                                                            

6

 San Juan is a cornerstone of JetBlue’s growth in the Caribbean. From San Juan, 

JetBlue has made public its intention to add frequencies on existing JetBlue routes and 

initiate service on new routes. 
7

In addition to the proposed domestic connections, JetBlue and its partner Cape 

Air will also offer one-stop connections to additional international destinations. Those 

destinations include Santo Domingo (“SDQ”), Anguilla (“AXA”), Tortola (“EIS”) and 

Nevis (“NEV”). Given reports that American Eagle has plans “to suspend its operations 

in Puerto Rico next year,” 7 there may be multiple additional opportunities for JetBlue 

and Cape Air connecting service. American Eagle currently serves 10 destinations 

from SJU without any nonstop competition, including SJU-Barbados (“BGI”), SJUDominica (“DOM”), SJU-Martinique (“FDF”), SJU-Grenada (“GND”), SJU-La Romana, 

Dominican Republic (“LRM”), SJU- Guadeloupe (“PTP”), SJU-Punta Cana, Dominican 

Republic (“PUJ”), SJU-St. Kitts (“SKB”), SJU-St. Lucia (“SLU”), SJU-Santiago, 

Dominican Republic (“STI”).8 

2. JetBlue’s Proposed Service Will Increase Competition in Multiple 

Markets. 

JetBlue’s proposed service will increase competition in multiple markets. First, 

documented in its Application, JetBlue has a unique and proven track record of entering 

a market with lower fares that stimulate traffic and demand.9 JetBlue’s addition of 

nonstop service to SJU not only will increase competition for service to San Juan but 

also to the connecting markets in the Caribbean. The addition of the attractive 

connections will increase consumer choice and therefore competition in markets served 

                                                            

7

 Associated Press, American Eagle Plans to End Operations in Puerto Rico Next Year 

(Mar. 25, 2012), http://www.washingtonpost.com/business/report-american-eagle-plansto-end-operations-in-puerto-rico-next-year/2012/03/25/gIQAJEb2ZS_story.html. 

8

 See OAG schedules in Diio (captured Mar. 26, 2012). 

9

 See JetBlue’s Entry Decreases Fares and Stimulates Traffic, attached hereto as 

Exhibit A (depicting fare declines and traffic increases in JAX-SJU and MCO-BOG). 
8

from DCA across the Caribbean. As noted above, all of these markets are unique to 

JetBlue’s Application and several are first-of-their-kind services. 

Second, the addition of JetBlue’s proposed service will increase competition by 

creating another domestic hub (SJU) through which DCA customers can reach 

Caribbean destinations. Currently, travelers from DCA transit through hubs at 

Charlotte, Atlanta, Fort Lauderdale or Miami to reach Caribbean destinations. JetBlue’s 

service will introduce a new carrier willing to compete aggressively against established 

hubs on routes from DCA to destinations across the Caribbean with more direct routing 

than is currently available in the marketplace. 

Third, in addition to the effect of increased consumer choice inherent to the entry 

of a low-cost carrier, JetBlue will compete on the basis of its award-winning 

differentiated coach product. As discussed in its Application, JetBlue offers a bundle of 

popular services and amenities for which other carriers typically charge, including 1) no 

overbooking and thus, no denied boarding; 2) first checked bag free; 3) all one-way 

fares; 4) pre-assigned seats; 5) the most legroom in coach; 6) the youngest all-jet 

mainline fleet; 7) unlimited snacks and drinks; and 8) 136 channels of free 

entertainment at every seat on every flight. JetBlue will increase competition on the 

basis of its superior service as well as price. 

3. JetBlue’s DCA-SJU Proposal Will Increase Service to Small or 

Medium Hub Airports. 

Because SJU is a medium hub airport, JetBlue’s proposal necessarily will 

increase service to such airports. JetBlue’s service will also increase service to small 

hub airports, including STT and STX, by introducing one-stop connecting service from 

DCA. This increase in service to small-hub airports in competition with hubs up and 
9

down the east coast is unique to JetBlue’s Application in this proceeding. Moreover, 

because JetBlue’s proposed service will be additive to its existing DCA service, there 

will be no reduction in service to small and medium hub airports within or beyond the 

DCA perimeter. 

4. JetBlue’s Proposed DCA-SJU Service will not Increase Travel 

Delays.

JetBlue’s proposed SJU-DCA service has a significant advantage over the 

competing Applications because the proposed arrival (15:05) and departure times 

(10:00) are at uncongested times at DCA. Indeed, no other limited incumbent has 

proposed an exemption operation in the 1000 hour and only Alaska’s second-choice 

San Diego service would arrive in the 1500 hour.10 Because these periods are already 

times of off-peak usage at DCA, there is no possibility that JetBlue’s proposed service 

will result in increased travel delays. 

The timing of other carriers’ exemption requests highlights another problem with 

the other applications in this proceeding. With the goal of limiting congestion at DCA, 

Congress expressly directed in FAA 2012 that the Department limit exemptions to five 

per one hour period.11 Indeed, the Order initiating this proceeding stated: “Applicants 

should keep these constraints in mind prior to submitting any proposals and should 

                                                            

10 As will be discussed later, US Airways’ announcement that it will initiate nonstop 

DCA-SAN service means that Alaska’s second-choice Application is not worthy of an 

award of such a scarce public resource. See Notice of US Airways, Inc. of BeyondPerimeter Service (DCA-SAN), DOT-OST-2012-0029 (Mar. 21, 2012) (“US Notice 

(DCA-SAN)”).

11 See FAA 2012 § 414(b). 
10

understand that these slot-time constraints may cause some proposals not to be 

viable.”12

Unlike other Applications in this proceeding, JetBlue’s proposal is viable under 

the Department’s articulation of the statutory standard. The chart below depicts the 

existing beyond perimeter exemptions, exemptions noticed by incumbent carriers 

pursuant to FAA 2012 and the requested exemptions in this proceeding during each 

hour of the day. The number of Applications exceeds the statutory threshold in the 

1700 and 2100 hour, making the grant of exemptions as requested by Virgin America, 

Southwest, Alaska, Frontier and Air Canada impossible.13 

Figure 4: Timing of Existing and Requested Beyond Perimeter Exemptions14

Source: FAA Slot Administrator’s Office, March 2012. 

While the Department’s order in this proceeding placed carriers on notice of this overscheduling possibility, the reality of it, not mere possibility of it, will undoubtedly change 

the operating times and likely connections and purported network benefits offered by 

other carriers. This will not, due to the proposed times, be the case with JetBlue’s 

                                                            

12 Order 2012-2-21, DOT-OST-2012-0029, (Feb. 24, 2012), at 3. 

13 Only JetBlue’s and Sun Country’s Applications do not present issues under FAA 2012 

Section 414(b).

14 The congestion at the 1700 hour will be relieved somewhat when US Airways 

changes the schedule of its noticed DCA-SAN service effective July 11, 2012. See US 

Notice (DCA-SAN), at 1. 

 JetBlue

 Applicants

 Incumbents WN AUS (D)

F9 COS (D)

AS PDX (D)

AC YVR (D) WN AUS (A) AC YVR (A)

US SAN (A) AS SAN (D) VX SFO (A) VX SFO (A)

US LAS (A) B6 SJU (A) F9 COS (A) US SAN (D) UA SFO (A)

AS SEA (D) AS SAN (A) AA LAX (A) AS SEA (D) VX SFO (D) AS SEA (A)

US PHX (D) VX SFO (D) B6 SJU (D) DL SLC (A) AS SEA (A) US PHX (D) AS PDX (A) US PHX (A)

DL SLC (D) UA SFO (D) AS LAX (D) US PHX (D) SY LAS (D) B6 AUS (A) B6 AUS (D) US PHX (A) DL SLC (D) AA LAX (D) SY LAS (A) US PHX (A) AS LAX (A) US LAS (D) DL SLC (A)

Hour 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 2200

Beyond Perimeter Slot Times
11

Application. The Department should take this Congressional mandate into 

consideration in awarding these scarce resources. 

5. JetBlue’s Proposed Service Will Enhance Nonstop Travel Options 

in Markets to be Served. 

JetBlue’s proposed DCA-SJU service will necessarily enhance nonstop travel 

options because the service is the first of its kind. Not all the other applications can 

make the same claim. The applications of Sun Country, Virgin America and Alaska 

seek to serve markets that either already have been allocated a beyond perimeter 

exemption or will receive one in connection with the FAA 2012’s allocation beyondperimeter exemptions to incumbent air carriers.15

6. JetBlue’s Proposed Service will have a Positive Impact on the 

Overall Level of Competition in the Markets to be Served. 

JetBlue’s proposed DCA-SJU service will increase competition on the proposed 

route by initiating service between two cities that are currently served by a single carrier, 

United, from Dulles International Airport.16 Sun Country and Virgin America propose to 

                                                            

15 On February 27, 2012, United Airlines informed the Department it intends to serve 

San Francisco (“SFO”) with the slot pair allocated to it by FAA 2012. See Notice of 

Intent of United Air Lines, Inc. DOT-OST-2012-0029 (Feb. 27, 2012). US Airways 

already serves Las Vegas (“LAS”) from DCA. On March 21, 2012, US Airways informed 

the Department it intends to serve San Diego (SAN) with the exemption pair allocated to 

it by FAA 2012. See US Notice (DCA-SAN). 

16 This is a unique aspect of JetBlue’s application. Although Southwest proposes to 

serve Austin in competition with United, JetBlue also proposes to serve that market with 

fares commensurate with Southwest’s and with unparalleled customer service benefits. 

Moreover, although Alaska’s proposed PDX service would also compete with United’s 

IAD-PDX service, all the proposed connection points are already served by Alaska’s 

twice daily DCA-SEA service, reducing the competitive impact to the local market. 
12

duplicate existing or previously announced service.17 Accordingly, JetBlue’s Application 

has the most potential to make a substantial competitive impact. 

JetBlue’s entry into the DCA-SJU market will have substantial impacts on 

competition. As documented in JetBlue’s Application, JetBlue has a long history of 

reducing fares and stimulating traffic on routes served solely by legacy, mainline 

carriers and not diverting traffic from its own competing flights or other carrier’s flights. 

Growing markets is a core feature and proven result of JetBlue’s business strategy. 

Indeed, JetBlue forecasts that its new low fare service will initially stimulate 41,610 

annual new customers between SJU and WAS. In this regard, JetBlue’s Application 

stands alone. So many of the duplicative inter-mountain and west coast beyond 

markets proposed by the other carriers (Alaska, Frontier, Virgin America) will likely shift 

existing traffic in very small beyond markets already served with convenient one-stop 

service rather than generate new traffic like JetBlue’s proposed new service will. 

JetBlue also competes on the basis of its award-winning service. As noted 

above, JetBlue provides a standard bundle of popular services and amenities for which 

other carriers typically charge. The introduction of service-based competition will also 

benefit consumers. 

                                                            

17 As will be discussed below, the applications of Air Canada and Frontier seek to serve 

routes that lack sufficient O&D traffic to warrant any nonstop mainline jet service, 

whether from IAD or DCA.
13

7. JetBlue’s Proposed DCA-SJU Service will Result in Additional 

Public Benefits to the People of Puerto Rico as well as the 

Residents of the District of Columbia and the Surrounding 

Region. 

a. JetBlue’s SJU-DCA Service will Improve the Connection 

between Puerto Ricans and the Federal Government. 

If JetBlue’s Application for this DCA-SJU route is granted, it will facilitate 

significantly improved connection between the federal territory and the federal 

government. Because of the unique relationship between Puerto Rico and the federal 

government, this connection is particularly important. Indeed, the offices of no fewer 

than 30 federal departments and agencies are located in Puerto Rico. See Exhibit B. 

To support these improved connections, JetBlue will bid for General Services 

Administration’s City Pair Program to carry federal employees on this route, offering 

non-stop service to DCA.18 Included among the many beneficiaries of this service 

would be the military personnel serving at Fort Buchanan, located 12 miles south of San 

Juan. 

b. DCA-SJU Service will Enhance a Domestic Tourist 

Destination. 

As JetBlue stated in its Application, its proposed service will enhance a domestic 

tourist destination. First, JetBlue’s service will offer first of its kind nonstop service to 

the Caribbean from DCA. Improving access for the millions of people living in the 

District of Columbia and surrounding areas will lead more travelers to visit Puerto Rico. 

JetBlue believes it will stimulate traffic and attract travelers that may have otherwise 

flown to other destinations in the Caribbean. 

                                                            

18 JetBlue won the fiscal year 2012 government contract to provide service between 

SJU and IAD with connecting service against United’s nonstop service. 
14

Second, JetBlue’s proposed service will benefit the growing cruise industry in 

Puerto Rico. A growing number of cruise ships line have decided to homeport their 

ships in San Juan.19 Since 2007, homeport cruise passenger traffic in San Juan has 

bucked prevailing economic trends and grown by 20 percent, now exceeding more than 

half a million passengers annually.20 With 14 ships opting to make their home port in 

San Juan, Puerto Rico expects an 8 percent increase in total visitors,21 and each of 

those homeport cruise passengers requires air service to travel to and from their cruise. 

JetBlue’s new service can only enhance this growing business. 

c. DCA-SJU Service will Lead to Unique Public Benefits.

With its proximity to downtown Washington DC and the federal government, DCA 

is unique in the Washington metropolitan area. For example, DCA is much closer and 

more convenient than IAD to the U.S. Capitol building, drastically reducing ground 

transportation time. Accordingly, for business travelers between these two capital cities, 

JetBlue’s new service will be invaluable. The proposed DCA service also will both 

compete with and provide for the first time pricing discipline for United’s current nonstop 

service from IAD to SJU. By introducing DCA-SJU service, JetBlue will increase 

options for the traveling public. JetBlue will compete on the basis of price and its 

                                                            

19 See JetBlue Application at 13. 

20 See Letter of Hon. Jose R. Perez-Riera, Department of Economic Development and 

Commerce, Government of Puerto Rico (Mar. 7, 2012), attached as Exhibit C-8; Letter 

of Support of Irene Rocafort, Senior Manager of Air and Maritime Access, Puerto Rico 

Tourism Company, Government of Puerto Rico (Mar. 26, 2012), attached as Exhibit C9. 

21 See Letter of Support from Cruise Lines Int’l Assoc & Florida-Caribbean Cruise 

Assoc. (Mar. 23, 2012), attached as Exhibit C-10; see also Letter of Support from Eleni 

P. Kalisch, Vice President, Royal Caribbean Cruise, Ltd. (Mar. 26, 2012), attached as 

Exhibit C-11. 
15

differentiated coach product. But JetBlue will have the added benefit of competing on 

the basis of convenience for travelers choosing the close-in Reagan Airport. 

The compelling nature of JetBlue’s Application has been widely recognized by 

public officials, the cruise line industry and the public at large. In addition to the support 

for JetBlue’s initial Application, see JetBlue Application at Exhibit A, the prospect of 

JetBlue’s service to Puerto Rico has led to a groundswell of further support. 

Congressional leaders, including Chairman John L. Mica of Florida; the Honorable Dan 

Burton of Indiana; the Honorable Daniel Webster of Florida; the Honorable Bill Posey of 

Florida; and the Honorable Aaron Schock of Illinois as well as Senators Charles 

Schumer and Kirsten Gillibrand of New York, have submitted letters supporting 

JetBlue’s application.22 Recognizing the economic benefits of JetBlue’s proposed 

service, economic development officials and the cruise industry have supported 

JetBlue’s Application.23 In addition, more than 500 private citizens have thus-far taken 

the time to write to the Department in support of JetBlue.24

B. JetBlue’s Proposed DCA-AUS Service also Will Provide Significant 

Public Interest Benefits Consistent with the Statutory Criteria. 

While JetBlue agrees with Southwest’s assessment of the AUS-DCA market as 

overpriced and need of more competition,25 it respectfully submits that an award of a 

beyond perimeter exemptions to JetBlue to serve AUS would better serve the 

                                                            

22 See Exhibits C-1 to C-7. 

23 See Exhibits C-8 to C-11. 

24 These letters will be submitted to the Department under separate cover. 

25 See Application of Southwest Airlines, DOT-OST-2012-0029 (Mar. 12, 2012) 

(hereinafter “Southwest Application”), at 4-5. 
16

Congressional goals set forth in FAA 2012. JetBlue’s proposed service satisfies each of 

the statutory criteria and is superior to Southwest’s service for a number of reasons. 

First, JetBlue’s proposed schedule is more compatible with the statutory 

requirements imposed by FAA 2012 than the one proposed by Southwest. Second, 

JetBlue’s operating history demonstrates that it is just as effective, if not more so, in 

reducing fares and stimulating traffic on routes served by mainline carriers and 

Southwest in particular. Third, JetBlue offers a far more compelling package of 

standard services to consumers than does Southwest. 

1. JetBlue’s SJU-AUS Service Will Expand the Domestic Network 

Benefits. 

JetBlue’s proposed DCA service to Austin expands the domestic network. 

Although JetBlue’s service primarily will cater to the local Austin market, JetBlue’s 

service will open a new destination that is otherwise not served from DCA today and will 

also provide the opportunity to connect service to Long Beach. Indeed, JetBlue’s 

proposed service will provide more domestic network benefits than Southwest’s 

competing bid for DCA-AUS service. While Southwest proposes to offer connecting 

service to San Diego, US Airways will provide, and Alaska Airlines has proposed, 

nonstop service to San Diego. Moreover, Southwest’s touting the benefits of future 

connecting service to cities nearby Austin, including Dallas Love Field (“DAL”) and 

Houston Hobby Airport (“HOU”) is not worthy of consideration. Dallas and Houston are 

within-perimeter destinations already competitively served by 34 combined nonstop 

flights from Washington and 20 combined nonstop flights from DCA in particular, as 

depicted in the charts below: 
17

Figure 5:  Daily Service from Washington to Dallas (as of March 2012)

Carrier Origin Destination

Daily

Flights

American IAD DFW 5

United IAD DFW 3

American DCA DFW 11

US Airways DCA DFW 1

Total 20

Figure 6:  Daily Service from Washington to Houston (as of March 2012)

Carrier Origin Destination

Daily

Flights

United Airlines DCA IAH 8

United Airlines IAD IAH 6

Total 14

JetBlue, however, can offer connecting service to Long Beach, which is not served from 

DCA today, and no other airline has applied for a beyond perimeter exemption to serve 

Long Beach directly. 

2. JetBlue’s Proposed DCA-AUS Service Will Increase Competition 

in Multiple Markets. 

JetBlue’s proposed DCA service will compete with United’s twice daily service to 

Austin from IAD. As discussed in JetBlue’s Application, the WAS-AUS market has 

experienced rising fares and decreasing enplanements. See JetBlue Application at 16-

17. JetBlue will offer fares that are substantially lower than the current $246 average 

fare in the market. As explained in its Application, JetBlue can point to market after 

market where its entry has resulted in lower fares and increased traffic. See id. at 4-5. 
18

3. JetBlue’s DCA-AUS Proposal Will Enhance Travel Options to 

Small or Medium Airports. 

By introducing this additional service to Austin, which is a medium-hub airport, 

and maintaining all its existing DCA within-perimeter service, it is axiomatic that 

JetBlue’s proposal will increase service to small and medium hub airports. 

4. JetBlue’s Proposed AUS Service Will Not Increase Travel Delays. 

JetBlue’s proposed AUS-DCA service will not increase travel delays at DCA. 

Neither the proposed arrival time of 12:55 nor departure time of 13:40 are congested 

times at DCA. There are currently no exemptions allocated to either the 1200 or 1300 

hours, and no other carrier in this proceeding has applied for an exemption during these 

times. Because these periods are already times of off-peak usage at DCA, there is no 

possibility that JetBlue’s proposed service will result in increased travel delays. 

In this regard JetBlue’s AUS Application is far superior to Southwest’s proposal. 

Southwest proposes to conduct both its proposed arrival and departure in the peak 

congested 1700 hour. This proposal will run afoul of the statutory requirements of FAA 

2012, which imposes a limit of 5 exemptions per hour at DCA. As depicted in Figure 4 

above, three exemptions have already been allocated in the 1700 hour and US Airways 

has noticed its intent to use a fourth. Applicants in this proceeding (including 

Southwest’s duplicative request) have sought five additional exemptions. Southwest’s 

proposed schedule is a significant deficiency in its Application. Given the schedule of 

already-allocated exemptions, Southwest’s Application is “not . . . viable,” Order 2012-

2-21, and its purported one-stop connections to the heavily-served markets of Dallas 

and Houston are thus questionable. In addition, because the 1700 hour is a time of 
19

peak usage at DCA, Southwest’s proposal is also far more likely to increase travel 

delays at DCA. 

5. JetBlue’s Proposed DCA-AUS Service will Enhance Options for 

Nonstop Travel to and from Beyond Perimeter Airports. 

JetBlue’s service from DCA to Austin would be the first of its kind. As noted 

above, this service would compete with United’s current service to Austin from Dulles. 

JetBlue will do so at lower fares than the incumbent and at least at parity with the fares 

proposed in Southwest’s competing Application. In addition, JetBlue’s service offers 

consumer benefits not available on Southwest, including reserved seating, the most leg 

room in coach and 136 channels of free entertainment at every seat on every flight. 

6. JetBlue Will Have a Lasting Impact on the Overall Level of 

Competition in Austin. 

JetBlue projects that its lower fares and increased customer service will stimulate 

traffic in the Austin to Washington market. At first look, it would appear that Southwest 

projects that it will project substantially more traffic than JetBlue (146,082 WN 

passengers vs. 36,500 B6 passengers), but these projections reflect an apples to 

oranges comparison. When all the factors are considered, the difference between the 

two companies’ projections is minimal. 

First, Southwest’s estimate reflects the combined purported stimulation of its 

AUS and SAN service. Southwest’s claims about traffic stimulated by its continuing 

service to SAN will simply not be realized given US Airways’ notice that it intends to 

initiate DCA-SAN service this spring. Excluding the 54,276 projected San Diego 

passengers, the projected DCA-AUS route stimulation is 91,806 passengers. 
20

Second, Southwest counted each passenger twice (once in each direction), while 

JetBlue’s projection is an estimate of one-way passengers. On an apples to apples 

basis, Southwest’s projections are cut in half to 45,903, compared to JetBlue’s 36,500. 

Third, JetBlue attributes much of the remaining difference in the projections to 

the fact that Southwest intends to use a 175-passenger aircraft, while JetBlue’s steadystate projections assume a 150-passenger aircraft.26

Finally, another factor contributing to the discrepancy is that Southwest assumes 

“some of the newly generated passengers will be carried by Southwest and others will 

be carried by competing carriers who lower fares in response to Southwest.” Southwest 

Application at WN-124. JetBlue’s projections assume that the stimulated traffic is 

carried exclusively on JetBlue. 

Taking all of these factors into account, JetBlue sees little meaningful difference 

in its own stimulation projections compared to Southwest’s projections. 

7. JetBlue’s Proposal to Serve DCA-AUS will Benefit the People of 

Texas as well as the Residents of the District of Columbia and the 

Surrounding Region. 

JetBlue’s first of its kind service will connect the capital of Texas with the nation’s 

capital. This exciting new service will link two regions that have demonstrated 

unparalleled economic vitality. This growth should be nurtured by increasing the ease 

of transportation between the two growing areas. Indeed, the City of Austin has filed 

                                                            

26 JetBlue intends to initiate service with a 100-seat E190 but expects to up gauge its 

service to a 150-seat A320 when demand warrants it. 
21

comments in this proceeding endorsing the Applications of both JetBlue and 

Southwest.27

III. None of the Competing Applications Offer the Public Interest Benefits 

Offered by JetBlue’s Application. 

A. Alaska’s does not Propose to Increase the Overall Level of 

Competition in the Washington Market.

Alaska’s Application to serve DCA from either Portland or San Diego is 

unequaled in this proceeding as an exercise in skimming the cream at DCA for the 

benefit of the airline and not the traveling public. Alaska’s commitment to the 

Washington market is minimal. For years, despite having every opportunity to do so, it 

has refused to begin serving IAD, where it would face competition from other carriers. 

Instead, Alaska only flies to DCA from beyond-perimeter hubs (LAX and SEA) on routes 

made possible by the Department’s grant of exemptions, free from competition by the 

entry constraints imposed by the perimeter rule. The only reason Alaska does not serve 

greater Washington from PDX or SAN is because Alaska has chosen not to do so. 

In its Application, Alaska has come calling to the Department again, only willing 

to initiate more service to Washington if it can be free from the threat of competitive 

entry on its preferred route. Alaska’s Application boasts that the previous award of 

beyond perimeter exemptions for service to SEA have allowed it to build a dominant 

market share of 61 percent in the DCA-SEA market.28 The Department must not 

                                                            

27 See Comments of the City of Austin in Support of the Applications of Southwest 

Airlines, Inc. & JetBlue Airways, Inc., DOT-OST-2012-0029 (Mar. 27, 2012). 

28 See Application of Alaska Airlines, Inc. for Exemptions, DOT-OST-2012-0029 (Mar. 

12, 2012), at 7 (“Alaska Application”). 
22

sanction Alaska’s commitment to the avoidance of competition in the Washington 

market to the detriment of the traveling public. 

In contrast, JetBlue has invested heavily in the Washington market. JetBlue has 

traded valuable slot assets at other airports and paid $40 million to acquire a total of 16 

pairs of DCA slots. These slots have been and will be used to compete head-to-head 

against incumbents in large, robust markets like Boston (“BOS”), Orlando (“MCO”), Fort 

Lauderdale (“FLL”) and soon Tampa. The Department has recognized expressly the 

procompetitive effects of JetBlue’s entry, resulting in substantial benefits to 

consumers.29 Together with its longstanding operations at IAD, JetBlue is building a 

network to compete against the entrenched incumbents in Washington. This 

commitment to the “overall level of competition” at DCA must be recognized by the 

Department, and these precious beyond perimeter exemptions should be awarded to 

carriers like JetBlue willing to submit themselves to a competitive Washington market. 

Alaska’s first-choice Application to serve PDX also simply duplicates the 

domestic network benefits of its existing DCA-SEA service. Although Alaska’s 

Application proposes to connect to 10 beyond cities, these cities can and are served 

from SEA, which Alaska already serves twice daily from DCA.30 The lack of any new 

network benefits is further demonstrated by the fact that Alaska proposed departure 

                                                            

29 Notice of Petition for Waiver and Other Relief, 76 Fed. Reg. 45,313, 45,437 (Jul. 28, 

2011) (“JetBlue entered the [DCA-BOS] market aggressively in October 2010, carrying 

over 48,000 passengers that quarter with highly competitive fares that yielded only 24 

cents per mile. US Airways’ yield that same quarter . . . dropped from 55 cents to 44 

cents, with overall average passenger weighted yields in the market falling from 52 to 

38 cents. . . . This data demonstrates JetBlue’s entry enhanced competition and 

significantly reduced fares.”).

30 See Alaska Application at 6,
23

time for its DCA-PDX (17:35) service is almost identical to the time of departure for one 

of its DCA-SEA flights (17:40). 

Figure 7: AS’s Proposed PDX Departure Time is 

Identical to its Current SEA Departure Time31

Airline From To Depart Arrive

AS DCA SEA 07:55 10:33 

AS DCA SEA 17:40 20:37 

AS DCA PDX 17:35 20:25 Proposed 

Airline From To Depart Arrive

AS SEA DCA 08:40 16:34 

AS SEA DCA 14:05 21:59 

AS PDX DCA 10:10 18:10 Proposed 

Considering that PDX is only 150 miles away from SEA and that the two airports are 

served by a full 23 daily trips in each direction, the new domestic network benefits are 

non-existent.32 Indeed, there is nothing new in Alaska’s Application, as it proposes to 

connect to the same airports in this Application that it did when it applied for SEA 

service in 2001.33 This comparison demonstrates that this DCA-PDX Application is 

completely duplicative of its existing SEA service and the award of an exemption a 

waste of a valuable public resource.34

Alaska’s second choice Application is unattractive and fails to meet the statutory 

tests for many reasons not the least of which is US Airways’ announced service DCA to 

                                                            

31 See OAG schedules in Diio (captured Mar. 24, 2012) (depicting departure date July 

20, 2012). 

32 See OAG Schedules on Diio Mi (Mar. 23, 2012) (reflecting peak summer service 

June 4, 2012-August 24, 2012). 

33 See Application of Alaska Airlines, Inc. for Exemption, OST-2000-7181 (Apr. 16, 

2001), at Exhibit AS-103. 

34 Alaska’s proposed PDX schedule suffers from the same infirmity as Southwest’s 

AUS service. It proposes to serve the congested 1700 hour, for which the number of 

exemption requests exceeds the statutory limit of 5. 
24

SAN. See US Notice (DCA-SAN). The award of this route would create redundant 

service and waste a valuable beyond perimeter exemption on a market that will soon 

enjoy nonstop DCA service. 

B. Virgin America Proposes Redundant Service that Fails to Satisfy the 

Statutory Criteria. 

Virgin America’s proposal to serve San Francisco (“SFO”) is redundant and fails 

to satisfy several of the statutory criteria. First, Virgin America’s proposed service would 

not enhance options for non-stop travel to and from the beyond-perimeter airports. On 

February 27, 2012, United announced that it intends to serve SFO from DCA. Not only 

is Virgin America’s service itself duplicative, but so is the timing. One of Virgin 

America’s two proposed departure times is in the 0800 hour, the same hour United 

intends its flight to depart. One of Virgin America’s two proposed arrival times is in the 

2100 hour, the same hour United intends its flight to arrive. 

Second, Virgin America’s own Application makes the case that SFO is already 

well-served from the Washington market. Virgin America serves SFO from IAD four 

times a day. This is in addition to United’s 11 daily flights from IAD. 

Figure 8: United Provides Ample WAS-SFO Service35

Airline From To Frequency

UA IAD SFO 11x daily 

UA DCA SFO 1x daily 

                                                            

35 See OAG schedules in Diio (captured Mar. 24, 2012) (depicting departure date July 

20, 2012). 
25

Virgin America will not stimulate additional traffic but simply divert traffic from its 

and others’ existing flights. In light of the existing service, the award of a single 

exemption to Virgin America, let alone two, is a waste of these scarce public resources. 

Third, Virgin America’s proposal lacks any domestic network benefits beyond the 

direct DCA-SFO flight. All of its proposed connections to LAX, LAS, SEA and SAN 

already have nonstop service from IAD, and, once US Airways initiates its announced 

DCA-SAN service this spring, all will be served from DCA on a nonstop basis. 

Fourth, the award of exemptions to Virgin America is also not in the public 

interest given the airline’s precarious financial situation. Virgin America’s financial 

struggles are well documented. Indeed, the company has had only one profitable 

quarter in its nearly five years of operation and earned yet another net loss in its most 

recent quarter.36 In the most-recent full fiscal year for which it has announced results, 

Virgin America had a net loss of more than $68 million.37 In the past, the Department 

has awarded exemptions to struggling airlines, only to have that service fail. 38 These 

unfortunate facts will not provide the traveling public the assurance of the benefits 

required by Congress to award these scarce assets nor assure the public of competitive 

                                                            

36 See Press Release, Virgin America, Virgin America Reports Third Quarter 2010 

Financial Results (Nov. 9, 2010); Press Release, Virgin America, Virgin America 

Reports Third Quarter 2011 Financial Results (Dec. 21, 2011). 

37 See Press Release, Virgin America, Virgin America Reports Fourth Quarter and Full 

Year 2010 Financial Results (Apr. 21, 2011).

38 In 2000, the Department awarded TWA a beyond perimeter exemption to LAX. 

Ultimately, TWA filed for bankruptcy, and the exemption had to be reallocated. See 

Order 2001-6-20 (Jun. 22, 2001). Also in 2000, the Department allocated National 

Airlines an exemption to serve LAS, but that exemption too had to be reallocated when 

National failed. See Order 2002-11-20 (Nov. 27, 2001).
26

discipline of a low cost carrier in a market that is already amply served. Virgin 

America’s Application will not benefit the public nor comply with the decisional criteria. 

C. Frontier’s Proposed Service will not Create Public Benefits. 

Frontier’s Application must be rejected because it has proposed service that is 

both unneeded and not sustainable. Frontier has proposed to serve Colorado Springs 

(“COS”) directly from DCA. But COS is only 90 miles from Denver (“DEN”), the beyond 

perimeter airport that enjoys the most nonstop service from DCA. Frontier itself flies 

three daily round trips DCA-DEN, and United flies an additional round trip. United and 

Southwest provide an additional 11 daily nonstop flights between IAD and DEN. 

Figure 9: Capacity between Washington and Denver is Abundant39

Airline From To Frequency 

UA IAD DEN 9x daily 

WN IAD DEN 2x daily 

F9 DCA DEN 3x daily 

UA DCA DEN 1x daily 

In addition, Frontier and its affiliate Republic Airways serve COS from DEN four times 

per day.40 It would be a waste of a valuable beyond-perimeter exemption to allocate yet 

more service to this portion of Colorado.41

Frontier is not able to offer any other compelling justification for its service. 

Although Frontier proposes to serve SAN with single plane service, US Airways has 

                                                            

39 See OAG Schedules in Diio (Mar. 23, 2012) (for departure date Jul. 20, 2012).

40 See OAG Schedules in Diio (Mar. 23, 2012) (for departure date Jul. 20, 2012). 

41 Frontier makes the absurd claim that one of the advantages of its Application is that it 

will provide connecting service to DEN. See Application of Frontier Airlines, Inc., DOTOST-2012-0029 (Mar. 12, 2012), at 14. This claim is of no benefit to the public in light 

of the existing DCA-DEN nonstop service as well as nonstop service from IAD on 

Southwest and United. 
27

already noticed its intention to serve SAN with nonstop service later this spring. See US 

Notice (DCA-SAN). Alaska also has proposed nonstop SAN service in this proceeding. 

In addition, similar to Virgin America, Frontier’s severe financial problems and 

uncertain future cloud its Application and the viability of its claimed public benefits. As 

Frontier’s parent company, Republic Airways Holdings, Inc. (“Republic”) continues to 

post wider and wider losses attributable to Frontier’s poor performance, 42 Republic has 

announced plans to spin off or sell Frontier. Valuable exemptions should not be 

allocated into such uncertain circumstances. It cannot be predicted whether an 

independent Frontier, whether spun off to Republic shareholders or under new 

ownership will be committed to this route of dubious public benefit. 

D. Air Canada Proposes to Serve a Market that is Insufficiently Large to 

Warrant Nonstop Service from DCA. 

Air Canada’s proposed service to Vancouver is not sustainable because the local 

market is not large enough to support daily nonstop service. Indeed, Air Canada, or any 

other carrier, could have initiated service to YVR from IAD at any point but decided 

against it. Indeed, the traffic between YVR and WAS is minimal, and it is questionable 

at best whether the proposed service is viable. 

Figure 10: O & D Traffic Between WAS and YVR is Minimal43

YE Q2 2011 PDEW’s Average Fare 

DCA-YVR 21.8 $303 

IAD-YVR 26.2 $348 

Total 48 $328 

                                                            

42 See Republic Airways Holdings, Inc., Current Report (Form 8-K) (Mar. 1, 2012), at 4. 

43 See O & D Survey, as provided by Diio (Mar. 23, 2012). 
28

Air Canada offers no reason why the initiation of DCA service will create demand that 

currently does not exist. 

Despite Air Canada’s claims, it is far from clear that FAA 2012 authorizes 

applications from Canadian carriers. Section 414(a) states: 

In administering this section, the Secretary shall . . . (3) consider 

Applications from foreign air carriers that are certificated by the 

government of Canada if such consideration is required by the bilateral 

aviation agreement between the United States and Canada and so long 

as the conditions and limitations under this section apply to such foreign 

air carriers. 

FAA 2012 § 414(a) (emphasis added). The bilateral agreement between the United 

States and Canada does not clearly require consideration of Air Canada’s Application. 

Indeed, the relevant portion relating to the access of Canadian air carriers to DCA 

states that such access is “subject to . . . the prevailing perimeter rule.”44 Because Air 

Canada’s access to DCA is conditioned on its compliance with the perimeter rule, there 

is an open legal question as to whether the Department has the authority to grant Air 

Canada’s Application for beyond perimeter service. Congress appeared to recognize 

ambiguity when it directed the Secretary to consider the applications of Canadian 

carriers “if such consideration is required.” 

In any event, it is abundantly clear that Air Canada’s Application does not satisfy 

the first statutory criteria of this proceeding that the proposed service create “domestic 

network benefits” for the public and, in particular, travelers within the United States. 

Even if Air Canada’s Application for beyond perimeter service is authorized, it will not 

create any domestic network benefits. All of the points identified as connecting points 

                                                            

44 Air Transport Agreement Between the Government of the United States of America 

and the Government of Canada, Annex II § 2(a). 
29

are Canadian. See Application for Beyond Perimeter Slot Exemptions, DOT-OST-2012-

0029 at AC-4. 

E. Sun Country’s Proposed Service to Las Vegas (“LAS”) Does Not 

Offer Sufficient Public Benefits to Warrant the Award of a BeyondPerimeter Exemption. 

In its Application, Sun Country proposes to serve LAS from DCA. This proposed 

service does not offer any domestic network benefits. First, LAS is already served by a 

US Airways nonstop service from DCA. In addition, there is ample nonstop service from 

IAD. 

Figure 11: Nonstop Service to LAS from WAS is Abundant45

Airline From To Frequency

UA IAD LAS 2x daily

Airline From To Frequency

US DCA LAS 1x daily

SY DCA LAS 1x daily Proposed

With abundant service already in the market and no connecting service, JetBlue 

respectfully submits that a scarce beyond perimeter exemption would be put to better 

use by a different carrier. 

                                                            

45 See OAG Schedules, as provided by Diio (Mar. 23, 2012). 
30

IV. Conclusion 

Based on the forgoing, the Department should award JetBlue both of its 

requested route applications by providing beyond perimeter exemptions for its service to 

San Juan, Puerto Rico and to Austin, Texas.

Dated: March 27, 2012 Respectfully submitted, 

 

 Robert C. Land 

 Senior Vice President for Government Affairs 

 and Associate General Counsel 
31

Certificate of Service 

I, J. Parker Erkmann, hereby certify that a copy of the foregoing Consolidated Response 

of JetBlue Airways Corporation was served this 27th day of March, 2012 via email transmission 

on the following persons: 

john.varley@virginamerica.com

jegillick@zsrlaw.com 

jhfoglia@zsrlaw.com 

leslie.abbott@wnco.com

bob.kneisley@wnco.com

howard.kass@usairways.com 

benjamin.slocum@usairways.com

carl.nelson@aa.com

jonathan.linde@united.com

steve.morrissey@united.com

dan.weiss@united.com

lhalloway@crowell.com

rbkeiner@crowell.com

gmurphy@crowell.com

anita.mosner@hklaw.com 

Sascha.vanderbellen@delta.com

john.fredericksen@suncountry.com

robert.cohn@hoganlovells.com 

patrick.rizzi@hoganlovells.com

marshall.sinick@squiresanders.com

edward.sauer@squiresanders.com

quince.brinkley@mwaa.com 

Jim.Smith@austintexas.gov

Susan.Kurland@dot.gov

Esta.Rosenberg@dot.gov

Todd.Homan@dot.gov

brian.ctr.meehan@faa.gov 

fbavent@airlineinfo.com

and via First Class Mail: 

Arnaldo Deleo 

General Manager Aviation Bureau 

Port Authority 

Government of Puerto Rico 

PO Box 362829 

San Juan, PR 00936-2829 

s/ Parker Erkmann 

J. Parker Erkmann