BEFORE THE 

U.S. DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

 

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

In the matter of: ) 

 ) 

Petition for Waiver of the Terms ) 

of the Order Limiting Scheduled ) 

Operations at LaGuardia Airport ) Docket No. FAA-2010-0109 

 ) 

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

MOTION FOR LEAVE AND 

REPLY COMMENTS OF JETBLUE AIRWAYS CORPORATION

Communications with respect to this document should be sent to: 

Robert C. Land 

Senior Vice President for Government 

Affairs & Associate General Counsel 

JetBlue Airways Corporation 

P.O. Box 1927 

Rockville, Maryland 20850 

301-279-9727 

robert.land@jetblue.com

Jonathan B. Hill 

J. Parker Erkmann

Dow Lohnes PLLC

1200 New Hampshire Ave. NW 

Suite 800 

Washington, DC 20036 

202-776-2000 

jhill@dowlohnes.com

perkmann@dowlohnes.com

Counsel for JetBlue Airways Corporation 

James G. Hnat 

Executive Vice President & 

General Counsel 

JetBlue Airways Corporation 

118-29 Queens Boulevard 

Forest Hills, NY 11375 

jim.hnat@jetblue.com

September 13, 2011 
1

REPLY COMMENTS OF JETBLUE AIRWAYS CORPORATION

 JetBlue Airways Corporation (“JetBlue”) herewith moves to file these reply comments, 

which are submitted in response to comments and reply comments made by Southwest Airlines 

Co. (“Southwest”); to correct certain mischaracterizations in the comments of the Air Carrier 

Association of America (“ACAA”); and to respond to the reply comments submitted by Frontier 

Airlines, Inc. (“Frontier”). This reply will provide the Federal Aviation Administration (“FAA”) 

with additional information concerning the eligibility of carriers to participate in the proposed 

slot divestiture process. In their respective comments, Southwest, ACAA and Frontier all 

advocate for eligibility standards that violate Congress’s directive that available slots be 

allocated to new entrant and limited incumbent air carriers, as Congress has defined those terms. 

Receipt of this Reply into the record will not delay or prolong this proceeding and will not 

prejudice any of the parties. 

1. The Divestiture Proposal in the July 2011 Proposed Order is Completely 

 Inadequate. 

 JetBlue agrees with all the other air carriers, with the exception of US Airways and Delta 

(the “Parties”), that the number of slots the FAA’s July 2011 Proposed Order1

 would require the 

Parties to divest (16 slots at DCA and 32 slots at LGA) is insufficient to ameliorate the 

anticompetitive effects of the Parties’ transaction. Because the proposed transaction threatens to 

make the anticompetitive situation at both DCA and LGA worse by solidifying the control that 

US Airways and Delta have at these airports, more slots must be transferred to competitive 

carriers in order to allow them the opportunity to offer meaningful competitive choice in more 

than only a handful of markets. There is consensus that the Parties must divest at least 28 slots 

 

1

 Notice of Petition for Waiver and Other Relief, 76 Fed. Reg. 45,313 (July 28, 2011) (the “July 

2011 Proposed Order”). 
2

at DCA and 40 slots at LGA as a condition for issuance of a waiver, as the FAA itself concluded 

when it first considered the Parties’ proposed transaction. See Order, Notice on Petition for 

Waiver of the Terms of the Order Limiting Scheduled Operations at LaGuardia Airport, 75 Fed. 

Reg. 26,322 (May 11, 2010) (the “May 2010 Order”). 

2. Southwest and Frontier Are Ineligible to Participate in the Slot Divestiture 

 Process. 

Commentators also agree that the FAA should not require Delta and US Airways to 

auction slots in a single tranche (of 16 slots) at DCA and two tranches (of 16 slots) at LGA 

because the proposed process would preclude multiple carriers from acquiring slots at the 

airports. The sole exception is Southwest, which argues for the addition of another large carrier 

at DCA and LGA. Indeed, Southwest quite brazenly states that the maximum benefit will be 

realized if the slots are concentrated “in the hands of a single strong competitor at both airports.” 

Comments of Southwest Airlines Co., Docket FAA-2010-0109 (filed Aug. 29, 2011), at 9. 

Southwest essentially argues that the FAA should allow Southwest to buy itself into a position of 

incumbency at both DCA and LGA, strengthening the all too brief list of air carriers that control 

the vast majority of the slots. 

 JetBlue respectfully submits that Congress has already directed how the slots should be 

distributed – with a preference to new entrant and limited incumbent air carriers, meaning 

carriers that hold or operate fewer than 20 slots at each airport. See 49 U.S.C. §§ 41716(b), 

41718(b). Under the Congressionally-mandated definition of “limited incumbent,” Southwest, 

after giving effect to its already consummated acquisition of AirTran Airways (“AirTran”), does 

not qualify as a “new entrant” or “limited incumbent” and must be prohibited from participating 

in the divestiture process. Indeed, Congress’s definition of a limited incumbent air carrier 

specifically incorporated the definition found in “subpart S of part 93 of title 14, Code of Federal 
3

Regulations” 49 U.S.C. §41714(h)(5). That portion of the regulations defines a limited 

incumbent as “an air carrier or commuter operator that holds or operates fewer than [20] air 

carrier or commuter slots, in any combination, at a particular airport . . . .” 14 C.F.R. § 

93.213(a)(5). Moreover, the definition makes clear that the slot holdings of airlines under 

common control must be considered as a single air carrier: 

For purposes of this subpart, if an air carrier, commuter operator, or other person 

has more than a 50-percent ownership or control of one or more other air carriers, 

commuter operators, or other persons, they shall be considered to be a single air 

carrier, commuter operator, or person. In addition, if a single company has more 

than a 50-percent ownership or control of two or more air carriers and/or 

commuter operators or any combination thereof, those air carriers and/or 

commuter operators shall be considered to be a single operator. A single 

operator may be considered to be both an air carrier and commuter operator for 

purposes of this subpart. 

14 C.F.R. § 93.213(c) (emphasis added). At DCA, Southwest and AirTran hold 24 slots. See

July 2011 Proposed Order, 76 Fed. Reg. at 45,318. At LGA, they hold 38 slots. See id. at 

45,319. For the reasons stated in JetBlue’s August 29, 2011 comments in this proceeding, 

Southwest is ineligible to participate in any slot divestiture process at these airports. See 

Comments of JetBlue Airways Corporation, Docket FAA-2010-0109 (filed Aug. 29, 2011), at 

13-22 (hereinafter “JetBlue Comments”). 

 JetBlue, like others, also opposes any deviation from the definition of “limited 

incumbent” with respect to Frontier. Because Frontier is owned by Republic Airways Holdings, 

Inc., which holds 113 DCA slots,2

 Frontier does not qualify as a “limited incumbent air carrier” 

at DCA as Congress has defined that term and is therefore also ineligible to participate in a slot 

divestiture process. 

 

2

 See July 2011 Proposed Order, 76 Fed. Reg. at 45,318; Motion for Leave and Reply 

Comments of Frontier Airlines, Inc., Docket FAA-2010-0109 (filed Sept. 9, 2011), at 7 

(“Frontier Reply Comments”). 
4

 Frontier has a curious response to JetBlue’s position that the FAA is compelled by statute 

to order the divestiture of the relevant slots to new entrant and limited incumbent air carriers, 

arguing that JetBlue’s legal analysis is “off base” because Congress’s definition of “limited 

incumbent” applies “only to the allocation of AIR-21 slot exemptions under 49 U.S.C. §§ 41715-

18.” Frontier Reply Comments at 2-3. Likewise Southwest in its Reply Comments also ignores 

the direct connection between the actions of the FAA in this proceeding and the requirements of 

AIR-21. See Reply Comments of Southwest, Docket FAA-2010-0109 (filed Sept. 12, 2011), at 

4. But the implementation of Congress’s directive in AIR-21 is the core issue in this proceeding. 

This proceeding commenced when the Parties petitioned for a waiver of the conditions in the 

LaGuardia Interim Order.3

 See Joint Request of Delta & US Airways for a Waiver, Docket 

FAA-2010-0109 (Aug. 24, 2009), at 1 (requesting “a waiver from certain restrictions in the 

LaGuardia Interim Order”). In that order, the Department sought to deal with the congestion 

caused, in part, by Congress’s direction “in the Wendell H. Ford Aviation Investment and 

Reform Act for the 21st Century (AIR-21)” that the DOT “grant exemptions from the” High 

Density Rule. 71 Fed. Reg. at 77,854. Indeed, in this very proceeding, the FAA explicitly relied 

upon AIR-21 as a source of its statutory authority to require slot divestitures: 

The waiver of the LGA Order on the conditions set forth in this Notice carries out 

the Congressional intent of AIR–21 to allow for new airline entry, to increase 

competition, and lower inflated prices at the slot-controlled airports. 

May 2010 Order, 75 Fed. Reg. at 26,326. Congress’s directive in AIR-21 cannot simultaneously 

be, on the one hand, a source of the FAA’s authority to act and, on the other hand, somehow 

inapplicable to the conditions the FAA chooses to impose.4

 

3

 71 Fed. Reg. 77,584 (Dec. 27, 2006). 

4

 Frontier’s argument that JetBlue’s position is “an attempt to gain a parochial advantage” is 

amusing at best. See Frontier Reply Comments at 6. JetBlue is insisting that the FAA act within 
5

3. ACAA’s Comments Reflect the Voice of Southwest. 

 JetBlue respectfully submits that the comments of the Air Carrier Association of America 

(“ACAA”) must be considered critically. The ACAA is a trade association with only a single air 

carrier member, AirTran, which has been acquired by Southwest.5 While the ACAA makes a 

number of valid points, with which JetBlue fully agrees, those points simply reflect the same 

views articulated by its sole member airline, AirTran and thus Southwest, in its voluminous 

comments and attached expert report. JetBlue agrees that the proposed transaction “creates a 

rare opportunity for the FAA to expand the enormous benefits of low fare service to two 

airports.” Comments of the ACAA, Docket FAA-2010-0109 (filed Aug. 29, 2011), at 7. JetBlue 

also supports the ACAA’s conclusion that the divestiture should be at least 28 DCA slots and at 

least 40 LGA slots. 

 JetBlue, however, takes issue with AirTran’s (and therefore Southwest’s) contention that 

air carriers holding up to 5 percent of the slots at LGA or DCA should be eligible to participate 

in the divestiture process. See id. at 8. Indeed, prior to Southwest’s acquisition of AirTran, both 

the ACAA and AirTran repeatedly advocated for the distribution of slots to new entrants and 

limited incumbents, precisely as Congress defined the term, holding or operating fewer than 20 

slots. See Comments of the ACAA Regarding Operating Limitations at New York LaGuardia 

Airport, Docket FAA-2006-25755 (filed Oct. 19, 2006), at 3 (“Limited incumbents are only 

 

the bounds of its statutory authority to implement pro-competitive policies consistent with 

Congress’s direction, while Frontier is advocating for two exemptions, one from Congress’s 

definition of a “limited incumbent air carrier” and one from the FAA’s proposed “no 

subsidiaries” rule so that it can be favored in a forthcoming slot divestiture process. Id. at 5-7. 

Moreover, all of the submissions in this or any other proceeding are made to further the interest 

of the commenting party. 

5

 Air Carrier Association of America, ACAA Airline Members (available at: 

http://www.acaa1.com/airline_members.asp). 
6

allowed twenty (20) total slots (ten roundtrips) from which to operate their flights.”); Response 

of the ACAA Regarding Operating Limitations at New York LaGuardia Airport, Docket FAA2006-25755 (filed Oct. 30, 2006), at 3 (“Legacy carriers currently have up to twenty times more 

slots than limited incumbents at LGA . . . . who are only allowed twenty (20) total slots.”); 

Application of AirTran Airways, Inc. for Exemptions from 14 C.F.R. Part 93, Subparts K and S, 

pursuant to 49 U.S.C. § 41718(b), Special Rules for Ronald Reagan Washington National 

Airport (within-perimeter slot exemptions), Docket OST-2000-7182 (filed Nov. 5, 2003), at 8 

(“[A] limited incumbent air carrier is defined as an air carrier or commuter operator that holds or 

operates . . . fewer than 20 slots and slot exemptions at DCA. AirTran is a limited incumbent.”); 

Amendment to the Application of AirTran Airways, Inc., in the matter of the Wendell H. Ford 

Aviation Investment and Reform Act for the 21st Century for Exemptions from 14 C.F.R. Part 

93, under 49 U.S.C. § 41716(b), Docket OST-00-7176 (filed Aug. 16, 2001), at 3 (“AirTran 

Airways met the statutory criteria as a new entrant/limited incumbent air carrier because it held 

less than twenty slots at LGA prior to obtaining AIR-21 exemption slots.”). As JetBlue has 

asserted, the FAA is constrained in establishing new preferences and thresholds for the 

distribution of slots. See JetBlue Comments at 18-22. 

4. ACAA’s Comments Concerning JetBlue Were Ill-Considered. 

 JetBlue also must take issue with the veiled accusations in the ACAA’s comments that, 

because of Lufthansa’s minority ownership stake in JetBlue and its commercial agreement with 

American Airlines, the Department should consider not allowing JetBlue to participate in the 

divestiture process. The ACAA’s comments are based on mischaracterizations and allegations 

that are demonstrably false. The ACAA wrongly states that as part of JetBlue’s commercial 

agreement with American, “various JetBlue DCA flights would connect to American’s flights at 
7

JFK to multiple international destinations. . . .” Comments of the ACAA at 10 (emphasis 

added). But JetBlue does not fly from DCA to JFK. Instead, JetBlue has a pro-competitive 

interline agreement with American whereby a customer can purchase a ticket with connections 

from some JetBlue domestic flights to some American Airlines international flights at both 

Boston (“BOS”) and JFK airports. The connections are permitted as part of an interline 

agreement, an industry standard form of partnership. (Delta, United, US Airways, American and 

Lufthansa themselves all have similar interline agreements with multiple carriers that allow 

similar connections to be ticketed.) JetBlue and American do not have a codeshare agreement in 

any market.6

 Any insinuation that JetBlue would not compete vigorously with newly-acquired 

slots is demonstrably false. In the July 2011 Proposed Order, the FAA itself cited JetBlue’s 

entry on the DCA-BOS route as the paramount example of the consumer benefits that result from 

low cost carrier entry: 

JetBlue’s entry enhanced competition and significantly reduced fares. Its 

presence continues to have a disciplining effect on fares: our check of available 

one-month advance purchase economy fares showed JetBlue charging $69 oneway, with US Airways, Delta, and United all matching. 

76 Fed. Reg. at 45327 (footnote omitted). Given these errors, JetBlue believes that ACAA’s 

comments (and therefore Southwest’s comments) concerning JetBlue’s eligibility should be 

disregarded. 

Conclusion 

 In this proceeding, the FAA has an unprecedented opportunity to address the competitive 

imbalance found at two of the nations most important airports. In determining the conditions, if 

 

6

 ACAA also wrongly claims that Lufthansa’s ownership interest in JetBlue is 19 percent. As 

disclosed in JetBlue most recent proxy statement, Lufthansa’s ownership percentage is now less 

than 16 percent. See JetBlue Airways Corporation, Schedule 14A (filed Apr. 14, 2011), at 19-

20. 
any, under which Delta and US Airways should be allowed to proceed with a consolidation of

their hold on these two airports, the FAA should at a minimum require the caniers to divest at

least as many slots as were originally contemplated by the FAA in the May 2010 Order. The

minimal change in circumstarìces, as described by the Parties, does not remotely support the

significant reheat from the FAA's conclusion in the May 2010 Order to the one in the July 201 1

Proposed Order.

The FAA should conduct any divestiture process in a man¡er consiìtent with Congress's

clear direction to favor new entrants and limited incumbents, meaning caniers holding fewer

than 20 slots at an airport. The FAA-approved procedure must comply with the statutory

requirements, not gerrymandered to accommodate the interests ofnon-qualified air carriers such

as Frontier and Southwest. Lastly, the divestiture should be conducted in a manner such that

more than one carrier can successfully bid for slots at DCA and LGA.

September 13,2011 ly submitted,

J. Parker Erkmann

Dow Lohnes PLLC

1200 New Hampshire Ave., NV/ Suite 800

'Washington, DC20036

(202) 776-2000

(202) 776-4725 (fax)

jhill@dowlohnes.com

perkmann@dowlohnes.com

Counsel for JetBlue Airvays Corporation

Hill