1 March 5, 2014

Exemption No. 7370 H Regulatory Docket No. FAA

- 20 02

- 13734

Mr. Robert E. Cohn Counsel for Republic Airline s
, Inc. Hogan Lovells US LLP Columbia Square

555 T hirteenth Street, NW. Washington, DC 20004

Dear Mr . Cohn :

This letter is to inform you that we have granted your petition to amend FAA Exemption

No

. 737 0 , as amended

. It explains the basis for our decision, describes its effect, and lists the

revised co nditions and limitations.

The Basis for Our Decision

By letter dated January 6, 2014, you petitioned the FAA on behalf of Republic Airline Inc. (Republic) and Shuttle America Corporation (Shuttle America) seeking confirmation that Exemption No. 7370G auth orizes Shuttle America to use Slot 1497 at Ronald Reagan Washington National Airport (DCA) as proposed and described more fully later in this document, or alternatively request ing that the FAA amend the exemption to the extent necessary to allow Shuttle Am erica to operate Slot 1497 beginning on or about March 1, 2014, as Delta Connection service. That exemption from 14 CFR § 93.123 allowed Republic to use exemption slot number 1497 at DCA for a flight marketed under one of the Republic

brands. On July 9, 2012, the FAA extended this exemption for a period of 5 years.

As set forth in your petition, Republic uses slot 1497 to operate a flight from Madison, Wisconsin in nonstop service to DCA under the Frontier Airline s b rand. Republic has been advised by Fr ontier that it will no longer continue this service. Shuttle America, Republic’s2

corporate affiliate, intends to use the slot for service between DCA and Madison , marketed by Delta Connection beginning on or about March 1, 2014, pursuant to its existing f ee

- for

service/code sharing agreement with Delta Air L ines. 1

In Condition No. 3 of Exemption No. 7370G , it states , “ This slot may be utilized only by Republic for a flight marketed under one of the Republic brands.” You argue that Shuttle

America’s proposed operation with slot 1497 would be consistent with this condition because: (1) Republic and Shuttle America are considered to be one

- and

- the

- same carrier under the

FAA’s slot rule 2 ; and therefore that (2) Shuttle America’s pr o posed o peration of slo t 1497 as

Delta Connection service is consisten t with Con dition No. 3, in that Shuttle America has registered the trade name “Delta Conne ction ” with the Department of Transportation and

Shuttle America’s use of its registered trade name, Delta Connection should be considered “utilized....for flight marketed under one of the Republic brands. ”

As precedent for this position, you state that Shuttle America’s registered use of the trade

name “Delta Connection” under 14 CFR p art 215 is similar to Republic’s r egistration of the trade name “Frontier” with the Department of Transportation p ursuant to p a r t 215. As such, you contend that a waiver or amend ment to the exemption is not necessary because Shuttle

America’s operation of slot 1497 as Delta Connection ser vice would be consistent with

C ondition No. 3.

If the FAA does not agree with the forestated position, you request that the FAA amend the exemption to permit Shuttle America to use the slot for continued service to Madison. In support of an exemption, you argue that the public interest is supported in the preservation of the only nonstop service between the Washington , D.C. Metropolitan area and Madison; the enhancement of competition and service options as Delta would be using dual

- class ERJ

aircraft a nd passengers would have access to Delta’s global frequent flight program and connectivity options . Lastly, you argue that amending the exemption as described above would not adversely affect safety or operational efficiency in that Shuttle America/ Delta

Connection would be operating the flight in the same time period and consistent with previous

FAA fin dings in extending th e exemption that there is no adverse impact on safety.

The FAA published a summary of the petition for exemption in the Federal Reg ister for comment on January 16, 2014. The comment period closed on January 27, 2014 . The FAA received approximately 18 comments and the only commenters objecting to the exemption

were two air carriers. Comments in support of the petition were from U.S

. Senators Baldwin and Johnson, Governor Walker of Wisconsin , several local elected officials, affected

1 By letter dated January 8, 2014, you advised that effective February 1, Frontier will no longer provide this service and that Chautauqua Airlines , a corporate affiliate of Republic, will provide the service usi ng Delta Connection.

2 Section 93.123(c) of 14 C.F.R. provides that “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 person, 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 combinations 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.3

C hambers of Commerce, association, educational institutions, Dane County Regional Airport, and Dane County.

Southwest Airlines and JetBlue Airways (hereinafter referred to as “Southwest/JetBlue”) filed two separate joint responses. Southwest /JetBlue argued that favorable action on the petition would be an “improper de facto transfer of the slot exemption to Delta that is inconsistent with the origin al purpose of the exemption which is to enhance competition by new entrant
and limited incumbent carriers. ” They further state that the petition does not meet the public interest threshold cited in past FAA grant of exemptions and that Delta, as one of th e largest slot holders at DCA, can provide the service, absent the exemption , if it so desired. The carriers also challenge that Republic, Chautauqua and Delta have effectively proceeded with transferring the slot absent authorization from the FAA by adve rtising and selling the service

under Delta.

Our Decision

As described in the petition, the operating authority for the flight using the exemption slot

number 1497 remains with Republic /Chautauqua/Shuttle America, who for purposes of slot allocation, ar e a c ommonly owne d carrier

. In granting t h is exemption, the FAA is guided by recent actions taken by the Department to preserve the DCA/Madison service and finds that this exemption supports the Department’s finding of public interest in maintaining this

service. In consideration of the foregoing, I find that the requested amendment to Exemption No. 7370G is in the public interest and would not adversely affect safety.

The FAA amends Condition No. 3 to remove the requirement that the flight must be mar keted under one of the Republic brands and replace it with the requirement that the slot must be operated by Republic or a commonly owned carrier. This amendment does not negatively impact operational efficiency at DCA and does not alter any other conditi on set forth in the exemption.

The FAA advises that upon the termination or expiration of this exemption, the operating authority conferred herein will cease to be authorized by exemption. The FAA will either

retire the exemption permanently or take ac tion to codify this existing operation under the provisions of the Title 14 of the Code of Federal Regulations, Subpart K, and the corresponding allocation mechanisms.

Therefore, under th e a uthority provid ed by 49 U.S.C. §§ 106(f), 40113

, and 44701, whi ch the

FAA Administrato r has delegated to me, Republic and Shuttle are granted an amendment per its petition to be exempted from § 93.123 that allow s Republic to use exemption slot number 1497 at DCA for a flight marketed under one of the Republic brands

, subject to the amended

condition s and limitations listed below.4

Conditions and Limitations

1. The operation authorized by the grant of exemption may be conducted only in the 1800 hour. The FAA may adjust the time period if necessary for air traffic cont rol or other operation purposes.

2. Republic must contact the FAA Slot Administration Office to confirm the scheduled operation and frequency under this exemption.

3. This slot may be utilized onl y by R epublic

, or a commonly

– owned carrier.

4. This exemption will be rescinded if Republic discontinues schedule operations at
DCA.

5. The operation authorized under this exemption is not part of the pool of permanent slots at DCA. However, this operation, while in effect, is subject to the provision s of 14 CFR part 9 3, S ubparts K and S, including the s l ot usage requirement, except

that the authority may not be sold, leased, or otherwise transferred

.

6. Republic must rep o rt usage of this slot once it begins operations authorized herein.

7. This letter must be attache d to, and is part of, E xemption No. 7370.

The Effect of O ur Decision

Our decision maintains the termination date of Exemption No. 7370, as amended , of September 30, 2017, unless sooner superseded or resc inded

.

Sincerely,

/s/

Marc L. Warren Acting Chief C ounsel