BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

In the matter of the application of CONCESIONARIA VUELA COMPAŇIA DE AVIACIÓN, S.A.P.I. DE C.V. d/b/a Volaris for an exemption fr om 49 U.S.C. § 41301 Docket DOT-OST-2014-0137

REPLY OF THE CITY OF HOUSTON

Communications with respect to this document should be sent to: Mario C. Diaz Director Ian Wadsworth Chief Commercial Officer Department of Aviation CITY OF HOUSTON 16930 John F. Kennedy Blvd. Houston, TX 77032 (281) 233-3000 (281) 233-1859 (fax) Rachel B. Trinder Jol A. Silversmith ZUCKERT, SCOUTT & RASENBERGER, L.L.P. 888 Seventeenth Street, N.W. Washington, D.C. 20006-3309 (202) 973-7927 (202) 342-0683 (fax) rbtrinder@zsrlaw.com jasilversmith@zsrlaw.com For the City of Houston Dated: August 22, 2014BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

In the matter of the application of CONCESIONARIA VUELA COMPAŇIA DE AVIACIÓN, S.A.P.I. DE C.V. d/b/a Volaris for an exemption fr om 49 U.S.C. § 41301 Docket DOT-OST-2014-0137

REPLY OF THE CITY OF HOUSTON

The City of Houston (“Houston” o r the “City”) respectfully subm its this reply to the

answer filed in this docket on August 13, 2014 by American Airl ines, Inc. (“American”) to the July 31, 2014 application of Concesionaria Vuela Compaňia d e Aviación, S.A.P.I. de C.V. d/b/a Volaris (“Volaris”) for FLL – Mexico authority. The reply solely addresses the issue raised by American concer ning anomalies in the treatment of U.S. cities insofar as available designations under the U.S.-Mexico bilateral are conc erned. As American has noted, there are significant inconsistencies in how city-pair markets are defined for designation allocation purposes under t he current U.S.-Mexico bilateral air services agreement. This leads to a severe disad vantage competitively for certain cities and carriers, as well as lost opportunities in t he development of new transborder air services by both U.S. and Mexican carriers. As DOT knows, in certain metropolitan areas – including Hous ton, Chicago and New York – multiple airports are required to share a single pool o f city-pair designations. Thi s limits the available designations to only two or three for each side (depending on t he market) in each cityReply of the City of Houston Page 2

pair, while in other cities each airport is treated as having i ts own pool of designations; the latter includes Washington/Baltimore (IAD and BWI), Los Ang eles area airports (LAX, ONT, and SNA), San Francisco area airports (SFO, OAK, and SJC), and airports

in the MIA/FLL markets. For suc h markets, the number of availa ble designations is in effect doubled or tripled, regardl ess of market size, traffic d emand, or other relevant

factors. Houston recognizes that there ar e historical bases for these di fferences and that

the U.S. Government is not in so le control of the variations in treatment. However,

there is considerable inconsiste ncy in the rationale for the di ffering treatment, and the adverse impact on the Houston metropolitan area is significant. The Houston region is at the forefront of the nation’s economic recovery. Just since the 2010 Census its metropolitan area has led the count ry in population growth – ad ding the equivalent number of residents of a city th e size of Tulsa, Oklahoma. Hou ston’s airports have enjoyed a 60% growth in international traffic over the last dec ade, even before the startup of new international services at Houston’s William P. Hobby Airport (“HOU” or “Hobby”) next year. With both U. S. and Mexican carriers seekin g to provide additional services in Houston, the City, the region, carriers and the eco nomy will suffer if both

Houston’s Bush Intercontinental Airport (“IAH”) and HOU are tre ated as having a single pool of designations for Mexico services. As Houston has expressed in ot her contexts, the City hopes that before the end of this year, bilateral negotiations with Mexico will result in a complete liberalization of at

least all third and fourth freedom passenger designations so th at the current city-pair limits and single pool of designa tion issues will no longer be obstacles to new service.Reply of the City of Houston Page 3

To the extent that this does not occur, or cannot be achieved s oon enough, Houston asks that DOT pursue every opport unity to resolve the problem b y other means, so that additional services can be prov ided to meet market demand, and so that neither cities, airports, carriers, o r the economy are di sadvantaged competitiv ely.

Respectfully submitted,

Rachel B. Trinder Jol A. Silversmith ZUCKERT, SCOUTT & RASENBERGER, L.L.P. 888 Seventeenth Street, N.W. Washington, D.C. 20006-3309 (202) 973-7927 (202) 342-0683 (fax) rbtrinder@zsrlaw.com jasilversmith@zsrlaw.com For the City of Houston Dated: August 22, 2014CERTIFICATE OF SERVICE I certify that on this 22nd day of August 2014, a copy of the f oregoing was served on the parties named below in ac cordance with the Department’s Rules of Practice.

Jol A. Silversmith

msinick@ssd.com (Counsel for Alaska Airlines) rpommer@atlasair.com (Atlas Air) robert.wirick@aa.com , francis.heil@aa.com , and howard.kass@aa.com (American Airlines) sascha.vanderbellen@delta.com , chris.walker@delta.com , and sametta.c.barnett@delta.com (Delta Airlines) cefelts@fedex.com nssparks@fedex.com (Federal Express) jhill@cooley.com and perkmann@cooley.com (Counsel for JetBlue Airways) matwood@cozen.com (Counsel for Kalitta Air) kevin.montgomery@polaraircargo.com (Polar Air Cargo) robert.cohn@hoganlovells.com and patrick.rizzi@hoganlovells.com (Counsel for Republic Airlines) ethan.blank@rjet.com (Republic Airlines) temerson@skywest.com (SkyWest Airlines) bob.kneisley@wnco.com and leslie.abbott@wnco.com (Southwest Airlines) dkirstein@yklaw.com and jyoung@yklaw.com (Counsel for Spirit Airlines) john.fredericksen@suncountry.com and thomas.ting@suncountry.com (Sun Country) hershel.kamen@united.com , dan.weiss@united.com , steve.morrissey@united.com , karine.faden@united.com , thomas.bolling@united.com , and abby.bried@united.com (United Airlines) sseiden@crowell.com and gmurphy@crowell.com (Counsel for United Airlines) anita.mosner@hklaw.com and jennifer.nowak@hklaw.com (Counsel for UPS) dsmalls@ups.com (UPS) john.varley@virginamerica.com and barbara.russell@virginamerica.com (Virgin America) charles.donley@squirepb.com (Counsel for Volaris) paul.gretch@dot.gov , brian.hedberg@dot.gov , brett.kruger@dot.gov , reese.davidson@dot.gov , todd.homan@dot.gov , peter.irvine@dot.gov , and laura.remo@dot.gov (DOT) john.s.duncan@faa.gov (FAA) ronald.williams@ustranscom.mil (USTRANSCOM) englets@state.gov and cristinasa@state.gov (State Department) info@airlineinfo.com