BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

-------------------------------------------------------------------- Application of )

)

Southwest Airlines Co. )

)

For an exemption pursuant to 49 U.S.C. § 40109 to ) Docket No. DOT

- OST

- 2014

- 0222

engage in foreign scheduled air transportation of )

persons, property and mail between Houston Hobby )

International Airport and Cancun, Mexico City, )

Puerto Vallarta, and San Jose del Cabo, Mexico )

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

ANSWER OF SPIRIT AIRLINES

Communications with respect to this document should be s ent to:

Joanne W. Young

David M. Kirstein

Kirstein & Young, PLLC

1750 K Street, N.W.

Suite 200

Washington, D.C. 20006

(202) 331

- 3348

(202) 331

- 3933

Attorneys for

SPIRIT AIRLINES, INC.

December 29 , 2014BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

-------------------------------------------------------------------- Application of )

)

Southwest Airlines Co. )

)

For an exemption pursuant to 49 U.S.C. § 40109 to ) Docket No. DOT

- OST

- 2014

- 0222

engage in foreign scheduled air transportation of )

persons, property and mail between Houston Hobby )

International Airport and Cancun, Mexico City, )

Puerto Vallarta, and San Jose del Cabo, Mexico )

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

ANSWER OF SPIRIT AIRLINES

Spirit Airlines ( “ Spirit ” ) submits this Answer in support of Southwest Airlines (“Southwest”)

position , as set forth in its Application for an exemption to engage in foreign scheduled air transportation

between Houston Hobby International Airport ( “ HOU ” ) and Cancun (“CUN”) , Mexico City (“MEX”)

,

Puerto Vallarta (“PVR”) , and San Jose del Cabo (“SJD”) , Mexico , to the effect that one of the two

designations held by United Airlines (“United”) in the HOU/MEX and HOU/SJD markets be reallocated

to Southwest

. W here a single carrier holds all or a majority of U.S. carrier designations in a city pair

market under the US

- Mexico Air Transport Agreement, blocking new entry, Spirit believes the public

interest in enhanced competition and the resulting consumer benefits, strongly favor new entry

,

particularly where this will inject new low fare competition.

As discussed by Southwest, under the current U.S.

- Mexico Air Transport A greement, U.S.

carriers are limited to two or three designations per city pair, restricting both competition and consumerAnswer of Spirit Airlines

Docket No. OST

- 2014

- 0222

Page 2

benefits. 1 Currently, in some city pair markets, such as HOU/MEX and HOU/SJD, U.S. legacy carriers

and their affiliates hold all two or a majority of three U.S. carrier designations. In these city pair markets,

the legacy carriers and their affiliates do not compete but instead dominate these markets through

coordination of operat ions , marketing and distribution. 2 While the grant of dual designations does not

impede the public interest when other U.S. carrier entry is possible, the public is directly harmed when a

new entrant is prevented from enter ing the market because a du a l designation is marketed under the

legacy carrier brand

. 3

The Department has recognized there may be a time when dual authority is no longer in the

public interest and has always reserved its right to amend, modify, or revoke the authority it grants

. 4

Specifically and as pointed out by Southwest in granting dual authority to United and SkyWest in the

HOU

- MEX market, the Department stated :

should a competing U.S. carrier present a firm proposal to provide scheduled

Houston

- Mexico City service, we wo uld be prepared to reconsider

whether, in those circumstances, award of the authority granted here continues

to be in the public interest. 5

Spirit urges the Department to advance the public interest and support new entry and competition

by exercisin g the discretion it has reserved by reassigning one of the two United held designations in each

of the HOU/MEX and HOU / SJD markets to Southwest. T he reallocation of a duplicate U.S. carrier

designation would advance the Department’s principle objective of maximizing public benefits through

1 U.S.

– Mexico Air Transport Agreement Annex 1(B)(4),(5), December 12, 2005 .

2 See Application of Southwest Airlines Co., DOT

- OST

- 2014

- 0222 2(December 11, 2014).

3 Congress defines the public interest in the Airline Deregulations Act to include the following: (1) the availability of

a variety of adequate, economic, efficient, and low

- priced services; (2) avoiding unreasonable industry

concentration, excessive market domination, monopoly powers, and other conditions that would tend to allow at

least one air carrier unreasonably to increase prices, reduce services, or exclude competition in air transportation;

(3) encouraging, developing, and maintaining an air transportation system relyin g on actual and potential

competition to provide efficiency and low price; and (4) encouraging entry into air transportation markets by new

and existing air carriers to ensure a more effective and competitive airline industry. 49 U.S.C. 40101 (a)(4),(10 ),

(12), (13) (1994).

4 See Notice of Action Taken, issued Sept. 3, 2014, in Dockets DOT

- OST

- 2014

- 0129 and

- 0130; Notice of Action

Taken, issued Sept. 18, 2014 in Docket DOT

- OST

- 2014

- 0154; Notice of Action Taken issued July 29, 2014 in Dockets

DOT

- OST

- 2 014

- 0100 and

- 0101.

5 Notice of Action Taken, issued Sept. 3, 2014, in Dockets DOT

- OST

- 2014

- 0129 and

- 0130.Answer of Spirit Airlines

Docket No. OST

- 2014

- 0222

Page 3

the promotion of competition and valuable consumer benefits. Preventing city pair domination by certain

carriers and their partners will generate “new low

- cost travel options for a large number of U.S.

consumers. ” 6 As shown in the Appendix to Southwest’s Application, low fare carrier entrance into a

market previously dominated by legacy carriers can result in fare reductions of up to 25%

. Such

significant reductions will offer ne w travel options to millions of p assengers who previously may have

be e n unable to afford a flight to Mexico.

Accordingly, given the benefits derived by the traveling public from enhanced competition

, Spirit

believes the Department should grant Southwest’s request to: (1) withdraw one of the two designations

currently held by United and its partner carriers in both the HOU

- MEX and HOU

- SJD markets; and (2)

provide Southwest authority and corresponding designations to service HOU

- MEX and HOU

- SJD

markets.

Respectfully submitted,

Joanne W. Young

David M. Kirstein

Kirstein & Young, PLLC

1750 K Street NW, Suite 200

Washington, D.C. 20006

Counsel for the Spirit Airlines

December 29 , 2014

6 Application of Southwest Airlines Co. at 4.Certificate of Service

I hereby certify that on this 29 th day of December 2014, a copy of the foregoing Answer in

Support of Southwest Airlines Co. on behalf of Spirit Airlines was served by emai l on the parties named

below:

gmurphy@crowell.com

sseiden@crowell.com

dan.weiss@united.com

steve.morrissey@united.com

thomas.Ting@suncountry.com

robert.cohn@hoganlovells.com

patrick.rizzi@hoganlovells.com

perkmann@cooley.com

jhill@cooley.com

Robert .Land@jetblue.com

stephen.lachter@lachterlaw.com

matwood@cozen.com

sascha.vanderbellen@delta.com

chris.walker@delta.com

robert.wirick@aa.com

howard.kass@aa.com

marshall.si nick@squirepb.com

john.varley@virginamerica.com

bob.kneisley@wnco.com

leslie.abbott@wnco.com

susan.kurland@dot.gov

brian.hedberg@dot.gov

brett.kruger@dot.gov

reese.davidson@dot.gov

todd.homan@dot.gov

peter.irvine@dot.gov

cristinasa@state.gov

info@airlineinfo.com



### __________________________ David M. Kirstein