BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

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

Application of :

:

SOUTHWEST AIRLINES CO. :

: Docket DOT-OST-2014-0222

for an exemption pursuant to 49 U.S.C. § 40109 :

to 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

UNITED AIRLINES, INC. AND SKYWEST AIRLINES, INC. 

Communications with respect to this document should be sent to:

Steve Morrissey

Vice President-Regulatory & Policy

UNITED AIRLINES, INC.

1225 New York Avenue, NW

Suite 1100 – DCAIZ

Washington, DC 20005

(202) 521-4373

steve.morrissey@united.com

Daniel A. Weiss

Managing Director-International

 Affairs and Regulatory

UNITED AIRLINES, INC.

233 South Wacker Drive

10th Floor – HDQIZ

Chicago, IL 60606

(872) 825-6828

dan.weiss@united.com

December 29, 2014

Thomas Newton Bolling

Vice President and Deputy General Counsel

Abby L. Bried

Associate General Counsel-Regulatory, 

 Alliances & International

James Conneely

Counsel-Regulatory

UNITED AIRLINES, INC.

233 South Wacker Drive

11th Floor – HDQLD

Chicago, IL 60606

(872) 825-8068

(872) 825-7415

(872) 825-8311

thomas.bolling@united.com

abby.bried@united.com

james.conneely@united.com

Gerald F. Murphy

Steven J. Seiden

CROWELL & MORING LLP

1001 Pennsylvania Avenue, NW

Washington, DC 20004

(202) 624-2500

gmurphy@crowell.com

sseiden@crowell.com

Counsel for

United Airlines, Inc.

and SkyWest Airlines, Inc.
BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

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

Application of :

:

SOUTHWEST AIRLINES CO. :

: Docket DOT-OST-2014-0222

for an exemption pursuant to 49 U.S.C. § 40109 :

to 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

UNITED AIRLINES, INC. AND SKYWEST AIRLINES, INC.

I. INTRODUCTION

United1and SkyWest object to the above-captioned application of Southwest insomuch 

as Southwest seeks to begin providing foreign air transportation between Houston, on the one 

hand, and Mexico City and San Jose del Cabo, Mexico, on the other hand, on or around October 

15, 2015 and have the Department withdraw U.S.-Mexico operating carrier designations for 

those routes from United and/or SkyWest at that time.

2

United and SkyWest base their objection on the following key points:

 While Southwest alleges that its proposed services will benefit consumers and 

competition in the Houston-Mexico City/San Jose del Cabo markets, it conveniently 

downplays that it also proposes to limit consumer choice by taking away rights held 

 

1 Common names are used for airlines. 

2

The Houston-San Jose del Cabo designation currently held by ExpressJet will 

transition to SkyWest effective January 6, 2015. Notice of Action Taken dated Jul. 29, 2014 in 

Dockets DOT-OST-2014-0100 and DOT-OST-2014-0101. United and SkyWest take no 

position on the remainder of Southwest’s application.
Answer of United and SkyWest

Page 2 of 9

by United and/or its United Express partner SkyWest – both of which operate these 

routes and provide important network connecting opportunities and time-of-day travel 

choices to the benefit of United’s customers, coworkers and communities. 

 Contrary to Southwest’s assertion, longstanding Department precedent and due 

process require a carrier selection proceeding before limited-entry rights can be 

withdrawn and reallocated under these circumstances. As United and SkyWest note 

below, however, instituting such a proceeding is a distant second best option and not 

a valuable use of Department and airline resources.

 As it has done on several prior occasions, the Department should grant extra-bilateral 

authority to allow Southwest to operate in the Houston-Mexico City/San Jose del 

Cabo markets alongside United, SkyWest and Spirit for the short, two and one-half 

month period until the new U.S.-Mexico air transport agreement goes into effect on 

January 1, 2016. This alternative will truly benefit all carriers, consumers, and 

communities on both sides of the border, and is supported not only by United and 

SkyWest, but by the Chairman of the Subcommittee on Trade of the House Ways and 

Means Committee as well. To argue otherwise would be contrary to maximizing 

consumer choice and competition in the marketplace. 

 Southwest hastily directs the Department to eliminate existing air service options 

without providing any indication that Houston’s William P. Hobby Airport (“HOU”) 

will be ready for Southwest’s proposed operations on October 15, 2015. The 

Department should not even consider Southwest’s application until it has 

demonstrated that HOU’s new international terminal will be completed and 

appropriately staffed with the Customs and Border Protection (CBP) Officers and 

other personnel necessary for its operation. 

II. THE DESIGNATIONS HELD BY UNITED AND SKYWEST CANNOT BE 

WITHDRAWN WITHOUT A CARRIER SELECTION PROCEEDING

The designations held by United and SkyWest can only be withdrawn following a carrier 

selection proceeding. They cannot simply be taken away. Southwest’s request is contrary to 

longstanding Department policy applicable to U.S.-Mexico routes: “[w]here there are directly 

competing requests for a route or for city-pair markets within a route, [DOT] would institute 

carrier selection proceedings.” Order 1988-7-43 at 7 (finalized by Order 1988-10-30).

Southwest does not allege that United or SkyWest have plans to discontinue service on these 

routes. Department precedent only supports foregoing carrier selection proceedings and

withdrawing one carrier’s limited-entry rights in favor of another’s proposed service when the 
Answer of United and SkyWest

Page 3 of 9

first carrier has allowed its rights to go unused or has no firm plans to resume services. See, e.g., 

Order 2007-11-23 at 2 (U.S.-Colombia frequencies); Notice of Action Taken dated Sep. 28, 2007 

in Docket DOT-OST-2007-29103 (U.S.-Philippines designation); and Notice of Action Taken 

dated Feb. 13, 2004 in Docket DOT-OST-2003-16444 (Phoenix-Puerto Vallarta/San Jose del 

Cabo designations). Accordingly, Southwest’s “competing proposal to provide scheduled 

[Houston-Mexico City/San Jose del Cabo] service[s]” means only that the Department “would be 

prepared to consider whether...award of the [United and United Express carrier] 

authority...continues to be in the public interest.” Notice of Action Taken dated Sep. 3, 2014 in 

Dockets DOT-OST-2014-0129 and DOT-OST-2014-0130, at 2 (emphasis added) (responding to 

Southwest’s assertion that United’s and SkyWest’s designations “are subject to being rescinded 

if Southwest were to actively seek competing authority to serve the Houston-Mexico City 

market”); see also Notice of Action Taken dated Jul. 29, 2014 in Dockets DOT-OST-2014-0100 

and DOT-OST-2014-0101 (awarding Houston-Puerto Vallarta/San Jose del Cabo operating 

designations to SkyWest).

It is also unclear why Southwest argues that the Department should withdraw United’s or 

SkyWest’s designation in the Houston-San Jose del Cabo market, for which Spirit also holds a 

designation. See Notice of Action Taken dated Sep. 18, 2014 in Docket DOT-OST-2014-0154. 

Presumably, Southwest would rather handpick its competition – and eliminate carriers with a 

different business model, superior international and domestic connecting opportunities, and more 

flexible service offerings – rather than rely on a carrier selection proceeding. 

While United and SkyWest support longstanding Department precedent requiring carrier 

selection proceedings as a matter of due process, instituting such a proceeding is a distant second 

best option given the unique circumstances of this case. As described below, withdrawing the 
Answer of United and SkyWest

Page 4 of 9

designations would not be in the public interest and carrier selection proceedings are not 

necessary for Southwest, United, SkyWest and Spirit to be able to serve the Houston-Mexico 

City/San Jose del Cabo markets prior to January 1, 2016. 

III. RIGID ENFORCEMENT OF THE DESIGNATION REQUIREMENTS IS NOT 

APPROPRIATE UNDER THESE CIRCUMSTANCES

If indeed HOU is ready for international service on October 15, 2015, as discussed 

below, the Department will be faced with only two and one-half months of operational overlap 

between Southwest’s proposed startup date and the liberalization of transborder services under 

the new aviation agreement set for January 1, 2016. And with the Department reporting

informally that the new agreement could take effect even earlier, it makes little sense to United, 

SkyWest, and the Chairman of the Subcommittee on Trade of the House Ways and Means 

Committee for the Department to eliminate competitive service options for a period that will not 

exceed 11 weeks. Of particular concern in this case is that the Department’s standard 90-day 

startup dormancy condition for U.S.-Mexico routes would perversely allow Southwest to bump 

United and/or SkyWest from the market without Southwest ever having to commence operations

on its actual target date. See, e.g., Notice of Action Taken dated Sep. 3, 2014 in Dockets DOTOST-2014-0129 and DOT-OST-2014-0130 (Southwest would not be required to begin service 

until January 15, 2016). Such a result would be anathema to an aviation agreement that promises

to “expand opportunities for passenger and cargo carriers to provide service between the United 

States and Mexico, and strengthen the economic ties between the two countries.” Press Release, 

U.S. Dep’t of Transp., United States, Mexico Reach Modernized Aviation Agreement, (Nov. 21, 

2014) at 1.
Answer of United and SkyWest

Page 5 of 9

IV. GRANTING EXTRA-BILATERAL AUTHORITY TO SOUTHWEST WOULD 

PRESERVE EXISTING UNITED AND UNITED EXPRESS SERVICES, AND IS IN 

THE PUBLIC INTEREST

The Department should grant extra-bilateral authority to Southwest to cover the short 

period during which sufficient designations would not be available for both Southwest’s 

proposed operations and the existing services provided by United, SkyWest and Spirit under the 

current U.S.-Mexico aviation agreement. The Department has granted such extra-bilateral 

authority time and again in the past for U.S.-Mexico services:

 The Department used extra-bilateral authority to provide six U.S. and Mexican 

carriers with early utilization of codeshare opportunities covered by the 1999 U.S.-

Mexico air transport agreement. See Order 1999-6-6 (granting applications of 

American/Aero California, Delta/Aeromexico, and United/Mexicana). In so doing, 

the Department determined that the proposed services were “consistent with [the new 

U.S.-Mexico agreement], will use valuable rights for which the United States has 

exchanged valuable operating rights, and will expand the service options in the U.S.-

Mexico market.” Id. at 4 (internal citations omitted). The Department also found 

that “[t]he exercise of these rights will benefit travelers, shippers, businesses, cities, 

airlines, and airports, and grant of the authority is clearly in the public interest.” Id. 

 The Department has also used extra-bilateral authority with respect to U.S.-Mexico 

transborder operations several times in the past three years – to the benefit of 

Mexican carriers – allowing Volaris and Interjet to use Mexicana’s designations on 

12 separate routes: 

o Chicago-Monterrey and Los Angeles/Las Vegas-Mexico City. See Notice of 

Action Taken dated Jul. 12, 2011 in Docket DOT OST-2011-0117.

o Orlando-Mexico City. See Notice of Action Taken dated Jun. 21, 2012 in 

Docket DOT-OST-2012-0097.

o San Francisco/Denver-Mexico City. See Notice of Action Taken dated Jun. 

15, 2012 in Docket DOT-OST-2012-0083.

o San Antonio/New York/Miami-Mexico City. See Notice of Action Taken 

dated Aug. 31, 2011 in Docket DOT-OST-2011-0159.

o Las Vegas-Guadalajara and Chicago-Zacatecas. See Notice of Action Taken 

dated Aug. 24, 2011 in Docket DOT-OST-2011-0156.
Answer of United and SkyWest

Page 6 of 9

o Chicago-Mexico City. See Notice of Action Taken dated Aug. 25, 2011 in 

Docket DOT-OST-2011-0155.

The same rationale by which the Department used extra-bilateral authority to allow for 

early implementation codeshare opportunities under the 1999 U.S.-Mexico aviation agreement 

clearly applies here. And while United and SkyWest acknowledge that the extra-bilateral 

authority supporting the operations of Volaris and Interjet was granted when Mexicana was in 

bankruptcy and not operating, the fact remains that the U.S. and Mexican governments agreed 

(twelve different times) to help Mexican carriers during a unique situation in the history of U.S.-

Mexico aviation relations. Similarly faced with unique circumstances in the development of air 

services between both nations, the Department should once again exercise extra-bilateral 

authority to serve the public interest, and in this case to the benefit of U.S. carriers. United and 

SkyWest cannot think of any reason both the U.S. and Mexican governments would not see the 

merits of enhancing competition and preserving existing U.S. carriers’ services in the HoustonMexico City/San Jose del Cabo markets by allowing Southwest to operate alongside United, 

SkyWest and Spirit for just two and one-half months. 

Simply put, using extra-bilateral authority to allow Southwest to begin its proposed 

operations without disrupting existing United and/or United Express service options is “the best 

alternative on the table for consumers.” See Letter from Congressman Kevin Brady (TX-8) to 

Anthony Foxx, Sec’y, U.S. Dep’t of Transp. (Dec. 29, 2014), attached as Exhibit A. 

V. THE DEPARTMENT SHOULD NOT CONSIDER SOUTHWEST’S APPLICATION 

UNTIL SOUTHWEST HAS DEMONSTRATED THAT HOBBY WILL BE READY 

FOR INTERNATIONAL OPERATIONS BY OCTOBER 15, 2015

In addition to common startup issues related to new foreign scheduled service, 

Southwest’s proposed operations assume the on-time completion of the construction of the new 

$156 million Houston Hobby International Terminal, which includes five new gates and a new 
Answer of United and SkyWest

Page 7 of 9

Federal Inspection Services (FIS) facility. Concerns have also been voiced regarding availability 

of adequate CBP staffing and resources. See, e.g., Houston Will Need More Customs Agents, But 

Where’s the Money?, HOUSTON CHRONICLE (Mar. 6, 2013), available at 

http://www.chron.com/opinion/editorials/article/Houston-will-need-more-customs-agents-but4334369.php. Indeed, there is no certainty regarding the availability of CBP funding for October 

2015 – or any indication that those circumstances are about to change. See Consolidated and 

Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235; see also Press Release, The 

White House, Statement by the Press Secretary on H.R. 83 (Dec. 16, 2014) (announcing that the 

legislation provides full FY2015 appropriations through September 30, 2015 for all agencies 

except the Department of Homeland Security, for which funding has instead only been provided 

through February 27, 2015). Public reports indicate that the new HOU facility would require 20 

CBP Officers, 21 Houston Police Department (HPD) officers and three HPD sergeants, among 

other staffing requirements. See Houston Airport System, Houston Hobby International 

Terminal Project, FLY2HOUSTON (Jun. 14, 2014), available at 

http://www.fly2houston.com/0/3921751/0/83280/.

Fully training a new CBP Officer takes 9 to 12 months – after the Officer has passed 

extensive back-ground checks. It can also take several months to complete the transfer of CBP 

Officers between postings. Sourcing Officers from the field is also a time-consuming and 

difficult task, particularly when taking into consideration the already acute budgetary and 

staffing constraints at existing airport gateways across the country. United and SkyWest are not 

aware of any decision having been made on how and when to staff HOU to support Southwest’s 

proposed operations, or that would support stripping away an operator’s existing service rights.
Answer of United and SkyWest

Page 8 of 9

Houston Airport Systems Director Mario Diaz is on record stating that the city does not 

support staffing HOU to the degradation of service and passenger processing times at George 

Bush Intercontinental Airport (“IAH”): “That is not the right way to handle this. That does not 

make any sense. That would be a degradation of service at Intercontinental. It’s something 

we’re not going to tolerate.” Chris Moran, Southwest’s Plan at Hobby Could Slow Down Lines 

at Bush, HOUSTON CHRONICLE (May 24, 2012), available at

http://www.chron.com/news/houston-texas/article/Customs-staffing-remains-question-in-Hobby3584338.php. United and SkyWest thank Mr. Diaz for his candor on the matter, particularly 

given the positive growth trends experienced at IAH. To illustrate, IAH experienced a 

cumulative international passenger growth of approximately 15.0% (3.8 million passengers to 

4.4 million) from FY2009 to FY2013. See Houston Airport System, Statistical Report Fiscal 

Year 2013, FLY2HOUSTON, at 8, available at http://www.fly2houston.com/TrafficStats. That 

pattern of increasing passenger volume continued through the beginning of FY2014, with 

passenger growth increasing by 12.7% through June 2014 compared to the same period in 

FY2013. See Houston Airport System, Statistical Report Fiscal Year 2014, FLY2HOUSTON, at 8, 

available at http://www.fly2houston.com/TrafficStats. United and SkyWest do not contend that 

IAH’s growth should impact HOU, but rather highlight these important facts to demonstrate that 

there are reasonable concerns and questions as to how HOU can be adequately staffed by CBP 

by October 15, 2015. 

Unless and until Southwest can demonstrate that HOU’s new international facilities will 

be completed and fully staffed by Southwest’s proposed startup date, it would be reckless for the 

Department to consider eliminating existing consumer service options in the Houston-Mexico 

City/San Jose del Cabo markets. 
Answer of United and SkyWest

Page 9 of 9

VI. CONCLUSION

For the foregoing reasons, United urges the Department to grant Southwest extra-bilateral 

authority for Southwest to commence its proposed Houston-Mexico City/San Jose del Cabo 

operations and preserve the existing United mainline and SkyWest (d/b/a United Express)

regional jet services to the benefit of United’s customers, coworkers and communities. Doing so 

would enhance competition on these important U.S.-Mexico routes, further the intent of the new 

U.S.-Mexico air transport agreement, and serve the public interest. 

Respectfully submitted,

CROWELL & MORING LLP

____________________________

Gerald F. Murphy

Steven J. Seiden

gmurphy@crowell.com

sseiden@crowell.com

Counsel for

United Airlines, Inc. 

and SkyWest Airlines, Inc.

December 29, 2014
EXHIBIT A
	



 
CERTIFICATE OF SERVICE

I certify that I have this date served the foregoing document on the following persons in 

accordance with the Department’s Rules of Practice.

robert.wirick@aa.com

howard.kass@aa.com

nssparks@fedex.com

gbleopard@fedex.com

kevin.montgomery@polaraircargo.com

rpommer@atlasair.com

rsilverberg@sgbdc.com

jjohnson@sgbdc.com

msinick@ssd.com

stephen.lachter@cozen.com

robert.land@jetblue.com

jhill@cooley.com

perkmann@cooley.com

dkirstein@yklaw.com

jyoung@yklaw.com

bob.kneisley@wnco.com

leslie.abbott@wnco.com

pjackson@swapa.org

matwood@cozen.com

anita.mosner@hklaw.com

jennifer.nowak@hklaw.com

sascha.vanderbellen@delta.com

chris.walker@delta.com

robert.cohn@hoganlovells.com

patrick.rizzi@hoganlovells.com

thomas.ting@suncountry.com

john.varley@virginamerica.com

rbtrinder@zsrlaw.com

paul.gretch@dot.gov

brett.kruger@dot.gov

susan.kurland@dot.gov

brian.hedberg@dot.gov

reese.davidson@dot.gov

todd.homan@dot.gov

peter.irvine@dot.gov

cristinasa@state.gov

info@airlineinfo.com

__________________________________

Steven J. Seiden

December 29, 2014