BEFORE THE

FEDERAL AVIATION ADMINISTRATION

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

____________________________________

In the Matter of the Joint Petition of )

)

REPUBLIC AIRLINE INC. ) Docket No. FAA-2002-13734;

SHUTTLE AMERICA CORPORATION ) Exemption No. 7370G

)

For exemption from 14 C.F.R. Section 93.123 )

_____________________________________ )

JOINT ANSWER OF SOUTHWEST AIRLINES AND JETBLUE AIRWAYS

Ron Ricks James Hnat

 Executive Vice President -- Executive Vice President

 Chief Legal and Regulatory Officer JetBlue Airways Corporation

Mark Shaw 27-01 Queens Plaza North

 Vice President General Counsel & Long Island City, NY 11101

 Corporate Secretary

SOUTHWEST AIRLINES CO. Robert C. Land

2702 Love Field Drive Senior Vice President

Dallas, TX 75235-1611 JetBlue Airways Corporation

1212 New York Ave., N.W.

Robert W. Kneisley Suite 1212

 Associate General Counsel Washington, DC 20005

Leslie C. Abbott 

 Senior Attorney Jonathan B. Hill

SOUTHWEST AIRLINES CO. J. Parker Erkmann

919 18th Street, N.W. Cooley LLP

Suite 600 1299 Pennsylvania Ave., N.W.

Washington, DC 20006 Washington, DC 20004

bob.kneisley@wnco.com jhill@cooley.com

(202) 263-6284 perkmann@cooley.com

Counsel for JetBlue

Airways Corporation

January 27, 2014
1

BEFORE THE

FEDERAL AVIATION ADMINISTRATION

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

____________________________________

In the Matter of the Joint Petition of )

)

REPUBLIC AIRLINE INC. ) Docket No. FAA-2002-13734;

SHUTTLE AMERICA CORPORATION ) Exemption No. 7370G

)

For exemption from 14 C.F.R. Section 93.123 )

_____________________________________ )

JOINT ANSWER OF SOUTHWEST AIRLINES AND JETBLUE AIRWAYS

Southwest Airlines and JetBlue Airways submit this Joint Answer to the Joint 

Petition filed January 6, 2014 by Republic Airline and its corporate affiliate Shuttle 

America and the Amendment to the Joint Petition filed January 8, 2014 (the 

“Amendment”) filed by Republic and its affiliated carriers including Chautauqua 

Airlines.1 

The Joint Petition requests FAA approval, via either confirmation or an 

amendment, for Republic to transfer Exemption No. 7370 to Shuttle America, and, 

pursuant to the Amendment to Chautauqua, to allow Chautauqua, for the period from 

February 1st through March 1

st

, and thereafter, Shuttle America to provide service 

exclusively under the Delta Connection brand to Madison, Wisconsin (“MSN”). 

Republic‟s petition to the FAA is part of a broader, and improper, plan to use a total of 

four slot related exemptions on behalf of Delta Air Lines, under the Delta Connection 

brand. Three of these are slot slide exemptions for which Republic seeks DOT approval 

for their use by Shuttle America in contract service as a Delta Connection carrier (DOT 

 

1 Common names of carriers are used.
2

Dockets DOT-OST-1999-6240 and DOT-OST-2013-0086). Southwest and JetBlue 

have filed extensive papers in those dockets detailing why Republic‟s proposal violates 

the governing statutes for slot slides and Department precedent.

2

Similarly, the instant petition constitutes an improper de facto transfer of a slot 

exemption to Delta Air Lines, one of the largest slot holders at DCA. The proposed 

transfer is inconsistent with the original purpose of the exemption to enhance 

competition by new entrants and limited incumbents, and is not necessary in order for 

Delta to serve Madison if it wishes to do so. It should not be permitted.

I. Two Decades of Precedent Makes Clear that this “Braniff Exemption” is 

Intended Exclusively for the Benefit of New Entrant and Limited Incumbent 

Carriers. 

Exemption No. 7370 was originally issued to Midwest Express Airlines in 2000 

and subsequently transferred to Republic Airline when its parent Republic Airways 

Holdings Inc. acquired Midwest in 2009.

3

 This exemption was one of four so-called 

“Braniff exemptions” that were originally granted to America West Airlines in 1990 due 

to “unusual circumstances then facing that carrier.”4 America West, a new entrant 

carrier, had recently participated in a lottery for temporary slots at DCA in May 1989. 

When those slots were later recalled, rather than force America West to terminate its 

service at DCA, the FAA took advantage of the then available four exempted operations 

previously flown by Braniff Airways at DCA and awarded them to America West. In 

2000, authority to conduct one of the four operations was withdrawn from America West 

for non-use and then given by exemption to Midwest Express. FAA found Midwest‟s 

 

2

See Joint Answer (filed January 15, 2014) and Joint Sur-Reply (filed January 24, 2014) of Southwest Airlines and 

 JetBlue Airways in Dockets DOT-OST-1999-6240 and DOT-OST 2013-0086.

3

See Letter from Rebecca B. McPherson, Assistant Chief Counsel for Regulations, Oct. 30, 2009, in this docket. 

4 Grant of Exemption to AirTran Airways, Inc., Exemption No. 8112, Docket FAA-2003-14563, p. 2 (Aug. 14, 2003)

 (hereafter “AirTran Airways Exemption”).
3

application to be in the public interest because (a) “Midwest Express [was] the only 

carrier to express interest in obtaining this slot to augment its limited service at DCA” 

and (b) “Midwest Express [was] considered a limited incumbent carrier at DCA and that 

a grant of exemption in this case would not change that status.”

5

When America West ceased operations in April 2003, the FAA reallocated the 

remaining three Braniff slot exemptions to AirTran Airways over a competing application 

from Delta‟s wholly-owned subsidiary Comair on August 14, 2003.

6

 Since the FAA was 

faced with competing applications for these exemptions, it undertook a more rigorous 

and comprehensive analysis than for the unopposed Midwest award. 

Since safety was not an issue, the FAA applied its public interest standard, 

broadly defined, to determine which air carrier should receive the exemptions. In doing 

so, FAA specifically cited “the Department‟s policy of promoting competition in the 

airline industry consistent with former Section 102 of the Federal Aviation Act, which 

among other matters, allows the Secretary to „place maximum reliance on competitive 

market forces and on actual and potential competition‟ in determining what is „in the 

public interest and consistent with public convenience and necessity.‟” 49 U.S.C. § 

40101. The FAA also noted that:

Former Section 102 provides that the Secretary should consider as being 

in the public interest, „avoiding unreasonable industry concentration, 

excessive market domination, monopoly powers, and other conditions that 

would tend to allow at least one air carrier or foreign air carrier 

unreasonably to increase prices, reduce services, or exclude competition 

in air transportation.‟7 

 

5

Exemption No. 7370; FAA Regulatory Docket No. 30190, Oct. 19, 2000 (emphasis added).

6

See Letter from Kathryn B. Thomson, Chief Counsel, July 9, 2012, in this docket. Spirit Airlines also applied for the 

 exemptions but was not selected. 

7

AirTran Airways Exemption at 6, n. 9 (emphasis added).
4

Moreover, the FAA stated that “granting an exemption to a new entrant at DCA [was]

consistent with the rationale for awarding the slots to America West – allowing a carrier 

to maintain or achieve access to the airport.”8 

Similarly, in denying Comair‟s application for the slot exemptions, FAA found it 

relevant that “Delta/Comair/Delta Connection operates 147 slots at DCA [which] 

represents nearly 20 percent of all the slots at DCA.” The FAA went on to state that:

[E]ven without the available slot exemptions, it is obvious that Delta and 

Comair have adequate slots to commence the proposed service today; 

decisions on where to allocate resources are made by the carriers. The 

petitioner could serve the routes in question on a nonstop basis without 

any action by the FAA. 9

Similarly here, Delta “could serve the route in question on a nonstop basis without any 

action by the FAA.” In fact, Delta did serve the DCA-MSN route for many years until 

January 2012 when it voluntarily chose to discontinue service. 

Republic‟s proposal contravenes consistent FAA precedent that these slot 

exemptions are intended to enable new entrant and limited incumbent carriers to 

compete more effectively with larger DCA slot holders. But Shuttle 

America/Chautauqua are not proposing to use Exemption No. 7370 to provide

competition and options for consumers under their own brand or even Republic‟s brand. 

To the contrary, the benefit of the exemption would inure entirely to Delta, the largest 

airline in the world and the second largest DCA incumbent with a portfolio of more than 

100 slots. Shuttle America/Chautauqua will be nearly invisible to consumers, and the 

exemption will therefore do nothing to enhance competition. 

 

8

Id. at 6.

9

Id. 
5

Indeed, grant of this petition would transfer the exemption from a limited 

incumbent, low cost airline to a large incumbent legacy carrier. Delta would never 

qualify for the exemption in its own right, yet under Republic‟s proposal would receive 

the benefit of the exemption that was awarded to a limited incumbent at DCA to 

enhance its ability to compete with larger carriers. Such a transfer of this valuable and 

limited slot exemption would turn the original purpose of the exemption on its head and 

is inconsistent with two decades of DOT and FAA precedent.

II. Republic’s Proposal to Provide Service Exclusively Under the Delta Brand 

is Explicitly Prohibited by the Conditions Contained in the Exemption.

Republic‟s proposal to use Exemption No. 7370 to provide service that will be 

marketed, priced and distributed exclusively by Delta Air Lines as Delta Connection 

flights is a de facto transfer and as such contravenes the explicit language of the 

exemption itself. Specifically, Condition and Limitation No. 3 states: “The slot may be 

utilized only by Republic for a flight marketed under one of the Republic brands.”10 This 

requirement is unqualified. Not only must the exemption be operated by Republic but it 

also must be marketed by Republic or one of its brands, i.e., Shuttle America or 

Chautauqua. Moreover, Condition No. 5 of the exemption broadly prohibits any type of 

transfer:

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 provisions of 14 C.F.R. part 93, subparts K and S, including 

the slot usage requirement, except that the authority may not be sold, 

leased, or otherwise transferred.

11

In an attempt to circumvent these explicit prohibitions, Republic suggests that 

because Shuttle America has registered the trade name of “Delta Connection” with the 

 

10

 Exemption No. 7370G; Regulatory Docket No. FAA-2002-13734, p. 2, July 9, 2012 (emphasis added).

11

 Id. (Emphasis added). 
6

DOT under 14 C.F.R. Part 215, its Delta Connection service should be “considered 

„utilized... for a flight marketed under one of the Republic brands.”12 This argument is 

absurd. As the screen shot below shows clearly, from a consumer‟s perspective, 

Shuttle America, Chautauqua and Republic are all but invisible under Republic‟s 

proposal. Delta controls the marketing, distribution, and pricing of the DL code Delta 

Connection flight made possible with this slot exemption, and the service appears to be 

just another flight in Delta‟s already large DCA portfolio. 

 

12

 Joint Petition of Republic Airline Inc. and Shuttle America Corporation; Docket No. FAA-2002-13734, p. 5 (Jan. 6, 

 2014)(hereafter “Joint Petition”).
7

Republic‟s use of Exemption No. 7370 for the commercial benefit of Delta Air

Lines in this manner is flatly inconsistent with the conditions of the exemption itself 

prohibiting transfer. Accordingly, the FAA should deny Republic‟s petition and withdraw 

the slot exemption for non-use. 

III. Republic’s Request for the FAA to Waive the “Brand Condition” Would 

Undermine the Original Purpose of the Slot Exemption. 

In a tacit acknowledgement of the weakness of its arguments, Republic requests 

that if necessary FAA waive the “brand” condition or amend Exemption No. 7370 to 

authorize operations under the Delta Connection brand.13 Republic states that using 

this slot exemption to allow for the continuation of DCA-MSN service is a compelling 

public interest.14 This argument is irrelevant, as the merits of a particular route have no 

bearing on the grant of these specific slot exemptions. In the original reallocation of the 

Braniff slot exemptions, FAA stated explicitly that:

In granting the requested exemption under the unique circumstances of 

this case, however, the FAA cannot consider the specific route plans of 

the petitioners in determining where the public interest lies. As noted in 

the grant of exemption to America West, FAA decisions on slot allocation 

or exemption authority have never been predicated on route selection but 

rather on access by specific carriers to specific airports, in this case, 

DCA.15

Thus the public interest in this case is narrowly focused on providing access to DCA for 

small and limited incumbent carriers. Allowing Republic to transfer the benefits of this 

slot exemption to Delta does not satisfy this test and in fact contravenes it. Unlike an 

EAS or AIR-21 slot exemption proceeding, Republic‟s arguments about the importance 

of nonstop service to Madison, service to small communities, high load factors on the 

 

13

 Id. at 6.

14

 Id. at 6-7.

15

 Grant of Exemption to AirTran Airways, Inc. at p. 6, n. 9 (emphasis added).
8

route, and proposed new dual-class service are of no relevance in this case. 

Furthermore, Republic‟s argument that the transfer should be allowed because it 

has a small slot portfolio at DCA and without the exemption would have to discontinue 

service in this market is also specious. The Republic proposal will use the slot 

exemption entirely for the benefit of Delta Air Lines, so it is Delta‟s ample slot portfolio 

that is relevant here. 

IV. In Blatant Disregard of the FAA’s Authority, Republic and Delta Have 

Already Consummated the Exemption Transfer and are Selling the Service 

to the Public. 

Despite the FAA‟s exclusive authority over the use of these valuable slot 

exemptions, Republic and Delta have cut the FAA out of the process altogether. 

Without waiting for the comment period to close or the FAA to rule, Republic and Delta 

have brazenly gone ahead and effected the transfer of the slot exemption. As of Friday 

January 18, Delta loaded fares for the proposed DCA-MSN service -- fares that are 

more than 100% greater than those that were in effect for the same service offered by 

Republic16 – and has begun to sell tickets. The previous screen shot demonstrates that 

the service is already being held out to the public for sale, with no qualification that FAA 

approval has not been obtained. 

If the FAA were to allow the Republic/Delta plan to go forward, not only would the 

purpose of the slot exemptions be gutted but the agency‟s authority to administer them

will be undermined. The FAA should not condone such a direct disregard of its 

authority, and instead should ensure that these restricted exemptions fulfill their original 

purpose -- to allow new entrant and limited incumbent carriers to “maintain or achieve 

access to the airport” so that they may better compete with larger carriers. 

 

16

 Delta‟s $253 fare is an increase of approximately 220% from Republic‟s DCA-MSN fares, which averaged $115. 
9

~~~~~~~~~~~~~

Republic‟s unauthorized de facto transfer of Exemption No. 7370 to Delta as 

described above is inconsistent with the FAA‟s original finding of public interest,

prohibited by the explicit language of the exemption itself, and disrespectful of the 

agency‟s authority. For all of these reasons, we urge the FAA to reject Republic‟s Joint 

Petition. 

Respectfully submitted,

__________________ __________________

Robert W. Kneisley Jonathan B. Hill

Leslie C. Abbott J. Parker Erkmann

Southwest Airlines Co. Counsel for JetBlue 

Airways Corporation

January 27, 2014