BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

 

 ) 

DELTA/US AIRWAYS PETITION FOR ) 

WAIVER OF THE TERMS OF THE ORDER ) FAA-2010-0109

LIMITING SCHEDULED OPERATIONS ) 

AT LAGUARDIA AIRPORT ) 

 ____________________________________) 

RESPONSE OF SPIRIT AIRLINES, INC 

Communications with respect to this document should be sent to: 

Joanne W. Young 

David M. Kirstein 

Kirstein & Young, PLLC 

1750 K Street, N.W. 

Suite 200 

Washington, D.C. 20006 

(202) 331-3348 (telephone) 

(202) 331-3933 (facsimile) 

Attorneys for 

SPIRIT AIRLINES, INC. 

June 24, 2011 
BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

 

 ) 

DELTA/US AIRWAYS PETITION FOR ) 

WAIVER OF THE TERMS OF THE ORDER ) FAA-2010-0109

LIMITING SCHEDULED OPERATIONS ) 

AT LAGUARDIA AIRPORT ) 

 ____________________________________) 

RESPONSE OF SPIRIT AIRLINES, INC 

________________________________________________

INTRODUCTION

 Spirit Airlines, Inc. (“Spirit”) files this Response to the Petition for Waiver and Other 

Relief (the “Petition”) filed by Delta Airlines and U.S. Airways (the “Joint Applicants”) on 

May 23, 2011 renewing their request for a waiver from certain restrictions to the LaGuardia 

Interim Order.1

 Approval of the Petition would allow US Airways to transfer 265 operating 

authorities (“slots”) it holds at LaGuardia Airport to Delta, in exchange for 84 slots held by 

Delta at Reagan National Airport and other assets.2 In mitigation of competition concerns 

created by this transfer, the Joint Applicants agree to divest up to 32 slots at LGA and up to 

16 slots at DCA in a DOT approved process. 

 Spirit does not oppose the approval of this transfer subject to the stated divestment of 

slots. However, Spirit urges the DOT to adopt a divestment process whereby the FAA would 

withdraw the slots from the Joint Applicants and reallocate them to the low-fare incumbents 

 

1

 Petition for Waiver and Other Relief, FAA-2010-0109 (May 23, 2011). [hereinafter, Petition] 2

 The term “slots” is used to apply both to slots at DCA and to “operating authorizations” at LGA. 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 2 of 13 

currently operating with fewer than five (5) percent of the slots at these airports (“limited 

incumbents”), rather than through an auction process whereby eligible carriers were required 

to purchase the slots from the Joint Applicants as included in the FAA’s May 2010 Order.

3

 

 Significantly, the Joint Applicants have not sought payment for the surrendered slots. 

Rather in their current waiver petition, they voluntarily agree to divest slots without requiring 

or even asking for payment.4

 This is entirely consistent with their agreement prior to the 

FAA’s May 2010 Order to give away 4.5 slot pairs at DCA and 15 slot pairs at LGA to 

certain limited incumbents.5

 Even if the Joint Applicants had requested payment, authorizing them to sell the 

divested slots would directly contradict the prohibition of sale of operating authorities at 

LaGuardia and, importantly, the Department’s own Deregulation mandate.6 Under the 

policies contained in the Airline Deregulation Act as codified at 49 U.S.C. § 40101 (a)(9), 

(a)(10), (a)(12), and (a)(13), in carrying out its regulatory authority the Department is 

required to consider as in the public interest: 

(9) preventing unfair, deceptive, predatory, or anticompetitive practices

in air transportation. 

(10) 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. 

 (12) encouraging, developing, and maintaining an air transportation 

system relying on actual and potential competition— 

 (A) to provide efficiency, innovation, and low prices; and 

 

3 See Order, Notice on Petition for Waiver of the Terms of the Order Limiting Scheduled Operations at 

LaGuardia Airport, 75 FR 26322 at 26336-38 (May 11, 2010) [hereinafter May 2010 Order] 4 Petition at 1. 5

 Rebuttal Comments of Delta Airlines and U.S. Airways, FAA-2010-0109, at 2 (April 5, 2010). If the 

proposed transaction had been approved, Spirit was to receive 5 LGA slots for free. It is believed the other low 

fare carriers were offered substantially the same deal. 

6

 Notice of Order on Operating Limitations at New York LaGuardia Airport, 71 FR 77854, 77857 (Dec. 27, 

2006). 49 U.S.C. § 40101(a). 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 3 of 13 

 (B) to decide on the variety and quality of, and determine prices 

 for, air transportation services. 

(13) encouraging entry into air transportation markets by new and 

existing air carriers and the continued strengthening of small air 

carriers to ensure a more effective and competitive airline industry. 

The Joint Applicants received these slots without charge from the Department. Accordingly, 

only fairness coupled with the mandates of the Airline Deregulation Act require that the low 

cost carriers receive them without charge as well. The Joint Applicants are prohibited from 

selling the LGA operating authorities under the LGA Interim Order, and the FAA has failed 

to articulate any rational basis for changing its well-reasoned decision that these operating 

authorities are not property interests which cannot be bought or sold 1 Id. The law is clear 

that “[a]n agency’s view of what is in the public interest may change, either with or without a 

change in circumstances. But an agency changing its course must supply a reasoned 

analysis.” Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (1970) (emphasis 

added). Moreover, the LaGuardia Interim Order has yet to be replaced by a long term 

solution. Thus, any slots purchased by low fare carriers could be lost when the Order is 

replaced by a new rule. 

 Importantly, the net effect of the underlying transaction is to markedly increase the 

Joint Applicants’ dominance at these two airports, where effective competition is already 

severely encumbered by slot restrictions. Requiring small carriers to further pad the pockets 

of these dominant airlines flies in the face of the Department’s Deregulation mandate to 

encourage and strengthen low cost carriers. As the FAA correctly asserted in the May 2010 

Order, “[s]lots do not represent a property right but represent an operating privilege subject 

to absolute FAA control.”7

 In the case of the LGA operating authorities, allowing the Joint 

 

7

 14 C.F.R. § 93.223(a). 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 4 of 13 

Applicants to sell these slots would be inequitable, as other airlines are not given the same 

privilege. Accordingly, the FAA should not authorize the Joint Applicants to reap further 

financial benefits from these slots, at the expense of low fare carriers and, importantly, the 

price-sensitive consumers they serve. 

 In order to best serve the public interest, Spirit proposes that the FAA bundle the slots 

into sets of usable pairs, and distribute them to the eligible limited incumbents (those U.S. 

airlines having fewer than five percent of the slot allocations at each airport, namely Spirit, 

Frontier, JetBlue, and Southwest/AirTran) for domestic service. The slots should be grouped 

into four bundles of four slot pairs each at LaGuardia, and four bundles of two slot pairs each 

at Reagan. If a limited incumbent cannot use all the slots allocated after a reasonable start up 

period, the FAA could make those available by lottery to another qualified limited 

incumbent. This approach will ensure the divested slots are fairly allocated in a manner 

sufficient to protect consumers from the anti-competitive effects of the underlying transfer 

and will best promote the use of these slots and thus the availability of low-fare competitive 

alternatives in these key markets, as required by the Airline Deregulation Act. 

I. BACKGROUND 

As the FAA correctly explained in its Notice of February 18, 2009, in the more than 

30 years since airline deregulation, efforts to promote competition at LGA and DCA have 

been unsuccessful. Spirit began its quest for LGA slots in the early 1990s. Given the High 

Density Rule imposed by the FAA in 1969, obtaining slots for new entrants since passage of 

the Airline Deregulation Act in 1978 has proven extraordinarily difficult. Significantly, it 

was only through Congressional intervention in the Wendell H. Ford Aviation Investment and 

Reform Act for the 21st Century (AIR-21) in 2000, which required DOT/FAA to issue 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 5 of 13 

exemptions to new entrants to ensure they could have 20 slots, that Spirit and other new 

entrants were able to provide even minimal service at LGA.8

 In the almost 10 years since it 

obtained AIR-21 slots, despite diligent efforts, Spirit has been unable to obtain through 

purchase or lease an adequate number of slots to efficiently increase service at LGA. 

 That same AIR 21 legislation enabled the legacy carriers to add unlimited service to 

small-hub and non-hub airports using aircraft with fewer than 71 seats. Immediately, the 

large carriers through their regional affiliates applied for 548 slots, of which Delta and US 

Airways accounted for 346 or a whopping 63% of the slots, promising a capacity disaster at 

LGA.

9

 Ultimately, the legacy carriers were able to operate 200 additional daily flights. It 

was this avalanche of small aircraft service which created the capacity crisis that has plagued 

LGA for the last decade. Again, the legacy carriers paid absolutely nothing for these 

valuable slots and have been able to use them since for whatever service they wish. 

In accordance with the Deregulation mandates, Spirit and other limited incumbents 

who only gained entrance to LGA through AIR-21 should be given these divested slots, 

without compensation to the Joint Applicants, so that they may efficiently increase the level 

of competition at these two airports. As the FAA correctly recognized, with a sufficient 

number of slots these low-fare carriers will be able to “establish sustainable patterns of 

service” and provide important consumer benefits by substantially increasing the ability of 

passengers to choose between carriers with differing business models and range of fares 

offered the traveling public.10 

 

8 See, Public Law 106-181, 114 Stat. 61, Section 231 adding a new provision 49 USC §41716(b). 9

 See DOT, Order 2000-9-18, September 21, 2000 at 11. 10 Notice, Petition for Waiver of the Terms of the Order Limiting Scheduled Operations at LaGuardia Airport, 

75 FR 7306, 7310-7311 (Feb. 18, 2010) [hereinafter, Feb. 2010 Notice]. 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 6 of 13 

Spirit is the country’s leading Ultra Low Cost Carrier (“Ultra LCC”) and maintains 

consistently very low fares, offering an average system-wide fare of less than $8011, which is 

substantially less than any other airline. Significantly, at LGA, Spirit’s 2010 average fares 

were approximately 18 percent below JetBlue, 15 percent below AirTran and at least 35 

percent below the average fares charged by any of the legacy carriers. Spirit’s ability to act 

as an Ultra LCC provides an invaluable public service, as it extends the benefits of flying to 

those particularly price-sensitive consumers who might not otherwise be able to afford to 

travel at all. In these depressed economic times, it is particularly important that the FAA 

support the interests of Spirit and other low-cost carriers. Small businesses and lowerincome consumers are dependant on these airlines to stay connected to an increasingly 

globalized economy. 

 Spirit currently holds only 22 slots at LGA, which it uses for flights to Detroit, Myrtle 

Beach and Fort Lauderdale, and 10 slots at DCA for flights it uses to and from Fort 

Lauderdale.12 From Fort Lauderdale, passengers from LGA and DCA are able to connect to 

Spirit’s Caribbean and Latin American network and to other points such as Atlanta, Orlando 

and Tampa. Providing Spirit with access to additional slots at LGA and DCA will enable 

new low-fare service that particularly benefits the Latino and Caribbean communities who 

need to travel between these two cities and Spirit’s Caribbean and Central/South America 

destinations for business and to visit family. 

II. DISTRIBUTING THE DIVESTED SLOTS WITHOUT CHARGE BEST 

SERVES THE PUBLIC INTEREST 

 The slot divestiture process should be structured to maximize benefits to consumers. 

 

11 Average fare data is for full year 2010. 

12 Spirit also operates a flight to and from Myrtle Beach outside the controlled period. 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 7 of 13 

Spirit strongly agrees with the recent Comments of JetBlue that the Joint Applicants should 

not have discretion to select the recipients of these slots.13 Additionally, the slots should be 

allocated in a manner that gives the carriers that have successfully offered low fare service, 

despite very limited slots, and that are most likely to have a beneficial competitive impact at 

LGA and DCA, an equal opportunity to expand. Spirit believes the divestiture procedure 

proposed by the FAA in the May 2010 Order is completely inadequate to achieve this end. 

A. Requiring Limited Incumbents to Purchase the Slots is Anti-Consumer and 

Provides a Windfall to the Joint Applicants

 Spirit strongly disagrees with the FAA’s prior proposal to allow Delta and U.S. 

Airways to sell the LGA and DCA slots and retain the profits in order to to “monetize their 

interests.”14 This proposed result is contrary to Congressional intent and Congress’ 

mandate that the Department of Transportation and the FAA provide limited incumbents 

slots at no cost. It is also inconsistent with FAA’s specific decision that the airlines do not 

have any financial or security interest in operating authorizations at LGA. Unless the FAA 

requires the carriers to return the LGA and DCA slots to the FAA without compensation, the 

result will be a financial windfall to Delta and US Airways at the expense of low fare 

carriers and the public they serve. 

 Importantly, in a Notice of Order on Operating Limitations at New York LaGuardia 

Airport, 71 FR 77854, issued December 27, 2007, the FAA specifically prohibited the 

permanent sale, purchase or transfer of Operating Authorizations. The FAA stated that: 

Carriers and other persons have long known that any rights 

held under the slot rules would end on December 31, 2006. 

The statutory termination date for the slot rules has meant 

that all financial and security interests in slots will 

 

13 Comments of JetBlue Airways Corporation, FAA-2010-0109, at 2 (June 14, 2011). 

14 Id. at 7311. 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 8 of 13 

inevitably end on that date, so no one could have 

reasonably expected that existing business and financial 

arrangements based on the slot rules could continue after 

this year.15 

Accordingly, any payment to the Joint Applicants would be a complete windfall in violation 

of current FAA requirements. 

 The FAA earlier claimed that it wished to allow the Joint Applicants to “maximize 

the value of their slot interests as originally intended as part of the larger transaction.”16 

However, the Joint Applicants are obtaining a huge and unfair benefit from the transaction. 

Given their prior willingness to release these slots for free,17 their decision to go forward 

clearly is not based on receiving payment for the released slots. Accordingly, given the 

negative impact on the public interest, it is unclear why the FAA would see this as a needed, 

let alone important, aspect of the larger transaction. 

 Forcing low-fare carriers to purchase the slots will needlessly result in higher fares 

for passengers, either because the winning bidders must recoup the amount they paid for the 

slots given the thin margins on which they operate to keep fares low or because the lowest 

cost carrier could not bid successfully for enough slots to compete, ultimately undermining 

the public interest and harming consumers during a time of economic hardship. Clearly, to 

allow Delta or US Airways now to be paid for slots they acquired for free from the federal 

government would be inequitable and contrary to the Deregulation mandate and policy that 

Congress, DOT and the FAA have pursued for the last 16 years to promote competition at 

these airports. 

 

 

15 Notice of Order on Operating Limitations at New York LaGuardia Airport, 71 FR 77854, 77857 (December 

27, 2007). 

16 Id. 17 Supra note 7. 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 9 of 13 

B. The Proposed Auction Method Would Grossly Disadvantage Spirit.

 Spirit currently has the highest gate utilization of any carrier operating at LGA which 

helps it to keep its fares as low as possible. However, as stated in previous comments, 

although Spirit provides great value to customers and its flights are consistently full, it would 

effectively be blocked from acquiring any slots at LGA or DCA in an auction method of 

distribution.18 Spirit is far smaller than any of the other carriers that would likely be seeking 

slots. In terms of 2010 total revenue, Spirit is 80% smaller than JetBlue and 95% smaller 

than the merged Southwest/AirTran. While Spirit’s ability to stimulate traffic is very strong, 

Spirit is simply not in a position to compete on an equal basis in a bidding war with carriers 

like Southwest/AirTran or JetBlue. Importantly, neither of those carriers caters to the market 

segment which Spirit serves and neither would offer the kind of fare choice Spirit is able to 

provide. 

 Distributing the slots to the currently operating limited incumbents would ensure that 

each limited incumbent carrier will obtain new slots, which will benefit the public interest by 

promoting a variety of service options, while ensuring those carriers with the greatest 

likelihood of effectively competing in these markets can increase service.19 The auction 

method proposed by the FAA easily could result in one carrier with the “deepest pockets” 

acquiring all the available slots - leaving the remaining low-fare carriers without the slots 

necessary to respond to the very anticompetitive practices the FAA seeks to prevent. 

 In its prior May 2010 Order, the Department proposed that divested slots be 

auctioned off in bundles, four LGA bundles and two DCA bundles, to limited incumbents 

and new entrants. In an attempt to “prevent any one carrier from acquiring all divested 

 

18 Rebuttal Comments of Spirit Airlines Inc., FAA-2010-0109 at 8 (April 5, 2010). 

19 49 U.S.C. § 40101(a). 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 10 of 13 

slots,” the FAA limited eligible carriers to purchasing only one slot bundle, “except at the 

seller’s option.”20 The FAA was correct to recognize that allowing all the slots to go to one 

carrier would not serve the public interest; however, the exception completely undermines

this objective. 

 Giving the seller the option to sell more than one bundle to any carrier produces the 

same result as if there were no restrictions on the number of bundles purchased per carrier. 

In its proposal, the FAA intended to forward to the selling carriers any bids that were higher 

than the “winning” bid but were disregarded because the bidder had already won a prior 

auction. The selling carrier would than have the choice to sell the slot bundle to either the 

“winning” bidder or the bidder who submitted the highest bid. It is highly likely the Joint 

Applicants will always choose the highest bidder, making it almost a certainty that one 

carrier (Southwest) will acquire all the slots. We cannot envision a more anticompetitive 

process. 

III. THE DISTRIBUTION SHOULD BE RESTRICTED TO LIMITED

INCUMBENTS AS DEFINED IN THE MAY 2010 ORDER

 Slots should be transferred only to low-fare limited incumbent carriers at these two 

airports,21 rather than to new entrants. In order to effectively compete with the Joint 

Applicants at these slot constrained airports, carriers must possess enough slot interests to 

establish sustainable patterns of service.

22 The FAA quite correctly recognized that, 

without sufficient slots to defend “against increasingly dominant competitors,” Delta and US 

Airways “with the benefit of additional slot interests, could pursue anticompetitive 

 

20 Id. at 26337. 21 AirTran/Southwest and Spirit at DCA and AirTran/Southwest, JetBlue, and Spirit at LGA. February 2010 

Notice, 75 FR 7306, 7311. 

22 Id. 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 11 of 13 

 

strategies,” and force more efficient low-fare carriers with diverse business models from their 

markets.”23 We emphasize that the FAA’s prior Notice states that carriers with fewer than 

five percent of the total slot holdings at LGA and DCA, do not have the “minimum level of 

competitive service sufficient to affect pricing in the market.”24 Accordingly, a new entrant 

acquiring a bundle of four or fewer slot pairs will have great difficulty maintaining a 

sufficient and sustainable level of service and even less of a beneficial competitive effect on 

pricing. Conversely, granting four slot pairs to limited incumbent carriers at LGA and two 

slots pairs at DCA will enable them to more effectively utilize their current slots and have a 

greater impact on competition. 

 In a perfect world, Spirit agrees with the FAA that it would be desirable to also make 

slots available to new entrants. However, as the FAA recognized, by proposing the 

withdrawal of slots from US Airways and Delta, the proposed slot swap creates a serious 

threat to the important competition created and promised by low-fare carriers currently 

serving LGA. Providing slots to these carriers, which in the case of Spirit and 

AirTran/Southwest have operated at LGA for many years, is the surest way to preserve and 

enhance domestic competition. 

 JetBlue’s proposal, made in its recent comments regarding the Joint Applicants 

Petition, to restrict the eligible class of limited incumbents to those carriers with fewer than 

20 slots at DCA or LGA should not be adopted.25 This self-serving proposal would leave 

only JetBlue and Frontier eligible at LGA, and JetBlue and Spirit at DCA. The FAA was 

correct to restrict allocation of the divested slots to carriers with less than five percent of the 

23 February 2010 Notice, 75 FR 7306, 7310. 

24 Id. 25 Comments of JetBlue Airways Corporation, FAA-2010-0109, at 5 (June 14, 2011). 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 12 of 13 

total slot holdings at each airport. Defining a limited incumbent according to percent of 

holdings at each airport better serves the public interest given that the low fare carriers have 

all already found their service and ability to compete severely limited by the slots they 

currently operate. Importantly, JetBlue’s proposal would lead to great inequity among 

carriers with similar slot holdings at each airport. Spirit, for example, has only 3 slots more 

than Frontier at LGA - 22 and 19, respectively - yet under JetBlue’s proposal, Spirit would be 

blocked from acquiring any new slots at all while Frontier could acquire enough to surpass 

Spirit in slot holdings at LGA. JetBlue’s proposal, for which it offers no particular economic 

or competitive justification, is nothing more than a thinly-veiled attempt to curb Spirit’s LGA 

presence, which would especially and adversely affect pricing for consumers flying the highvolume New York-Florida routes on which these two carriers compete. 

CONCLUSION 

 The surrendered slots should be allocated so that low-fare carriers can operate an 

efficient level of service at LGA and DCA and thus reach the very price-sensitive public to 

which they especially cater. There is absolutely no reason, given the Deregulation mandate 

to strengthen smaller carriers, the abolition of the high density rule at LGA, the huge number 

of slots acquired from the government by US Airways and Delta at no cost following the 

AIR-21 legislation, and the explicit notice by the FAA that after December 31, 2006 the 

operating authorizations at LGA would have no value, that these legacy carriers should now 

be permitted to sell these slots. Similarly these carriers should not be compensated for slots 

released at DCA. Distributing the slots to the limited incumbent carriers identified by the 

FAA in its first notice will produce the greatest public good by ensuring the slots go to the 

parties with the greatest motivation and ability to use them effectively to serve the public 
Response of Spirit Airlines, Inc 

FAA Docket 2010-0109 

Page 13 of 13 

interest. 

For the above reasons, Spirit requests that, if the FAA approves the transaction upon 

the condition that the Joint Applicants divest 16 slot pairs at LGA and 8 slot pairs at DCA, 

these slots be distributed as proposed herein by the FAA to the limited incumbent low-fare 

carriers. 

 Respectfully submitted, 

 

 __________________________ 

 Joanne W. Young 

 David M. Kirstein 

 Kirstein & Young PLLC 

 1750 K Street N.W. 

 Suite 200 

 Washington, D.C. 20006 

 (202) 331-3348 (telephone) 

 (202) 331-3933 (facsimile) 

 

 Attorneys for 

 SPIRIT AIRLINES, INC. 

June 24, 2011 
CERTIFICATE OF SERVICE

 I hereby certify that, on June 24, 2011, I served a copy of the foregoing Response of 

Spirit Airlines via electronic mail upon the following persons: 

Howard_kass@usairways.com

sascha.vanderbellen@delta.com

 _______________________________ 

 Lyndsey Grunewald