OST-99-5532 / Baton Rouge Airport / High Density Rule

OST-99-5532 / Baton Rouge Airport / High Density Rule - Chicago O'Hare / April 12, 1999

Application of

GREATER BATON ROUGE AIRPORT DISTRICT / DocketOST-99-5532

for exemption from 14 CFR Pant 93, Subparts K and S. under 49 U.S.C.§ 41714 to allow nonstop service to Chicago O'Hare International Airport

APPLICATION OF THE GREATER BATON ROUGE

AIRPORT DISTRICT FOR EXEMPTION SLOTS AT CHICAGO O'HARE

The Greater Baton Rouge Airport District respectfully requests, pursuant to 49 U.S.C. § 41714, that the Department grant it four exemption slots so that the community may obtain nonstop regional jet service between Baton Rouge Metropolitan Airport, Louisiana and Chicago O'Hare International Airport, Illinois. Baton Rouge currently does not have nonstop service, or even single-plane service to Chicago. The award of four exemption slots will provide Baton Rouge the means to attract a carrier to fill the service void to Chicago. Such service will benefit the approximately 1,286,000 residents in the Baton Rouge community and the communities within Baton Rouge Metropolitan Airport's catchment area, i.e., Alexandria, Lake Charles and Lafayette. See Exhibit 1.

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(greater Rouge Airport District understands that as of June 1, 1993, American Eagle Airlines, Inc. will terminate its nonstop service between Shreveport, Louisiana and Chicago O'Hare. As a result, the four exemption slots used for that service will be released for reallocation by the Department. American Eagle has advised Greater Baton Rouge Airport District that it would operate nonstop regional jet service, using Stage 3 aircraft, between Baton Rouge and Chicago, if the community can obtain the necessary exemption slots. Baton Rouge contends that it should be awarded the four exemption slots presently being used by American Eagle to operate nonstop service between Chicago and Shreveport, so that the residents of Louisiana may continue to have convenient access to the worldwide air travel network for which Chicago O'Hare is a primary connecting hub.

Approval of Greater Baton Rouge Airport District's application is consistent with Congressional intent "that the Department enable increased access to O'Hare for small and medium-sized communities," Order 96-10-42, October 28, 1996, p. 1. On March 16, 1999, the Department awarded exemption slots directly to the communities of Greenville/Spartanburg, South Carolina and Savannah, Georgia/Hilton Head, South Carolina to be used for nonstop services between those cities and Chicago O'Hare. Order 99-3-12. The Department's decision was based, in part, on its policy to use its exemption authority to produce substantial transportation benefits by filling service voids in small and medium-sized markets. Greater Baton Rouge Airport District respectfully submits that similar transportation benefits will be produced by an award of O'Hare exemption slots to Baton Rouge. In short, nonstop Baton Rouge-Chicago O'Hare service will bring important new competition to a market

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dominated by one carrier, /1 with significant benefits to the public in service, quality and fare options.

The need for nonstop service to Chicago from Baton Rouge is clear. Baton Rouge does not have either nonstop or single-plane service to Chicago O'Hare. As a result of connecting service only, the average passenger itinerary from Baton Rouge to Chicago is 1,028 miles versus 810 miles nonstop, a 27% circuitous routing. Most of Baton Rouge's traffic to Chicago presently connects through Houston, Dallas/Ft. Worth or Atlanta. Studies have shown that a significant number of Baton Rouge air travelers are forced to use New Orleans' airport, because of the inconvenient service to Chicago offered at Baton Rouge. Accordingly, the introduction of nonstop service to Chicago will provide the communities within the Baton Rouge catchment area with significantly more convenient service.

Baton Rouge requires access to major markets in order to continue its economic growth. In order to provide its businesses with the opportunities and tools to compete in the worldwide marketplace, and thereby create jobs and obtain economic investment, Baton Rouge must be able to offer convenient air transportation options to large business markets. While Baton Rouge's air service development efforts can solidify its service to most U.S. domestic markets, it cannot obtain service at Chicago O'Hare unless the Department grants its slot exemption application.

The service void to Chicago O'Hare has without question damaged Baton Rouge's and the Southern Louisiana region's economic growth potential.

1/ Delta Air Lines controls 57% of total traffic from Baton Rouge Metropolitan Airport. Other major carriers include Continental Express and Northwest Airlines with 18% and 15% of traffic, respectively.

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However, lack of convenient access to Chicago, the Midwest's primary connecting hub, strong business ties have developed between Chicago and Baton Rouge. For instance, Bank One Corporation, which is headquartered in Chicago, recently acquired four banks located within the Baton Rouge catchment area -- (city National Bank (Baton Rouge), First National Bank of Lafayette, First National Bank of Lake Charles, and Rapides Bank (Alexandria) -- for which regular travel between the Baton Rouge area and Chicago is required. Additional companies headquartered in Chicago that require substantial travel to Chicago include Liquid Carbonic Chemical Corp., Shurfine Grocery Products, and Sears. Other major companies that routinely travel between Baton Rouge and Chicago include Albemarle Corporation and T.J. Moran Investments Group (Ruth's Chris Steak House).

Baton Rouge-Chicago O'Hare nonstop service would be operationally and financially feasible, and presents a unique opportunity for the Department to maximize the benefits provided to medium-sized markets through slot exemptions. As noted above, American Eagle, although terminating its Shreveport-Chicago O'Hare service, has advised Baton Rouge that it is willing to operate the service with regional jet aircraft. The Baton Rouge market is almost two and one-half times greater than Shreveport in both leading air travel indicators - total effective buying income and population. See Exhibit 2. Accordingly, Baton Rouge is a much more attractive market than Shreveport and Shreveport's inability to sustain a nonstop service to Chicago O'Hare should not be considered a negative factor.

Chicago ranks as Baton Rouge's 4th largest O&D market without nonstop service, and its 7th largest overall O&D market. Even without nonstop or single

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plane Chicago service, Baton Rouge's annual O&D traffic for the year ended June 1938 totaled 20,450 passengers. Moreover, the annual O&D traffic figure almost doubles to 39,030 passengers when taking into account the entire Baton

Rouge catchment area - ranking as Chicago O'Hare's 5th largest market without nonstop or roundtrip single-plane service. See Exhibit 3.

The Baton Rouge community has taken proactive steps to attract and retain new air service. The Baton Rouge Metropolitan Airport is a modern and well-equipped airport serving over 950,000 annual passengers. Air service is provided by Delta, Continental Express, Northwest, American Eagle, and Casino Air. Nonstop destinations include Atlanta, Dallas/Ft. Worth, Houston, Memphis, Birmingham, Mobile and Jackson (latter outbound service only). The airport is completing major improvements through its $61 million BTR Terminal

Development Program. Terminal improvements include a new rotunda opening in December 1999, which will result in a total of seven jet/regional jet gates and two commuter gates, with provision for two additional jet/regional jet gates. Furthermore, the airport recently opened a new three-level parking structure with enhanced roadway access underway and a 50,000 square foot air cargo facility under design, which makes Baton Rouge's renovated passenger terminal facilities comparable to the finest airports.

WHEREFORE, the Greater Baton Rouge Airport District requests the award of four Chicago O'Hare exemption slots, which are presently allocated to American Eagle's Shreveport-Chicago O'Hare service and which will be returned to the Department for reallocation effective June 1, 1999. The Baton Rouge community would use such slots to attract a carrier to operate nonstop regional jet service to Chicago O'Hare International Airport.

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Respectfully submitted,

Baton Rouge Metropolitan Airport

April 12, 1999