OST-99-5532 / Ost-99-5533 / Baton Rouge / Huntsville / / High Density Rule - Chicago O'Hare / Answer of United Air Lines / April 27, 1999
Application of
GREATER BATON ROUGE AIRPORT DISTRICT /
Docket OST-99-5532for exemption from 14 CFR Part 93, Subparts K and S, under 49 U.S.C. §41714 to allow nonstop service to Chicago O'Hare International Airport
Application of
HUNTSVILLE-MADISON COUNTY AIRPORT AUTHORITY /
Docket OST-99-5533for exemption from 14 CFR Part 93, Subparts K and S, under 49 U.S.C. §41714 for nonstop service to Chicago O'Hare
CONSOLIDATED ANSWER OF UNITED AIR LINES, INC.
United Air Lines, Inc. ("United") submits the following consolidated answer to the above-captioned applications of the Greater Baton Rouge Airport District (hereafter "Baton Rouge") and the Huntsville-Madison County Airport Authority (hereafter "Huntsville").
1. By their applications, Baton Rouge and Huntsville each seek four exemption slots "to attract a carrier to fill the service void to Chicago." United well understands the desire of
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communities that lack nonstop service to Chicago to secure exemption slots at O'Hare to enable a carrier to provide such service. Nonstop, service to Chicago is important to communities the size of Baton, Rouge and Huntsville both because of the access it makes available to Chicago, the principal business center in the Midwest, and because of the access it affords to other communities throughout the U.S. and the world through the global networks United and other carriers operate at O'Hare. For that reason, United has worked closely with the several independent commuter carriers that operate under the "United Express" servicemark, and 'with numerous local communities, to assist those carriers in adding additional underserved communities to the United Express network at O'Hare.
Even though United has strongly supported the efforts by eligible new entrant commuter carriers to add United Express service at O'Hare, it has reluctantly been forced to oppose applications such as those filed in these dockets by Baton Rouge and Huntsville where the slot request is filed by the community itself, rather than by an eligible new entrant carrier that is willing to serve the community. As United has already explained in detail in these other dockets, the award of exemption slots directly to communities is unsound as a matter of policy and inconsistent with the terms of the statute. See,, e.g., United's filings in Dockets
OST-98-3603 (Savannah/Hilton Head),
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OST-98-4604 (Virginia Peninsula), OST-98-5130 (Greenville/ Spartanburg) and OST-99-5475 (Sioux City). United continues to believe that the service needs; of communities such as Baton Rouge and Huntsville can be best addressed through cooperation between an eligible carrier and the community rather than through abdication of the Federal government's role by awarding slots directly to a community.
2. In their applications, both Baton Rouge and Huntsville rely upon the Department's decision in Order 99-3-12. However, the Department makes abundantly clear in that Order that it was awarding slots to communities as "a one-time test to enable [DOT] to observe the extent to which the availability of slot exemptions assists non-airline parties in addressing their transportation needs." Order 99-3-12 at 3. The Department particularly emphasized in the order that it was limiting the experiment "in number and duration." Id. at 7. United appreciates that the Department adopted this experimental approach as a means of exploring appropriate responses to the extraordinarily difficult situation of slot controlled airports and in the context of its ""expectation that Congress will soon be considering various proposals to liberalize the slot regime at O'Hare." Order 99-3-12 at 3. United believes that the Department's experiment with "community" slots should remain just that -- an experiment limited to the awards made in Order 99-3-12
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for the period of 179 days only. See attached letter restating United's position on the award of slots to communities.
3. Contrary to Baton Rouge's characterization in its application, applications for slot exemptions by communities are not an inevitable result or even a logical conclusion of the federal government's effort to increase access of small nonhub communities to O'Hare. By Order 96-10-42, the Department requested "proposals from carriers interested in providing air service between smaller communities (nonhubs) and Chicago O'Hare Airport." Order 96-10-42 at 1 (emphasis added). That Order states that Congress, by means of the slot exemption provisions, directed the Department "to ensure that an air carrier has sufficient operational authority at the high-density airport to provide the required service. Id. (emphasis added). The goal for the Department of enabling "increased access to O'Hare for small- and medium-sized communities," as expressed in the Congressional report on 1997 Department appropriations, did not require, suggest or even contemplate that the Department entertain applications-from communities. See Order 96-10-42 and Appendix A thereto.
4. As noted above, United has already set forth its position on the legal and policy implications of slot exemption awards to communities and adopts those arguments by reference
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here. The Department did not address these arguments when it issued slot exemptions to communities in Order 99-3-12, and these arguments remain equally valid today. As United has previously noted, one of the reasons it opposed the award of slot exemptions to communities was the likelihood of that action being viewed by other communities as an invitation for seeking slots on their own and creating an environment in which political pressure would build to award exemption slots not on the basis of marketplace economics but rather as a matter of political expediency. /1
5. United's objections to any continuation or expansion of the Department's '"experiment" with community slots is heightened by the particular circumstances of these applications. Huntsville informs the Department that its application for "community slots" is part of a larger scheme. As Huntsville explains it, American Eagle will, as of June 1, 1999 terminate nonstop service between Montgomery and O'Hare, "thereby releasing four exemption slots for reallocation by the Department." Huntsville goes on to state the American Eagle has advised it that American Eagle would operate regional jet service, using Stage 3 aircraft, "between Huntsville and Chicago O'Hare, in the
1/ United's prediction now seems to be coming true. In addition to these applications and the applications of the Virginia Peninsula parties and Sioux City, there are now also pending applications by Charleston County and Mobile as well as an application by Savannah for additional slots.
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event that Huntsville is successful in securing exemption slots." Application of Huntsville at 2. (emphasis added). Baton Rouge makes the same report. As Baton Rouge explains it, American Eagle will, as of June 1, 1999 terminate nonstop service between Shreveport and O'Hare, and that "[a]s a result, the four exemption slots used for that service will be released for reallocation by the Department." American Eagle has advised Baton Rouge that American Eagle would operate regional jet service, using Stage 3 aircraft, "between Baton Rouge and Chicago, if the community can obtain the necessary exemption slots." Application of Baton Rouge at 2. (emphasis added).
6. The scheme described in these applications does not warrant extension or expansion of the Department's "experiment" with community slots. When the Department granted American Eagle the Shreveport and Montgomery slots, they were specifically linked to service to Shreveport and Montgomery. See Order 98-421 at 1-2 ("grant of these exemptions . . . is conditioned on their being used solely to provide . . . scheduled nonstop frequencies with regional jet aircraft between O'Hare and [Duluth, Fayetteville, Montgomery and Shreveport]"). /2
2/ In fact, the exemption slots were for EAS points and not for the service to Duluth, Fayetteville, Montgomery and Shreveport, which, as explained below, calls into question the basic assumptions of Baton Rogue and Huntsville that exemption
(continued...)
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The slots used by American Eagle for Shreveport and Montgomery are not only specially restricted for use only in those markets, they are also linked inexorably to EAS operations to three other communities whose service the Department is committed to maintain and improve. In awarding the specially restricted Shreveport and Montgomery slots to American Eagle, the Department specifically noted the limited nature of the award: "we will tag the slot exemptions for use only in the designated markets," Order 98-4-21 at 16, and asserted that the recipients would not "be at liberty to use the slot exemptions for any purpose whatsoever other than as explicitly conditioned in this Order." Id. The exemption slots were awarded not to serve Shreveport and Montgomery but to serve enumerated EAS points. The Department, thus, awarded American Eagle exemption slots:
to conduct 16 flight operations a day (departures or arrivals) at Chicago O'Hare Airport during the slot-controlled hours of 6:45 a.m. to 9:15 p.m. . . . [and] to be used only to provide Essential Air Service operations, comparable in quality to existing services, between Chicago O'Hare Airport and the cities of Bloomington, IL, Champaign, IL, and La Crosse, WI, and only to the extent that [American Eagle] performs an equal number of flight operations during the slot-controlled hours each day with regional jet aircraft: between Chicago O'Hare Airport and
2/ (... continued)
slots will be available as of June 1, 1999.
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the cities of Duluth, MN, Fayetteville, AR, Montgomery, AL, and Shreveport, LA.
Order 98-4-21 at 23 (Ordering paragraph no. 4)
In enlarging the number of exemption slots from 16 to 18 in a subsequent Order on Reconsideration, the Department reiterated this special restriction:
The Department grants, in part, the petition for reconsideration of American Eagle, by increasing from 16 to 18 the number of flight operations (departures or arrivals) that American Eagle may operate each day at Chicago O'Hare Airport during the slot-controlled period of 6:45 a.m. to 9:15 p.m. pursuant to the exemption from 14 CFR Part 93, Subparts K and S, granted in
Order 98-9-24 at 7 (Ordering paragraph no. 1). In its attempt to accommodate the needs of Duluth, Fayetteville, Montgomery and Shreveport (which are not EAS points) and its attempt to protect and maintain service to the EAS points of Bloomington, Champaign and La Crosse, the Department adopted this complex formula because "American Eagle does not meet the definition of a new entrant carrier, and thus does not qualify for slot exemptions
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under Section 41714 (c) Order 98-4-21 at 16. /3 The Department, therefore, awarded American Eagle its exemption slots under Section 41714(a) which limits their use to EAS points. /4
7. American Eagle, without being officially involved in the community slot transactions Baton Rogue and Huntsville describe, appears to believe it can use those transactions to escape from the conditions under which the Department directed that American Eagle could hold slots for only a particular, specified purpose. As noted above, American Eagle's exemption slots are tagged for EAS service at specified points. American Eagle appears to have enlisted the assistance of Baton Rouge and Huntsville in a plan to evade the restrictions of Order 98-4-21 requiring American Eagle to use to exemption slots to serve these specific EAS points. The Department should not allow American Eagle to pervert an already dubious "slot swap" into an even more questionable "slot shuffle." The Department was only willing to allow American Eagle to receive exemption slots for purposes of EAS services and that condition should continue to apply no
3/ The Department also held that in addition to the "substantial number" of O'Hare slots American Eagle (then Simmons) held itself, its corporate relationship with American was significant "[a]s a legal matter" for purposes of the High Density Rule, which "unequivocally treats corporately related carriers as one." Order 98-4-21 at 16.
4/ United argued that the award of slots to American under §41714(a) was inconsistent with that statute but the Department never fully addressed that argument.
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matter what the Department may decide to do to remedy American Eagle's default in its service obligations at Shreveport and Montgomery.
8. As United has emphasized to the Department (see attached letter), it believes awarding slots to communities rather than to carriers is fraught with potential dangers, destroys the traditional motivation for cooperation between carriers and communities and increases the likelihood that the mandates of political expediency rather than those of the marketplace will guide slot exemption proceedings. These applications and -the special nature of the existing slot awards that have inspired these applications are compelling proof that "experiments" that depend on a contortion of the statute are fraught with potential danger, no matter how worthy the intentions of the experimenters.
9. For all of the foregoing reasons, United respectfully suggests that the Department has no alternative but to deny these applications.
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Respectfully submitted,
BRUCE H. RABINOVITZ
CONSTANCE O'KEEFE
KIRKLAND & ELLIS
655 Fifteenth Street, NW
Washington, DC 20005
(202) 879-5116
Counsel for UNITED AIR LINES, INC.
DATED: April 27, 1999