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Updated: Thursday, August 7, 2008 7:59 AM


OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding - Instituting Order


New York/Newark-Cancun Combination Service Proceeding / Chicago-Cancun Combination Service Proceeding / Los Angeles-Puerto Vallarta Combination Service Proceeding / Los Angeles-San Jose del Cabo Combination Service Proceeding

Order 2005-12-18
OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding
OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding
OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding

OST-2005-22551 - Delta - Exemption - New York-Cancun
OST-2005-22579 - Jet Blue - Exemption - US-Cancun
OST-2005-22636 - USA 3000 - Exemption - Newark/Chicago-Cancun

OST-2005-22636 - USA 3000 - Exemption - Newark/Chicago-Cancun
OST-2005-22580 - Frontier - Exemption - Chicago (MDW)-Cancun
OST-2005-22767 - United - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta
OST-2005-22589 - Spirit - Exemption - Dallas-Ft. Worth/Chicago-Cancun

OST-2005-22620 - Delta - Exemption - Atlanta-Acapulco; Boston-Cancun; Los Angeles-Puerto Vallarta/San Jose del Cabo/Zihuatanejo; Washington, DC-Cancun
OST-2005-22767 - United - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta

OST-2005-22769 - America West d/b/a US Airways - Exemption - Los Angeles-San Jose del Cabo
OST-2005-22620 - Delta - Exemption - Atlanta-Acapulco; Boston-Cancun; Los Angeles-Puerto Vallarta/San Jose del Cabo/Zihuatanejo; Washington, DC-Cancun
OST-2005-22766 - ExpressJet - Designation - Los Angeles-San Jose del Cabo
OST-2005-22590 - Frontier - Exemption - Los Angeles-San Jose del Cabo
OST-2005-22767 - United - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta

Issued and Served December 29, 2005

Instituting Order - Bookmarked

By this order we institute proceedings to select one primary carrier and one backup carrier to provide direct carrier (own-aircraft), scheduled combination air services in the New York/Newark-Cancun, Chicago-Cancun, Los Angeles-Puerto Vallarta, and the Los Angeles-San Jose del Cabo markets, thereby implementing new rights available to US. carriers under the recently amended US.-Mexico aviation agreement.

We grant the motions to consolidate applications into the relevant proceedings as described in this instituting order, and we consolidate the applications for the four city-pair markets addressed in this instituting order into the four carrier selection cases described herein.

We grant the motion of Spirit Airlines, Inc. to withdraw its application for exemption authority to serve the Chicago-Cancun market and hereby dismiss that application.

Procedural Timetable:

Petition for Reconsideration: 1-4-06
Replies to Petitions for Reconsideration: 1-6-06
Supplements/Amendments to Applications: 1-10-06
Answers: 1-12-06
Replies: 1-17-06

By: Michael Reynolds



OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding
OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding
OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding

January 5, 2006

Answer of Delta Air Lines to Petition of Frontier Airlines

Delta does not oppose Frontier's request for a modification of the procedural schedule. While Delta favors expedition, the modest extension proposed by Frontier will not materially impact the timing of a final decision and will enable the carrier participants to present and critique proposals without undue burden on staffing and resources. Whatever procedural dates are adopted by the Department should apply to all of the above-captioned proceedings covered by Order 2005-12-18.

Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com



January 6, 2006

Reply of JetBlue Airways

JetBlue respectfully files this reply to oppose Frontier's request to modify the procedural schedule in the above-captioned and related dockets. JetBlue is ready, willing, and able to begin service within ninety days of a final order in this matter and believes that extending the Department's existing schedule would needlessly delay the issuance of such an order. The parties to this case were originally invited to file applications over three months ago and have had ample time to prepare for the Department's requests. As such, even a minor delay is unnecessary. JetBlue respectfully requests the Department deny Frontier's request and maintain its established schedule.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2725, jhill@dowlohnes.com



OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding
OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding
OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding

Served January 9, 2006

Notice Amending Procedural Schedule

By Order 2005-12-18, the Department instituted carrier selection proceedings for the four above-captioned U.S.-Mexico routes and established a uniform procedural schedule for the four proceedings. On January 4, 2006, Frontier Airlines, Inc. filed a timely petition with respect to the Chicago-Cancun and Los Angeles-San Jose del Cabo routes, asking that the Department reconsider and extend by approximately two and one-half weeks the procedural schedule set forth in the Order. Frontier notes that the Department’s instituting order established a short timetable that included a busy holiday period. The carrier does not view the limited extension it seeks as inconsistent with the Department’s goal, which Frontier supports, of conducting these proceedings on an expedited basis.

Delta Air Lines answered in support of Frontier’s petition but stated that any extension should apply to all four proceedings. United Air Lines filed a reply asserting a comparable position. ExpressJet Airlines filed an answer in the Los Angeles-San Jose del Cabo proceeding taking no position on the Frontier and Delta requests but urging extension of the time frame established in the Order for answers to application supplements and amendments, from two days to five to seven days. JetBlue Airways filed a reply objecting to Frontier’s request were it to be applied to the New York/Newark-Cancun proceeding and USA 3000 filed a reply objecting to Frontier’s request as to the Chicago-Cancun proceeding.

We will extend the procedural schedule as to each of the above named combination service proceedings, as follows: supplements/amendments to applications will be due no later than January 17, 2006; answers will be due no later than January 23, 2006; and replies will be due no later than January 27, 2006. We believe that this result reasonably accommodates the requests of certain of the parties for limited additional time in which to file, while preserving the Department’s stated objective of expedition. Persons entitled to petition the Department for review of the action set forth in this Notice under the Department’s regulations, 14 CFR 385.30, may file their petitions within two business days after the date of issuance of this Notice. This action was effective when taken, and the filing of a petition for review will not alter such effectiveness.

By: Paul Gretch



January 17, 2006

Supplemental Application of Delta Air Lines - Bookmarked

Delta is proposing daily nonstop service from JFK to Cancun, Mexico. Delta will utilize widebody B-767-300 aircraft configured with 252 seats during the six peak travel months to Cancun. DL-101, 103. During the off-peak and "rainy season" months, Delta will operate B-757-200 aircraft configured with 183 seats. DL-102, 104. Delta's strong presence at JFK and its unique capability to meet peak season demand for New York-Cancun service by operating large capacity aircraft are key attributes distinguishing Delta's proposal.

Delta's proposed nonstop schedules are provided at Exhibits DL-101 and DL-102. Delta intends to operate New York (JFK)-Cancun service on a year-round basis. During the six peak travel months to Cancun, Delta will utilize Boeing 767-300 aircraft configured with 24 first class seats and 228 coach seats, DL-103. During the off-peak months, Delta will utilize Boeing 757-200 aircraft configured with 22 first class seats and 161 coach seats. DL-104. With nearly 300,000 annual passengers, New York - Cancun is a huge local market, and Delta expects that its new nonstop service will benefit predominantly local passengers. Nonetheless, Delta has provided viable one-stop connecting schedules as requested by Order 2005-12-18. DL-201.

Delta intends to operate its proposed JFK-Cancun services with aircraft on hand in its existing fleet. As of January 1, 2006, Delta has 121 Boeing 757-200 and 24 Boeing 767-300 aircraft (not including Delta's long-haul 767-300ER fleet). Delta uses Boeing 757-200 aircraft on a variety of U.S. domestic and medium haul international routes to Latin America. See OAG, North America Edition (January, 2006). The 252 seat configuration B-767-300 aircraft Delta has proposed are also used on domestic and medium haul international routes (including Atlanta-Cancun).

Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com


January 17, 2006

Supplemental Application of JetBlue Airways for Certificate of Public Convenience and Necessity for Foreign Scheduled Air Transportation - Bookmarked

JetBlue will commence operations to Mexico on May 3, 2006, or within 90 days of a final order, whichever is later. In the event JetBlue is not selected as the primary carrier it will accept backup authority subject to the conditions set forth in the Order, although given the immense imbalance in the market structure that presently exists with code share and direct service to many Mexican markets, including Cancun, by both USA 3000 and Delta, JetBlue is confident that it should be selected as the primary carrier.

Unlike each of the other applicants for service in the market, JetBlue has no present service to Mexico.

JetBlue presently has 86 A-320 aircraft its fleet. JetBlue will take delivery of 16 new A-320s this year. Those aircraft are on firm order with delivery dates for four aircraft presently scheduled through March of 2006. The remaining aircraft scheduled for delivery in 2006 will be delivered at the rate of one to two aircraft a month through December. The aircraft will be financed through secured debt and lease financing sources. Aircraft necessary for the Cancun service will be taken from this new delivery stream. All aircraft will be compliant with FAR-36. JetBlue will apply to the Mexican government for operating authority once selected by DOT. Counsel in Mexico advises that both the license and exemption should be obtained within the 90 day startup period to be provided under the Order.

JetBlue's schedule, flight numbers, complete routings, including behind and beyond connections from JetBlue's focus city of New York (at JFK) for the proposed service is set forth in Exhibit 1. JetBlue offers one class of service with free DirecTV provided at each customer's seat The service will be offered seven days a week on a year round basis. Should demand indicate the need for additional frequencies, JetBlue has the ability, perhaps uniquely in the industry, to dedicate additional aircraft to the route, as may be needed, from the firm order aircraft described in paragraph 6 above. Low fare connecting service will initially be offered from Richmond, Boston, Burlington, Buffalo, Rochester and Syracuse. All of these cities presently have no scheduled nonstop or connecting low-fare service to Cancun. In addition, JetBlue will continue to add new destinations, many of which will connect to its JFK - Cancun route.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com



OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding

January 17, 2006

Supplement/Amendment to Application of USA 3000 - Bookmarked

By this Supplement/Amendment, USA 3000 hereby confirms its application for exemption authority and for designation in the New York/Newark-Cancun and Chicago-Cancun city-pairs:

Chicago(ORD)-Cancun - Daily:

Origin

Departs

Destination

Arrives

Chicago (ORD)

07:45 (# 544)

Cancun (CUN)

11:15

Cancun (CUN)

12:15 (#545)

Chicago (ORD)

15:55

 All flights Operated with Airbus A-320 (168 Pax) Aircraft Fuel Usage: 5,794 gallons/round-trip (average) Total Annual Fuel Usage: 2,114,810 gallons

Chicago(MDW)-Cancun - Daily:

Origin

Departs

Destination

Arrives

Chicago (MDW)

10:50 (# 000)

Cancun (CUN)

14:20

Cancun (CUN)

15:20 (# 000)

Chicago (MDW)

19:00

 All flights Operated with Airbus A-320 (142 Pax) / A-319 (130 Pax) Aircraft Fuel Usage: 5,495 gallons/round-trip (average) Total Annual Fuel Usage: 2,005,675 gallons

Newark-Cancun - Daily:

Origin

Departs

Destination

Arrives

Newark (EWR)

06:00 (# 206)

Cancun (CUN)

09:00

Cancun (CUN)

10:00 (#207)

Newark (EWR)

14:35

 Newark (EWR) ‑ Cancun Effective 02/04/06

Newark-Cancun - Daily, plus double-daily on Saturday & Sunday:

Origin

Departs

Destination

Arrives

Newark (EWR)

15:35 (# 356)

Cancun (CUN)

18:35

Cancun (CUN)

19:35 (# 3570)

Newark (EWR)

23:55

 All flights Operated with Airbus A-320 (168 Pax) Aircraft Fuel Usage: 5,735 gallons/round-trip (average) Total Annual Fuel Usage: 2.683,980 gallons

Counsel: Pierre Murphy, 202-776-3980, pmurphy@lopmurphy.com



January 20, 2006

Letters of Individual Support for JetBlue Airways



January 23, 2006

Letters of Individual Support of JetBlue


January 23, 2006

Answer of Delta Air Lines - Bookmarked

On the basis of the applications and supplements that have been submitted for New York/Newark - Cancun authority, Delta's proposal will produce the greatest public interest benefits, and best satisfies the Department's stated carrier selection criteria in this case. Delta is the only applicant proposing large capacity widebody aircraft that will optimize peak season service and competitive benefits for New York -Cancun Passengers. Delta's 252 seat Boeing-767-300 aircraft carry nearly 40 percent more passengers than the narrowbody Airbus equipment proposed JetBlue and USA 3000. Furthermore, Delta is proven international competitor at JFK with an established track record of U.S.-Mexico service and the demonstrated ability to effectively challenge American and Continental for New York-Cancun passengers.

Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com


Answer of JetBlue Airways - Bookmarked

As clearly demonstrated by comparing the original and suplemental fillings of JetBlue and the other applicants for this route, Delta and USA 3000, JetBlue is best qualified to provide this new service to Cancun. JetBlue is the only carrier applying for the New York-Cancun route that brings the unquestioned benefits of a low-fare carrier to the market. JetBlue, based at JFK, is the only truly new service proposed for this route and by far the most beneficial to the traveling public. JetBlue has the financial strength to start and sustain the Cancun service on a year-round basis. With its high quality customer service and low fares JetBlue will not only stimulate the market for the benefit of all potential passengers and other carriers already in the market (Delta and USA 3000), but approval of JetBlue's application will provide a new entrant into the Mexican/United States market that the other applicants already serve.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com


OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding

January 23, 2006

Answer of USA 3000 - Bookmarked

In light of the value of any CUN designation due to its limited entry nature, an important additional consideration should be the extent to which an applicant herein is currently using its existing valuable limited-entry CUN authority in other authorized city-pairs. USA 3000 submits that if an applicant is currently either not using or is under-utilizing any of the valuable CUN authority it already holds, then that applicant should not be awarded any additional CUN authority herein.

USA 3000 further submits that an important special additional consideration to be taken into account when considering which applicant herein is going to be best able to provide the services proposed, is the current situation in Cancun and the surrounding area. As the Department is aware, Cancun was hit by a devastating hurricane last October. Whereas many of the hotels on the Riviera Maya may have re-opened, a number of hotels in the main Cancun area where the bulk of the hotels are located have yet to re-open due to the damage. Consequently, there remains a significant shortage of hotel beds in the Cancun area, and many carriers have significantly curtailed, and in some cases suspended, their authorized CUN services from their U.S. gateways due to this lack of hotel rooms.

Due to USA 3000's total focus on the leisure market, USA 3000 has access to a sufficient number of hotel rooms in Cancun to satisfy the needs not only of its existing scheduled services to CUN, but also for the passengers who will be traveling on its scheduled services to CUN from MDW, ORD and EWR.

Counsel: Pierre Murphy, 202-776-3980, pmurphy@lopmurphy.com



January 25, 2006

Letters of Individual Support of JetBlue



January 26, 2006

Comments of Richmond Chamber of Commerce in Support of JetBlue

I strongly support your favorable consideration of this application and your timely decision on this matter. JetBlue is a thriving low fare airline. It operates hundreds of daily flights from its JFK focus city and will add Richmond, VA to its route system in March. I am confident that the RIC-JFK service will be a success and serve to significantly strengthen our local economy. I understand low fare connecting service will be available between RIC and Cancun over JFK.

By: RCC, James Dunn


January 26, 2006

Comments of Richmond International Airport in Support of JetBlue

The Commission strongly supports your favorable consideration of this application and your timely decision on this matter. JetBlue is a thriving low fare airline. It operates hundreds of daily flights from its JFK focus city and will add Richmond, VA to its route system in March. I am confident that the RIC-JFK service will be a success and serve to significantly strengthen our local economy. I understand low fare connecting service will be available between RIC and Cancun over JFK.

By: RIC, Jon Mathiasen



January 27, 2006

Reply of Delta Air Lines - Bookmarked

Delta should be selected for the third U.S. carrier designation on the New York-Cancun route. Delta will bring important new service and competitive benefits to the market, and Delta's large aircraft proposal is consistent with the Department's prior determinations in U.S.-Mexico designation cases that the level of capacity offered by the applicant is critical to maximizing public benefits.

Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com


January 27, 2006

Reply of JetBlue Airways - Bookmarked

Upon a review of the record in this proceeding, there is only one possible conclusion: only the selection of JetBlue will maximize the benefits to the traveling public between New York (and beyond) and Cancun. JetBlue's history indicates that its award winning customer service coupled with its everyday affordable fares will likely necessitate the need for additional growth beyond one daily roundtrip. JetBlue has the financial strength to not only sustain the proposed service but the aircraft available to provide expansion.

In contrast, an award to Delta or USA 3000 would be a waste of this important opportunity to introduce a new, financially strong, low fare carrier in the NYC-CUN and U.S.-Mexico markets. Delta's existing service to Mexico and Cancun is substantial. With its nonstop Cancun service from its hubs at Atlanta, Cincinnati and Salt Lake City, plus its newly awarded Boston-Cancun and Washington Dulles-Cancun (plus Comair's Cincinnati-Cancun to be sold exclusively as a Delta flight) route authorities, Delta already has extensive nonstop and connecting service to Cancun. When coupled with its code share service to Cancun via AeroMexico as well as its existing SkyTeam partner (Continental) flights to Cancun from New York, Delta hardly requires yet another route to Cancun, nor do its arguments in this proceeding merit one. Similarly, USA 3000 currently serves this market with its scheduled charter service. Its selection would add little to the market other than moving charter service to scheduled service with no prospect of overall growth in the market.

JetBlue, by contrast, has a very large, loyal and growing customer base in New York, and beyond, which has come to rely upon its expanding route network. Just as JetBlue expanded and liberated the San Juan and Aguadilla markets, to name just a few, from exorbitant fares, JetBlue seeks to do the same in the New York-Cancun market.

Counsel: JetBlue and Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com


OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding
OST-2005-23496 - Chicago-Cancun Combination Service Proceeding

January 27, 2006

Reply of USA 3000 - Bookmarked

USA 3000 submits that, based on its practice in similar prior proceedings, the principal decisional factor in these cases should be the level of capacity to be offered . As part of this analysis, however, the Department should also consider the likelihood of the proposed service actually being offered by a consideration of whether the applicant is currently making full use of its other Cancun authorities.

USA 3000 further submits that an important special additional consideration to be taken into account when considering which applicant herein is going to be best able to provide the services proposed, is the current situation in Cancun and the surrounding area. As the Department is aware, Cancun was hit by a devastating hurricane last October. Whereas many of the hotels on the Riviera Maya may have re-opened, a number of hotels in the main Cancun area where the bulk of the hotels are located have yet to re-open due to the damage. Consequently, there remains a significant shortage of hotel beds in the Cancun area, and many carriers have significantly curtailed, and in some cases suspended, their authorized CUN services from their U.S. gateways due to this lack of hotel rooms.

Due to USA 3000's total focus on the leisure market, USA 3000 has access to a sufficient number of hotel rooms in Cancun to satisfy the needs not only of its existing scheduled services to CUN, but also for the passengers who will be traveling on its scheduled services to CUN from MDW, ORD and EWR.

In applying these criteria to the applications herein, USA 3000 submits that its applications will result in the maximum usage of the authority available herein and will achieve maximum public benefit.

Counsel: Pierre Murphy, 202-776-3980, pmurphy@lopmurphy.com



Order 2006-6-25
OST-2005-23494 - New York/Newark-Cancun
OST-2005-23497 - Los Angeles-Puerto Vallarta
OST-2005-23498 - Los Angeles-San Jose del Cabo

Issued and Served June 21, 2006

Order to Show Cause - Bookmarked

By this order, we tentatively award (1) primary exemption authority to Delta Air Lines, Inc., and backup exemption authority to United Air Lines, Inc. in the captioned Los Angeles-Puerto Vallarta Combination Service Proceeding; (2) primary exemption authority to JetBlue Airways Corporation, and backup exemption authority to Delta in the captioned New York/Newark-Cancun Combination Service Proceeding; and (3) primary exemption authority to Frontier Airlines, Inc., and backup exemption authority to Delta in the captioned Los Angeles-San Jose del Cabo Combination Service Proceeding. We will afford interested parties ten calendar days from the service date of this order to file objections to our tentative decisions here, with answers to objections due seven calendar days thereafter.

By: Michael Reynolds



OST-2005-23494 - New York/Newark-Cancun
OST-2005-23498 - Los Angeles-San Jose del Cabo

July 3, 2006

Objections of Delta Air Lines - Bookmarked

The Mexico Order decision reflects an apparent fundamental bias against "legacy network carriers" if any so‑called "low‑cost" carrier ‑ defined to include any carrier that is not a "legacy" carrier ‑ presents a proposal for consideration. This bias results in awards to such carriers even when their proposals are obviously and objectively inferior to those proposed by the legacy carrier applicants. Such bias is both improper and ill‑advised and leads to unfair and arbitrary results, such as occurred in this proceeding.

Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com


OST-2005-23494 - New York/Newark-Cancun
OST-2005-23498 - Los Angeles-San Jose del Cabo
OST-2005-23497 - Los Angeles-Puerto Vallarta

July 3, 2006

Objection of United Air Lines

Given the Department's focus on the sustainability of service as a selection criteria, the evidence offered by United in the record and Delta's subsequent actions would alone have been a reasonable basis for an award to United; when coupled with the other, superior public benefits of United's proposal, an award to United is compelling. If the Department is serious about maximizing public benefits, including ensuring the maintenance of proposed Los Angeles‑Puerto Vallarta service, it should reverse its tentative decision and award the designation to United.

Alternatively, if the Department were to finalize the tentative award to Delta despite significant questions over the sincerity and sustainability of Delta's proposed daily, year-round service, the Department should condition that award on the continuous commence and maintain daily, year-round service as proposed, the designation should automatically transfer from Delta to United without further action of the Department. This would ensure the realization of significant public benefits as envisioned by the Department and prevent Delta from benefiting from any route case gamesmanship at the expense of the traveling public.

Counsel: United and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com



OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding
OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding
OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding

July 10, 2006

Answer of United Air Lines

In its objection, Delta harshly criticizes the awards to Frontier and JetBlue as being "fundamentally flawed, unsupportable by substantial evidence, internally inconsistent, arbitrary and capricious."

When the Department commits many of those same errors in Delta's favor in tentatively awarding it the Los Angeles-Puerto Vallarta authority notwithstanding United's superior proposal, however, Delta's criticism vanishes and is replaced by acknowledgement and appreciation. But Delta's inconsistency cannot hide what its own objections clearly highlight -- the Department's tentative award of Los Angeles-Puerto Vallarta authority to Delta is flawed, and the authority should be awarded to United.

It is clear from Delta's objection to the Department's award of two of the routes at issue that the Department's decision-making is seriously flawed. When the factors cited by Delta are applied to the tentative award to that carrier in the third market at issue (LAX-PVR), it becomes even clearer that the Department's analysis has migrated from the flawed to the capricious. By awarding one route each to Frontier, JetBlue and Delta (and the earlier award of Chicago-Cancun authority to United), the Department apparently hoped to make each carrier happy.

This approach may be politically correct but it short-changes the consumer as well as the carriers that have invested in the development of network services at hub airports such as United has done at Los Angeles. Moreover, as noted above, in this case the Department's approach of rationalizing awards that maximize the number of recipients is doubly unfair to United since it fails to give United credit for the Ted product in which it has also invested to offer low-fare services to leisure markets. The Department is using the Los Angeles- Puerto Vallarta route to reward Delta for its participation in this ease even though it is clear that Delta is far more interested in the New York-Cancun route. Los Angeles-Puerto Vallarta thus becomes a sort of consolation prize designed to compensate Delta for having lost what it really wanted - Cancun service from its JFK hub. But Delta has no meaningful network connections at Los Angeles comparable to United's hub. And United, like JetBlue and Frontier, offers services by a low-fare specialist carrier in the form of Ted. It is United, not Delta, which maximizes consumer benefits for Puerto Vallarta passengers from Los Angeles as well as from network points served by United at its hub. This is amply demonstrated by the fact that Los Angeles civic parties supported United, not Delta.

The Department should, for the additional reasons cited by Delta in its objections and discussed above, reconsider its tentative decision with respect to Los Angeles-Puerto Vallarta and award that route to United. In the alternative, as United suggested in its objection, the Department should condition an award to Delta on the continuous operation of daily, year-round service proposed by Delta for the full two-year term of Delta's exemption authority. If Delta fails to commence and maintain such service the designation should automatically transfer to United without further action by the Department.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com


OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding

July 10, 2006

Answer of jetBlue Airways to Delta's Objections to Show Cause Order 2006-6-25 - Bookmarked

Delta has offered no compelling reason for the Department to change its tentative award to JetBlue, which should be confirmed promptly by a final order.

In its Order, the Department correctly determined that JetBlue's proposal best serves the consumer in the New York-Cancun market. In so doing, the Department rejected Delta's application which was founded on benefits to Delta and not the traveling public. JetBlue is the only carrier that will bring the unquestioned benefits of a low-fare carrier to the market and connecting cities. JetBlue's proposal is the only truly new service proposed for this route, and the introduction of JetBlue's low fares and award-winning service is by far the most beneficial to the traveling public. As noted previously, Delta already has substantial service to Mexico and Cancun. With its own nonstop Cancun service from Atlanta, Boston, Cincinnati, Los Angeles, Salt Lake City, and Washington Dulles, in addition to code share and SkyTeam partner flights to Cancun, Delta hardly requires yet another route to Cancun.

In a well-reasoned and fully supported decision, the Department properly determined that JetBlue "will provide the most benefits to the traveling and shipping public and will maximize use of the bilateral rights available to U.S. carriers in the New York/Newark-Cancun market." The Department should promptly conclude this proceeding by issuing a final order confirming the award of New York-Cancun authority to JetBlue

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com



Order 2006-9-8
OST-2005-23494 - New York/Newark-Cancun Combination Service Proceeding
OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding
OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding

Issued and Served September 11, 2006

Final Order - Bookmarked

By this order, we make final our tentative findings and conclusions in Order 2006-6-25 to: (I) award primary exemption authority to Delta Air Lines, and backup exemption authority to United Air Lines in the captioned Los Angeles-Puerto a!lara Combination Service Proceeding; (2) award primary exemption authority to JetBlue Airways, and backup exemption authority to Delta in the captioned New York/Newark-Cancun Combination Service Proceeding; and (3) award primary exemption authority to Frontier Airlines, and backup exemption authority to Delta in the captioned Los Angeles-San Jose del Cabo Combination Service Proceeding.

By: Michael Reynolds



August 6, 2008

Application of jetBlue Airways for Renewal of Exemption

jetBlue files this Application for Renewal of Exemption to provide scheduled air service of persons, property and mail between New York, New York and Cancun, Mexico. By Order dated September 8, 2006 in Docket OST-2005-23494, issued on September 11, 2006, the Department granted jetBlue's original request, which was filed in Docket OST-2005-22579 on September 26, 2005. jetBlue requests that the renewal of its exemption authority be granted for a period of two years.

jetBlue operates these routes with Stage 3 compliant Airbus A320 aircraft. jetBlue's A-320 aircraft are configured to carry 156 customers.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000


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