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Updated: Wednesday, February 6, 2008 9:33 AM


OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding - Instituting Order


OST-2008-0023 - United's Los Angeles-San Jose del Cabo Application


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-2005-23496 - Chicago-Cancun Combination Service Proceeding
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-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding
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

January 4, 2006

Petition for Reconsideration of Frontier Airlines

Frontier Airlines, Inc. hereby asks the Department of Transportation to reconsider the procedural schedule set forth in Order 2005-12-18 so that additional time is available to submit "Supplements/Amendments to Applications", "Answers", and "Replies." Frontier agrees that this proceeding should be handled in an expedited timetable, however, the timetable set forth in this Order is not only short but included time between the busy holiday week at the end of December and beginning of January. At the same time, there are other proceedings at the Department that need to be addressed.

In order to ensure that all parties have time to file all needed information that will allow the Department to make appropriate and timely decisions, Frontier asks the Department to amend the procedural schedule as follows:

Supplements/Amendments to Applications January 20, 2006
Answers January 27, 2006
Replies February 3, 2006

This would add approximately 2.5 weeks to the schedule. By adopting this modified schedule, the Department will provide each carrier with ample opportunity to respond and will help ensure that the record is complete. It would still allow the Department to award the authorities in time for initiation of services in the spring/summer seasons.

Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.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

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

Answer of ExpressJet Airlines

Frontier has asked the Department to extend the due dates in this proceeding to require supplements and amendments to applications January 20, answers January 27 and replies February 3, and Delta has suggested that the same procedural dates apply to all proceedings instituted by Order 2005-12-18.

ExpressJet takes no position on the Frontier or Delta requests other than to urge the Department to allow five to seven days for answers to the supplemented and amended applications. The two days originally allotted for answers to the amended and supplemented applications, which may well change significantly from the original applications submitted by the parties, was too short a period and may have deprived the parties of their rights to due process, although ExpressJet remains prepared to comply with the original procedural dates.

Counsel: Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.com


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-2005-22767 - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta

January 6, 2006

Reply of United Air Lines

United hereby replies to the Petition for Reconsideration of Frontier, dated January 4, 2006. In its Petition, Frontier requests that the Department reconsider the procedural schedule set forth in Order 2005-12-18 with regard to two contested routes, Chicago-Cancun and Los Angeles-San Jose del Cabo, to allow additional time for the submission of the required pleadings. If granted, Frontier's request would add approximately two and one-half weeks to the procedural schedule set by the Department.

United has pending applications for three contested routes which are subject to the procedural schedule set forth by the Department in the Order 2005-12-18: Chicago-Cancun, Los Angeles-San Jose del Cabo, and Los Angeles-Puerto Vallarta. Frontier is proposing to change the schedule of two of those while leaving the third (Los Angeles-Puerto Vallarta) unchanged.

United has no objection to the request of Frontier with respect to the Chicago-Cancun and Los Angeles-San Jose del Cabo proceedings. Should the Department, however, now decide to grant Frontier's request and push back the procedural schedule with respect to those two proceedings, it should do so the same for Los Angeles-Puerto Vallarta. There is no reason to treat the Los Angeles-Puerto Vallarta proceeding different in this respect.

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

Withdrawal of Application

On October 17, 2005, America West Airlines, Inc. d/b/a US Airways applied for an exemption to provide scheduled air transportation of persons, property and mail between Los Angeles, California and San Jose del Cabo, Mexico. On December 29, 2005, the Department issued Order 2005-12-18 establishing Combination Service Proceedings for the above referenced route.

In light of current market conditions, America West has decided to withdraw its Application for an Exemption to serve the Los Angeles-San Jose del Cabo market.

Counsel: US Airways, Howard Kass, 703-872-5230, howard_kass@usairways.com


OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding
OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding

January 17, 2006

Supplemental Application of Delta Air Lines - Bookmarked

Delta's proposed nonstop schedules are provided at Exhibits DL-101 and DL-102. Delta intends to operate Los Angeles (LAX)-San Jose del Cabo and LAX-Puerto Vallarta service on a year-round basis using Boeing 737-800 aircraft configured with 16 first class seats and 134 coach seats. DL-103. 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, 202.

Delta intends to operate its proposed Los Angeles-Mexico services with aircraft on hand in its existing fleet. Delta has 71 Boeing 737-800 aircraft. Delta uses Boeing 737-800 aircraft on a variety of U.S. domestic and medium haul international routes to Latin America.

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


OST-2005-22766 - Designation - Los Angeles-San Jose del Cabo
OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding

January 17, 2006

Amended/Supplemental Application of ExpressJet Airlines for Designation - Bookmarked

In accordance with Order 2005-12-18, as modified by the Department's Notice Amending Procedural Schedule served January 9, 2006, ExpressJet Airlines, Inc. d/b/a Continental Express amends and supplements its application as follows:

Continental Express holds blanket U.S.-Mexico exemption authority for operations with its 50-seat aircraft and therefore does not require specific Los Angeles-San Jose del Cabo exemption authority, as the other applicants do. Since Order 2005-12-18 says applicants "should ensure that their submissions include requests both for exemption authority and for designation," however, Continental Express supplements its application for a designation to request Los Angeles-San Jose del Cabo exemption authority to the extent necessary to conform with the requirements of Order 2005-12-18.

Continental Express indicated in its application for a designation that it would institute service within 90 days of an award of Los Angeles-San Jose del Cabo authority, and Continental Express still intends to do so. If the Department grants the Continental Express request for a designation prior to March 1, 2006, Continental Express intends to institute Los Angeles-San Jose del Cabo service on June 1, 2006. Since the precise date Continental Express will institute service will vary depending on when the Department reaches its final decision in this proceeding, Continental Express asks that it be authorized to institute service by June 1, 2006, or within 90 days of the Department's award, whichever is later.

Counsel: Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.com


OST-2005-22767 - United - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta
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 17, 2006

Amended and Supplemental Information of United Air Lines - Bookmarked

On October 17, 2005, United applied for exemption authority and designations to operate year-round services, inter alia, between Chicago-Cancun, Los Angeles-San Jose del Cabo, and Los Angeles-Puerto Vallarta. United plans to operate its Chicago-Cancun service twice daily during the peak season and daily during the off-peak, beginning April 2, 2006. United plans to operate its Los Angeles-San Jose del Cabo and Los Angeles-Puerto Vallarta services daily during the peak season and twice weekly service during the off-peaks' beginning April 2, 2006 for Los Angeles-San Jose del Cabo, and May 4, 2006 for Los Angeles-Puerto Vallarta.

This is an increase in the number of peak and off-peak frequencies United originally proposed (11 peak and 7 off-peak), as reflected in Order 2005-12-18. If awarded a designation in time to commence Chicago-Cancun service on April 2, 2006, United will begin with nine frequencies (seven operated as "Ted" and two as mainline).

United will operate all 14 peak season Chicago-Cancun frequencies and all seven of its off-peak frequencies using its "Ted" product. United will operate all seven of its peak season Los Angeles-San Jose del Cabo and Los Angeles-Puerto Vallarta frequencies using its "Ted" product, and its two off-peak Los Angeles-San Jose del Cabo and Los Angeles-Puerto Vallarta frequencies using mainline service.

All "Ted" service will be operated with A320 aircraft with 156 seats in an all-economy configuration (including Economy Plus) currently in United's fleet. All mainline service will be operated with A320 aircraft with 12 first class and 126 economy seats currently in United's fleet.

The "Ted" product was developed specifically for leisure markets such as Cancun, Puerto Vallarta and San Jose del Cabo, where its low‑fare service has been well received by consumers. Because of its success, United is expanding "Ted" service to more leisure markets in 2006, and would like Chicago‑Cancun, Los Angeles‑San Jose del Cabo and Los Angeles‑Puerto Vallarta to be among those.

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



January 17, 2006

Supplemental Application of Frontier Airlines for an Exemption

Frontier hereby applies for a two-year exemption from 49 U.S.C. § 41101 and any other provision of the Department's rules to the extent necessary to engage in scheduled foreign air transportation of persons, property, and mail between Los Angeles, California and San Jose del Cabo, Mexico with services beginning in the second quarter of 2006.

Frontier is fit, willing, and able to perform the U.S.-Mexico services proposed herein using Airbus A-319-111 aircraft, with an average seat configuration of 132 seats, which are currently in Frontier's fleet. Frontier reserves the right to serve this route with other aircraft from its fleet.

Flight Number #77 #78
Equipment Airbus A319 Airbus A319
Seats 132 132
Frequency Daily (year round) Daily (year round)
From LAX SJD
Departure Time 0710 1115
To SJD LAX
Arrival Time 1030 1245
Elapsed Flight Time 2:20 2:30

Counsel: Frontier and Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.com



OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding
OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding

January 23, 2006

Answer of Delta Air Lines

Delta hereby answers in opposition to the applications of United, Frontier, and Express Jet in the above-captioned proceeding. All four carriers have sought authority between Los Angeles and San Jose del Cabo. In addition, Delta and United have sought authority for Los Angeles-Puerto Vallarta. Only Delta has proposed daily, year-round mainline service to both destinations, and would best satisfy the Department's objective "to maximize public benefits."

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


January 23, 2006

Answer of ExpressJet Airlines - Bookmarked

If imitation is indeed the most sincere form of flattery, ExpressJet Airlines, Inc. d/b/a Continental Express is flattered that each of the other applicants has belatedly decided to imitate Continental Express's proposal to offer daily year-round service between Los Angeles and San Jose del Cabo. If another applicant were awarded Los Angeles-San Jose del Cabo authority based on its recently-adopted proposal for daily service, it would operate thousands of empty seats on the route, particularly during off-peak seasons, and waste thousands of gallons of precious fuel operating aircraft too large for the market with at least five nonstop competitors serving it. For this reason, the Department should be very skeptical of the other applicants' proposals and should award authority to Continental Express, which originated the concept of daily year-round service, will offer a meaningful alternative to current service and is the only applicant that can provide year-round daily nonstop service on an economic basis.

Counsel: Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.com


January 23, 2006

Answer of Frontier Airlines

Frontier will operate the LAX-SJD service on a daily basis and will focus on the local Los Angeles market. It will not offer connecting service. While the two incumbent carriers in the LAX-SJD market and the other carriers seeking this authority will utilize connecting traffic to build the market, Frontier believes that the market will support the service and that demand will expand with the introduction of low-fares.

Frontier Airlines is the leading low-fare carrier serving Mexico and is the only low-fare carrier applying for this authority. If awarded the route, Frontier would bring critical low-fare options to travelers for the LAX-SJD market and would be the first carrier to provide low-fare service to any Mexico market from LAX. Moreover, as it has done in markets it currently serves (i.e., non-stop Cancun service from Denver, Salt Lake City, Kansas City, St. Louis, Indianapolis, and Nashville), Frontier will stimulate overall growth in the LAX-SJD market by all operators. Additional Service in U.S.-Mexico Markets.

Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.com


OST-2005-22767 - United Air Lines - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta
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 23, 2006

Answer of United Air Lines - Bookmarked

United plans to use its low fare "Ted" product in all three markets for which it has applied. "Ted" was designed specifically for price-sensitive leisure destinations like Cancun, Puerto Vallarta and San Jose dell Cabo. By using "Ted" from its hubs, United provides not only low-fare service but also online connections to points throughout United's global network. Not surprisingly, "Ted" has been a tremendous success, and its burgeoning popularity has led to rapid growth. Since its inception in February 2004, "Ted" has spread to eight U,S.-Mexico markets, including service from various U.S. points to Cancun, Puerto Vallarta and San Jose del Cabo, and as just announced, "Ted" will add a ninth U,S.-Mexico market in December 2006 (Chicago-Puerto Vallarta).

By expanding "Ted" to the Chicago-Cancun, Los Angeles-Puerto Vallarta and Los Angeles-San Jose del Cabo markets, only United will bring both new low fare and network competition to those markets. These services would generate significant public benefits, more than any of the other applicants can offer.

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



OST-2005-22767 - United Air Lines - Exemption - Chicago-Cancun; Los Angeles-San Jose del Cabo; Chicago-Puerto Vallarta; Los Angeles-Puerto Vallarta
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 24, 2006

United Errata Notice

United Air Lines, Inc. hereby notifies the Department that it has discovered two typographical errors in the Answer of United filed on January 23, 2006, in the above referenced dockets. In footnote 21, at page 11 of the Answer, the word "Cancun" should be "Puerto Vallarta," and, in footnote 25, at page 13, the word "Cancun" should be "San Jose del Cabo."

Counsel: Wilmer Hale, Jonathan Moss, 202-683-6655



OST-2005-23497 - Los Angeles-Puerto Vallarta Combination Service Proceeding
OST-2005-23498 - Los Angeles-San Jose del Cabo Combination Service Proceeding

January 27, 2006

Reply of Delta Air Lines - Bookmarked

Delta will produce superior public benefits to any other applicant on each of the Los Angeles-San Jose del Cabo and Los Angeles-Puerto Vallarta routes. Delta's daily year-round schedules, combined with the most new capacity on the subject routes make it the leading contender for an award.

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


January 27, 2006

Reply of ExpressJet Airlines

The answers submitted in this proceeding demonstrate why ExpressJet Airlines, Inc. d/b/a Continental Express should be selected over Delta, Frontier and United for the Los Angeles-San Jose del Cabo route. Although each of the other applicants has belatedly recognized the importance of daily year-round service, not one of the other applicants can be relied on to maintain such service because each of their proposed operations would be uneconomic with five or six competitors serving the Los Angeles-San Jose del Cabo route.

Counsel: Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.com


January 27, 2006

Reply of Frontier Airlines - Bookmarked

Los Angeles is one of the only major markets that does not have low-fare options to Mexico markets.

Frontier Airlines is the leading low-fare carrier serving Mexico and is the only low-fare carrier applying for this authority. If awarded the route, Frontier would bring first time low-fare options to travelers for the LAX-SJD market and would be the first carrier to provide low-fare service to any Mexico market from LAX. If able to initiate service in this market, Frontier will positively impact the marketplace and stimulate overall growth in the LAX-SJD market by all operators.

Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.com


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 27, 2006

Reply of United Air Lines - Bookmarked

United has demonstrated that, with its low-fare Ted service and connecting services from its Chicago and Los Angeles hubs, its proposals offer more public benefits than those of any of the other applicants. United's Ted service and United's hubs would provide more improvements to the competitive market structure both for local markets and on a network basis than the services or networks of the others. In these circumstances, United urges that its applications in each of the captioned dockets be granted and those of the other applicants be denied.

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



May 2, 2006

Frontier Airlines Press Release

Frontier Airlines will begin new, non-stop service between San Francisco International Airport and Los Angeles International Airport, beginning June 29, 2006. The new service will be offered five times daily between the two cities and all flights will utilize Frontiers new Airbus aircraft, with 33 inches of legroom and 24 channels of DirecTV, which will be offered free for on flights between San Francisco and Los Angeles through Labor Day (Sept. 4, 2006).

Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.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


July 3, 2006

Response of ExpressJet Airlines to Order to Show Cause

Continental Express was not selected over Delta, Frontier and United for the Los Angeles­ San Jose del Cabo route despite the fact that Continental Express is the only applicant that originally proposed daily year‑round nonstop service on the Los Angeles‑San Jose del Cabo route; and the Department has refused to impose a condition requiring that the successful applicant operate daily, nonstop year‑round service between Los Angeles and San Jose del Cabo without interruption, subject only to a 90‑day start‑up period, without the normal allowance for dormancies of up to 90 days once flights have been instituted.

Continental Express disagrees with the Department's decision to award Los Angeles‑San Jose del Cabo authority to Frontier without the condition proposed by Continental Express and to award backup authority to Delta. Nonetheless, in the interest of expediting final action in this proceeding, Continental Express is not objecting to the proposed awards.

Counsel: ExpressJet and Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.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


July 10, 2006

Response of Frontier Airlines to Comments of Delta - Bookmarked

There is no basis for Delta's objections. Delta's complaints that the Department's decision showed "bias" against legacy carriers in favor of low cost carriers is without credibility and reflects the state of a carrier that has lost touch with today's airline industry and consumer demands.

Since Delta has only raised arbitrary and unfounded objections, it is essential that the Department quickly reject those comments and award the Los Angeles-San Jose del Cabo route to Frontier so that Frontier may immediately begin marketing and selling the route.

Frontier respectfully requests that the Department finalize its award of the Los Angeles-San Jose del Cabo authority to Frontier. As the Department correctly stated, Frontier "best serves the public interest, and will optimize use of these important new bilateral rights." Frontier has demonstrated in markets throughout the country that the American public will fly if affordable fares are available. If awarded the Los Angeles-San Jose del Cabo authority, Frontier will provide new choices to California travelers while at the same time allow Frontier to bring its service and fares to other U.S. and Mexico businesses and residents. This is what the public demands and is consistent with the worthy principles of deregulation and the Department's actions to increase U.S.-Mexico service. There is no basis to consider Delta's imaginary claims. Delta can serve potential customers through its true hubs or through its partnership/codeshare with AeroMexico.

Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.com



August 4, 2006

Accelerated Review Request of Frontier Airlines

On June 29, 2006, Frontier was awarded authority by the Department to serve the Kansas City-San Jose del Cabo market with a start date of December 16, 2006. Frontier would like to begin sales on the Kansas City route immediately to maximize bookings during the current strong selling season, but is hesitant to initiate that process because the Los Angeles-San Jose del Cabo authority has not been finally awarded. While Frontier is prepared to begin selling the Kansas City flight, they would prefer to do so along with the Los Angeles service. Since constraints on operations and equipment exist at San Jose del Cabo, the departure and arrival times of the Kansas City-San Jose del Cabo operation could change significantly depending upon the schedule for Los Angeles-San Jose del Cabo and when that service can be started. Therefore, in order to effectively operate San Jose del Cabo service from both markets, Frontier would like to schedule both flights to ensure they both are compatible with facility limitations. Frontier also needs to coordinate staffing and marketing for both operations. For all of these reasons, Frontier asks the Department to accelerate its review of the comments submitted and the award of the Los Angeles-San Jose del Cabo route.

Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wrf.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



February 4, 2008

Re: Frontier Airlines Will Not Renew Service

On September 11, 2006, the Department of Transportation issued a Final Order, Order 2006-9-8, awarding exemption authority to Frontier Airlines to serve Los Angeles-San Jose del Cabo. Consistent with that Order, Frontier operated service in the market. Frontier's service between LAX and SJD has been successful. Nevertheless, as a result of additional carriers operating in that market and in other California-Mexico markets, along with rising costs that are impacting all carriers, Frontier has decided to cease service in this market and instead strengthen its other international markets. Therefore, Frontier will not provide service in the Los Angeles-San Jose del Cabo market after April 13, 2008.

Counsel: Wiley Rein, Edward Faberman, 202-719-7402, efaberman@wileyrein.com


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