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Updated: Monday, November 26, 2007 8:25 PM


OST-2007-28057 - Spirit Air - Ft. Lauderdale-Bogota

http://www.spiritair.com/


OST-2007-0006 - US-Colombia Frequency Allocation Proceeding

OST-2007-29367 - Delta - US-Colombia
OST-2007-0017 - jetBlue - US-Colombia


Spirit Airlines, Inc.

OST-2007-28057 - Exemption - US-Colombia

April 25, 2007

Application for an Exemption

Spirit intends to offer daily scheduled air service between Ft. Lauderdale, Florida and Barranquilla and between Ft. Lauderdale and Bogota, using 144-seat Airbus A319 aircraft. Spirit understands the US currently has fourteen unused frequencies available for immediate allocation. Currently there is no U.S. carrier service at Barranquilla and no low-tare service between Bogota and the U.S. Bogota is currently the third largest market between South Florida and Latin America.

Counsel: Kirstein & Young, Joanne Young, 202-742-6644



May 3, 2007

Answer of American Airlines

Spirit states that it "understands the U.S. currently has fourteen unused frequencies available for immediate allocation". That is not correct. Under the U.S.- Colombia Air Transport Agreement, as amended, a total of 70 weekly combination frequencies may be allocated to U.S. carriers. Currently, all 70 are allocated.

As shown by the Department's Notice of February 16, 2001 in OST-2001-8910, as of that date American held 35 frequencies; Continental, 14; and Delta, 7. American's 35 and Continental's 14 are grandfather frequencies that are not restricted to specific city-pairs and are not subject to dormancy conditions. The 7 frequencies allocated to Delta (Order 2000-9-21, September 25, 2000) are limited to Atlanta-Bogota and are subject to dormancy conditions.

Subsequent to the Notice, 7 additional frequencies were allocated to American to serve Miami-Medellin, and 7 were allocated to Continental to serve New York/Newark-Cali/Medellin (Order 2001-5-26, May 24, 2001). Those frequencies are citypair specific and are subject to dormancy conditions. Continental failed to start service, and its 7 additional frequencies reverted to the unallocated pool as dormant. In 2005, Continental applied for 7 frequencies to operate Houston-Cali, granted by Notice of Action Taken in OST-2005-20150, February 22, 2005.

American's U.S.-Colombia service pattern has varied according to market demand. The unique political, economic, social, and security conditions in Colombia have a dramatic effect on passenger flows. In the 2005 summer traffic season, American utilized 42 weekly frequencies. Currently, American is using 28. American has been reviewing its Colombia service levels and expects to be utilizing all of its frequencies later this year.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com



May 8, 2007

Consolidated Answer of Delta Air Lines

The 14 U.S.-Colombia frequencies have been unused for almost two years. American's published schedules indicate no firm service plans to make use of at least 12 of these frequencies for the foreseeable future, and no plans to use any of the 14 after a brief period in Summer 2007. American's alleged "intention" to use them all some time later this year - utterly devoid of any substantiating details, and obviously prompted solely by the expression of interest by another carrier that does have firm service plans for the frequencies - - is not a "firm plan" to use them in the near future. American has warehoused these valuable limited entry rights for long enough. They should be promptly reallocated to another carrier that will actually use them.

With respect to Spirit's Application, Delta likewise desires to commence new services in the U.S. - Colombia market using these same 14 frequencies, specifically for a daily New York-Bogota flight, 4-times weekly Atlanta -Medellin service, and 3-times weekly ATL-Cali service.

Because Spirit's application is mutually exclusive with Delta's desire for additional U.S. -Colombia frequencies, which would require the same 14 weekly frequencies, the Department is required to institute a comparative selection proceeding to consider the merits of the competing applications.

Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999/5659, recohn@hhlaw.com




May 15, 2007

Reply of American Airlines

As shown by the attached news release, today American announced firm plans to operate 14 additional U.S.-Colombia weekly combination frequencies. Effective December 13, 2007, American is re-establishing daily nonstop service between Miami and Barranquilla; is adding four nonstop flights a week between Miami and Bogota; and is adding three nonstop flights a week between Miami and Medellin. These flights will be loaded in CRS systems later this week and be open for reservations and sales on Sunday, May 20.

American holds a total of 42 U.S.-Colombia weekly frequencies, consisting of (1) 35 grandfather frequencies as confirmed by the Department's Notice in OST-2001-8910, February 16, 2001, p. 1 n. 3, and (2) seven frequencies allocated for Miami-Medellin service by Order 2001-5-26, May 24, 2001.

It is well-established that the Department will not act to take away a carrier's temporarily dormant frequencies when the carrier has announced firm plans to use them. In these circumstances Delta's request that the Department invite applications from interested carriers for reassignment of frequencies from American should be denied and Spirit's application should be dismissed.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com


May 15, 2007

Reply of Spirit Airlines

American incorrectly asserts in its Answer that there are no frequencies available to Colombia. It would have the Department accept the proposition that it has a frequency allocationin perpetuity of 60% of all available Colombia frequencies regardless of use. While these frequencies are currently allocated, American has failed to use 14, or 34 percent of the 42 frequencies allocated to it for the past two years as well as before its very limited Summer 2005 use of' these frequencies. Spirit strongly believes that the status quo for allowing these valuable, hard-bargained for U.S. rights is completely unacceptable based on longstanding Department policy and precedent. Accordingly, Spirit requests that the Department immediately reallocate the unused frequeticies so that Spirit may use them. The U.S.-Colombia bilateral restricts service to only 70 weekly frequencies. It is clearly not in the public interest to let a substantial number of' such valuable frequencies sit idle for several years or, be used only for a couple of months a year, over many years when Spirit would use them 365 days a year to bring badly needed consumer-friendly, low-fare service to this market.

American concedes that the last time it operated all the allocated fl'equencies was nearly two years ago during the "2005 summer traffic season." In fact, from at least November 2003 through the present, American used all 42 of its frequencies for only a limited two month period from mid-June to mid-August 2005. American in Its Reply has announced plans to start using these frequericies in seven months as of December 13, 2007, including for a daily service to BarranquilIa, the unserved market requested by Spirit. The Department should ignore American's suddenly announced plan to use these frequencies following years of disuse. This is a short term Holiday special pulled out of a hat to retain its monopoly, made only alter Spirit proposed to compete with American. It clearly is not in the public interest to allow American to feeze out competition by suddenly feigning a renewed interest in frequencies they have chosen to pocket rather than use.

Counsel: Kirstein & Young, Joanne Young, 202-742-6644



May 17, 2007

Motion for Leave to File and Consolidated Response of Delta Air Lines

After the submissions by Delta and Spirit seeking to use 14 long-dormant U.S.-Colombia frequencies, American had an epiphany, belatedly (and only in its second reply) announcing an intention to begin using those frequencies at the end of the year, more than six months from now and more than two and a half years after it suspended service with those frequencies. The Department should view this proposal for what it really is: a desperate effort by American to salvage its warehousing of valuable limited entry frequencies in a cynical attempt to block new competition in a market which American has for years dominated. American could have launched these U.S.-Colombia services long ago - at any time during the past two years. It is clear that American's new-found interest was entirely prompted by Delta's and Spirit's desire to put those dormant frequencies to use.

There is no principled reason why American's frequencies should be treated any differently from any other US-Colombia frequencies. The automatic 90-day dormancy provision that applies to all frequencies granted since 2000 ensures that these valuable limited entry rights will be used rather than warehoused as American has done for the last two years. Indeed, the start-up date American just announced is more than double the time normally permitted under the standard 90-day dormancy requirement for limited entry rights (absent a waiver). American has not even attempted to justify its two-year dormancy, nor has it outlined why it needs yet another six months to commence these services.

The Department should reject American's transparent ploy and promptly institute a comparative carrier selection proceeding to reallocate the valuable frequencies. The Department should be able to issue a final decision long before American's proposed service resumption date. Of course, American would have the opportunity to apply for the frequencies in that proceeding along with Delta and Spirit.

If the Department nonetheless decides to countenance American's tactics and permit American to continue warehousing these frequencies, the Department should, at a minimum, enter an order imposing (i) a start-up condition of December 13, 2007, on these 14 U.S.-Colombia frequencies and (ii) an automatic 90-day dormancy requirement going forward with respect to all 35 of AA's remaining "grandfathered" frequencies, in order to ensure that American's abuse does not recur.

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



May 31, 2007

Motion for Leave to File and Response of American Airlines

Apparently recognizing that its bid for confiscation of 14 of American's U.S.-Colombia frequencies is a non-starter in light of American's firm plans to use them for new service to Barranquilla and additional flights to Bogota and Medellin, Delta has made a fall-back argument.

American conclusively showed in its reply of May 15, 2007 that the efforts by Spirit Airlines, Inc. and Delta to confiscate American's frequencies are entirely without merit. We will not repeat that showing here, other than to state that American is firmly committed to the December 13 date for new and additional U.S.-Colombia service that we publicly announced on May 15.

A host of grandfather frequencies and other limited-entry authorizations are currently held by U.S. carriers not only for service to Colombia, but to countries throughout the world, including Greece (Delta), Russia (Delta), Argentina (United and American), Brazil (United and American), Ecuador (American), Japan (United and Northwest), China (United and Northwest), and the Philippines (United and Northwest).

There is no principled basis for the Department to single out Colombia and retroactively place a 90-day dormancy condition on American's grandfather frequencies. If the Department were to consider such an action, it could only legitimately do so in an omnibus proceeding which places in issue -all grandfather frequencies and other limited-entry authorizations held by -all U.S. carriers (including Delta). To do otherwise be discriminatory and contrary to fundamental concepts of fairness. Delta's request should be denied.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com



Filed April 26, 2007 | Issued June 29, 2007

Notice of Action Taken

We have decided to dismiss Spirit’s application and permit American to retain use of its 14 unused U.S.-Colombia frequencies. Although the 14 frequencies have been unused by American for an extended period, it has generally been our policy to permit incumbent carriers to retain dormant frequencies if the carrier demonstrates firm plans to use them, even if another seeks use of the frequencies. We note that in both of the cases cited by Delta, the incumbent carriers holding the unused frequencies did not demonstrate firm plans to use them. In this case, American has presented a firm plan for use of its 14 unused frequencies, and began marketing and selling its service on May 20, based on a proposed start-up date of December 13, 2007. Therefore, we find that, in the circumstances presented, it is consistent with the public interest to permit American to retain its 14 frequencies based upon its firm commitment to use them.

However, we also note that it is not the Department’s policy to permit valuable operating rights to remain unused, particularly when another carrier has plans to use them. Therefore, in order to ensure that steps can be taken to reallocate these 14 frequencies in the event American does not re-establish use of them as proposed, we have decided to take additional steps. First, we will require American to report to the Department every 60 days its progress towards instituting its proposed services. Such reports should contain samples of promotional material and OAG advertisements, identify whether the aircraft for these services are on hand, and identify any issues that could have an impact on American’s proposed startup date of December 13, 2007. These reports will begin on July 20, 2007, and shall be addressed to the Director, Office of International Aviation, and also served on Spirit and Delta.

Second, based on the representations made here by American, it is our full expectation that American will institute service by December 13, 2007. Failure to do so will result in automatic expiration of the allocation for these 14 frequencies, and they will revert to the Department.

By: Paul Gretch



July 6, 2007

Petition for Review of Staff Action

Spirit requests that the Department reverse the Staff dismissal of Spirit’s application, and grant the allocation of 14 unused frequencies to provide daily low-fare service from Ft. Lauderdale to Bogota and Barranquilla, Colombia. Further, Spirit requests that the Department grant the application immediately, and without an unnecessary and time consuming Ashbacker comparative selection proceeding. As detailed in Spirit’s pleadings, Ashbacker requires equal consideration of applications by competing carriers, not a separate proceeding. Spirit is the only carrier not already in the U.S.-Colombia market applying for these frequencies, willing to serve the Ft. Lauderdale – Colombia market, as well as the only low-fare carrier applicant. The Department has no need to gather more information to make the determination that Spirit’s service will benefit the public and achieve the stautory aims of Congress. Delta’s application is to simply add more premium-fare flights under its existing codeshare with Avianca. Spirit has firm plans to use these 14 frequencies, and requests that the Department immediately reallocate them so it may begin service.

American is currently allocated 42 of the 70 frequencies available under the U.S.-Colombia bilateral treaty. Even though this amounts to 60 percent of all frequencies available, American has failed to use 14, or 34 percent, of the frequencies allocated to it. The NOAT states only that American has not operated all 42 of its frequencies since Summer 2005. In fact, American’s use during the Summer of 2005 was for only a two month period. The NOAT fails to include the fact that other than during this two month period, American has not used all 42 of its frequencies since at least 2003. This is significantly longer than the recital of facts would imply.

Spirit applied for the reallocation of these 14 unused frequencies so it could begin the first ever low-fare service to Colombia, and the only U.S. carrier service to Barranquilla. As the Department knows, there is enormous demand worldwide and especially in closed markets like Colombia, for service by low-fare carriers. However, the NOAT fails to include the specific pricing differentials presented by Spirit. These details are essential to Spirit’s application, and needed to be available to the decision maker. Although approximately 25% of domestic U.S. air service is now provided by low-fare carriers, there is no low-fare carrier serving the U.S.-Colombia market. Spirit’s lowest FLL-BOG fare would be $248 versus American’s $414, a 40% savings and the walk-up, no advance purchase fare, would be $648 versus American’s $719, a 24% savings.

Counsel: Kirstein & Young, Joanne Young, 202-331-3348



July 10, 2007

Answer of Delta Air Lines

Delta takes no position on the merits of Spirit's Petition, but submits this brief response, pursuant to 14 C.F.R. 385.31, to underscore Delta's continued interest in the Colombia frequencies, and the requirement for a comparative selection proceeding in the event any or all of the frequencies were to become available.

  1. Delta has made clear its interest in obtaining the 14 U.S.-Colombia frequencies for services between the United States and Bogota, Medellin, and Cali which have been unused for over two years. See Consolidated Answer of Delta Air Lines, Inc., dated May 8, 2007. Delta's interest in those frequencies remains unabated.
  2. Should the frequencies become available either because (i) the Department reverses the staff action in response to Spirit's Petition and withdraws the frequencies from American for re-allocation or (ii) American forfeits the frequencies for failure to meet the conditions imposed by the Department, Spirit's and Delta's proposals to use the 14 U.S.-Colombia frequencies would be mutually exclusive. Thus, in accordance with the long-standing Ashbacker doctrine, the Department would then be required to conduct a comparative selection proceeding to allocate the frequencies. This is black-letter law. The Department is therefore required to reject Spirit's position that the Department forego the requisite comparative selection proceeding and simply hand the frequencies over to it without a proceeding to contemporaneously consider Delta's proposal to use the frequencies.

Counsel: Hogan & Hartson, Robert Cohn, 202-637-499, recohn@hhlaw.com



July 17, 2007

Answer of American Airlines to Petition of Spirit Airlines for Review of Staff Action

On May 15, 2007, American publicly announced firm plans to operate 14 additional U.S.-Colombia frequencies, effective December 13, 2007. American is re-establishing daily nonstop service between Miami and Barranquilla; is adding four nonstop flights a week between Miami and Bogota; and is adding three nonstop flights a week between Miami and Medellin. These flights were loaded in CRS systems on May 18, 2007, and have been open for reservations and sales since May 20, 2007.

Spirit seems to be arguing that because the NOAT did not quote verbatim from Spirit's pleadings its claims of low-fare service or its recitation of American's past frequency usage, that constitutes an erroneous finding of material fact. Spirit cites no precedent for the extraordinary proposition that the Department's decisions must repeat in full (and cannot summarize) every allegation made in a party's pleadings. The NOAT explicitly referenced Spirit's self-serving claims to provide "low-fare service, which would substantially increase competition" (p. 2), and stated that "the 14 frequencies have been unused by American for an extended period" (p. 2). There is no erroneous finding of material fact in NOAT.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com



July 20, 2007

Reply and Motion for Leave to File of Spirit Airlines

American wrongly asserts that allowing it to retain 14 Colombian frequencies that have essentially gone unused for at least four years is consistent with Department precedent and raises no important policy question. Delta wrongly asserts that the Department is required to hold a comparative selection proceeding in the event the 14 U.S.-Colombia frequencies are reallocated.

American’s untenable position is that regardless of how many frequencies are unused – in this case 33 percent of American’s total – and how long the frequencies have remained unused, all an incumbent carrier has to do is announce it will start using these frequencies in another seven months to keep them. This is not and cannot be the “well-established” policy of the Department.

Delta argues that the Ashbacker doctrine requires the Department, if it reallocates the 14 unused frequencies, “to conduct a comparative selection proceeding to allocate the frequencies.” However, Ashbacker simply seeks to insure that mutually exclusive applications are both weighed when deciding which applicant will be granted the rights in question. There is no “black-letter law” that Ashbacker specifically requires a separate selection proceeding. Indeed, the U.S. Court of Appeals for the District of Colombia has said that the “Ashbacker rule is basically a rule of fairness in comparative consideration, that it must be applied with common sense and in a practical fashion.” In this case the Department has more than adequate information available to it to fairly compare the proposed service of Spirit and Delta. A decision based on the available information would satisfy the Ashbacker requirement. This is not a case where two applicants are so similarly situated in their proposals that the Department has no choice but to hold a proceeding to delve into the minutiae of the applications. The major policy goals laid out by Congress seek to place “maximum reliance on competitive market forces and on actual and potential competition.” Spirit’s service clearly advances the intent of Congress, while Delta’s proposal does not.

Counsel: Kirstein & Young, David Kirstein, 202-331-3348 x224, dkirstein@yklaw.com



Order 2007-8-28
OST-2007-28057 - Exemption - US-Colombia

Issued and Served August 27, 2007

Order on Review

We have decided to grant Spirit’s petition for review, and, on review, to affirm the action of the staff. We find that the staff acted properly and in accordance with established Department practices and policies in reaching its decision to dismiss Spirit’s application.

We are not persuaded by Spirit’s arguments that we should reallocate to it the 14 frequencies that have been held by American and which American has committed to utilizing by introducing the planned Miami-Colombia services involving Barranquilla, Bogota and Medellin. American states that these services are currently available in CRSs for reservations and sales and the carrier has already submitted to the Department information demonstrating that, among other things, it has been selling the services to the public since May 20. The June 29 Notice of Action Taken correctly stated that the Department has generally permitted incumbent carriers to retain unused frequencies when the incumbent carrier presented firm plans for their use. Therefore, in the circumstances presented here, we do not find that it is in the public interest at this time to reallocate American’s frequencies in response to Spirit’s application.

However, we note that American has been put on notice to report its progress towards instituting its proposed service every 60 days, and stated the Department’s expectation that American will institute service by December 13, 2007. Should American not institute service, and use its frequencies, as announced and affirmed by American in its pleadings, we would, of course, reexamine this matter. We note that we have placed such conditions on other incumbent carriers under similar circumstances, successfully ensuring that utilization of frequencies was carried out as represented by the carrier.

By: Andrew Steinberg



October 11, 2007

Supplement to Report of American

American Airlines, Inc. hereby supplements our report of September 18, 2007 with respect to use of U.S.-Colombia frequencies. These reports are required by the Notice of Action Taken issued in this docket on June 29, 2007.

Last week, through an exchange of diplomatic notes, the U.S. and Colombia agreed to additional frequencies, and designated Barranquilla and Cartagena as open skies cities not requiring a frequency allocation. Accordingly, the seven grandfather frequencies that American had assigned to daily Miami-Barranquilla service effective December 13, 2007 are now available for American to use on other U.S.-Colombia routes.

American hereby advises the Department that, effective December 13, 2007, we will use three of the seven frequencies formerly needed for Barranquilla service by increasing our weekly Miami-Bogota flights from 18 to 21, and will use the remaining four by increasing our weekly Miami-Medellin flights from 10 to 14. These schedules will appear in CRS systems on October 14, 2007. Along with daily service between Miami and Cali, American will be using all of the 42 weekly U.S.-Colombia frequencies we have been allocated by the Department, effective December 13, 2007.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com


October 11, 2007

Opposition of Spirit Air

We have received a copy of the letter submitted by American Airlines today, October 11, 2007, in the above referenced docket. We strongly object to American's attempt to unilaterally convert the seven frequencies it committed to use for Miami-Barranquilla service into substantial new high fare service to Bogota and Medellin simply by entering new schedules in CRS systems. American cannot turn the reporting requirements imposed in the above docket, which Spirit initiated, into a vehicle to avoid Department public interest review of the best use for these seven frequencies to promote much needed competition now that Barranquilla is an open entry point. On behalf of Spirit Airlines, we request that the Department, consistent with its recent Orders on the Colombian market, advise American not to begin sale of these additional flights to Bogota and Medellin.

As you know, Spirit brought to the Department's attention and sought to acquire 14 US-Colombia frequencies held by American, which had been virtually unused for more than 5 years. Following Spirit's application for these unused frequencies, American announced it was adding four weekly flights from Miami to Bogota, three weekly flights from Miami to Medellin and seven weekly flights from Miami to Barranquilla and would immediately open those flights for sale. The Department allowed American to retain all 14 frequencies only for the purpose of operating the specific proposed services set forth in its filing.

Spirit understands that within the next few days the Department will issue a Notice initiating a proceeding to allocate the few new frequencies which will become available under the amended bilateral agreement with Colombia. The reallocation of the seven frequencies that American committed to use for Barranquilla must be considered in this proceeding.

Clearly, in light of the new agreement and the change of status of Barranquilla to an open skies point, the Department must comprehensively address how limited U.S.-Colombia frequencies should be allocated to promote the statutory goals of increasing competition in restricted international markets. This review must include the seven frequencies that American allocated to Miami - Barranquilla. American currently dominates the market between South Florida and Colombia. Indeed, no other U.S. carrier operates in that market. American currently holds 42 frequencies and operates 18 weekly frequencies in the Miami - Bogota market and 10 weekly frequencies in the Miami-Medellin market. Its proposed increase to 21 and 14 weekly frequencies respectively will further tighten its competitive grip on these markets so it can continue to charge high fares and prevent low-fare competition.

American should not be permitted to increase its dominance in the still highly restricted Bogota and Medellin markets, through misuse of a reporting requirement in this docket and based on the fact that Colombia has agreed to liberalize entry only to certain coastal points. In response to Spirit's earlier application the Department committed to reconsider this issue if the frequencies were not used as announced "for any reason.'' Accordingly, Spirit requests that the Department advise American not to begin selling these additional flights until the Department has fully addressed the competitive issues in the context of the proceeding which will begin, pursuant to the Department's expected Notice, in a matter of days.

Counsel: Kirstein & Young, Joanne Young, 202-331-3348, jyoung@yklaw.com



Served October 12, 2007

Notice

On October 11, American Airlines, Inc. submitted a report in this Docket regarding the use of seven U.S.-Colombia frequencies. Interested parties wishing to comment on the report should do so no later than October 15, 2007. Replies are due on October 16, 2007. Comments and Replies should be filed in this Docket and, in light of the migration of the Department of Transportation Docket Management System to the Federal Docket Management System, we urge all parties to send copies of all comments and replies to Jeffrey.Gaynes@dot.gov and to Brian.Hedberg@dot.gov.

This notice is effective immediately and the filing of a petition for reconsideration shall not alter its effectiveness.

By: Paul Gretch


October 12, 2007

Email Message - Comments of Spirit Air

Please don’t put the AA unused frequencies into a Frequency Allocation proceeding with the new rights. AA has already allowed them to be wasted for 5 years except for seasonal holiday use. They need to be reallocated right away based on the extensive record developed in Docket OST-2007-28057, which we initiated last April when DOT didn’t realize AA had been quietly sitting on these rights while the U.S. was trying to determine the number of frequencies it actually had. The public interest demands these frequencies be put to use without further delay.

We fear DOT decision-makers don’t understand there already is a substantial record for them to make a decision on these unused frequencies. Incumbent carriers should not be allowed to waste any more time keeping the status quo when additional frequencies aren’t available until December at the earliest. All U.S. carriers had the right to intervene in the Colombia unused frequency proceeding started last April. We’ve been through two rounds in that proceeding and now, with today’s notice there is a third, with all U.S. carriers allowed to state their position for the decision-makers. The public deserves a decision and the use of these hard-bargained for valuable rights.

By: Kirstein & Young, Joanne Young, 202-331-3348, jyoung@yklaw.com


October 15, 2007

Email Message - Ex-Parte Letter to Spirit Air

By: DOT, Brian Hedberg


October 15, 2007

Response of Delta Air Lines

Simply put, the Department should end its tolerance of American's gamesmanship with respect to U.S.-Colombia frequencies. American Airlines - which dominates the U.S.-Colombia market and has, by far, the largest number of U.S.-Colombia frequencies - has been warehousing 14 highly valuable U.S.- Colombia frequencies for several years. Delta (and Spirit) previously urged the Department to reallocate those 14 dormant frequencies to a carrier that would actually use them to inject new competition and service into this highly restricted market. Only when forced to do so by the imminent prospect of their reallocation, American announced in May that it would finally use those long-abandoned frequencies by instituting daily service between Miami and Baranquilla, four weekly flights between Miami and Bogota, and three weekly flights between Miami and Medellin, effective December 13, 2007.

The U.S. Government has succeeded in persuading the Colombian Government to exempt U.S.-Baranquilla routes from the frequency limitations in the U.S.-Colombia bilateral. Thus, American no longer needs 7 of the long-warehoused frequencies to offer the "last chance" service it suddenly proposed last May. American has reacted to this development by purporting to unilaterally change its use for these 7 valuable frequencies to a completely different service not approved by the Department in its May order. The Department must not permit this last minute change under the particular circumstances of this case.

The Department should act as it said it would, and withdraw the 7 U.S.-Colombia frequencies from American. Those 7 frequencies should be reallocated in the same carrier selection proceeding in which the Department allocates the 21 new frequencies available under the liberalized bilateral agreement. The Department is required to institute a comparative selection proceeding to consider the merits of the competing applications in accordance with Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945). Delta urges the Department promptly to institute such a proceeding.

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



October 16, 2007

Re: Response of American Airlines

American holds 35 grandfather frequencies to serve Colombia that are not city-pair specific, and seven to serve Miami-Medellin. There is no impediment to shifting seven grandfather frequencies from Barranquilla - which has just become an open skies destination - to Bogota and Medellin. The Department established December 13, 2007 as the deadline for American to operate all of its frequencies, and we will do so.

There is no legitimate basis for the Department to confiscate any of American's U.S.‑Colombia frequencies. American will be using all of them as of the deadline set by the Department with service between Miami and Bogota (21 weekly flights), Medellin (14), and Cali (seven), and will also provide daily service between Miami and Barranquilla, a route that no longer requires a frequency allocation.

The latest take-away request by Spirit - and mimicked by Delta - is without merit and should be rejected.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com


October 16, 2007

Comments of jetBlue Airways

JetBlue believes that the Department should not permit American to either continue to warehouse valuable U.S.-Colombia frequencies or reallocate such frequencies on its own. As others have observed, American dominates the U.S.-Colombia market, and has the highest number of US.-Colombia frequencies, of which 14 have been unused for several years. Evidently in light of competitive imperatives raised by the filing of other carriers pointing out the dormancy of the frequencies and, clearly reluctantly, American announced that it would begin using these dormant frequencies by December 13, 2007, in the least frequent permitted manner. The Department, in Order 2007-8-28, that supersedes all prior Orders on the use of the frequencies, permitted American to retain them, but required that American actually operate its proposed U.S.-Colombia services to Barranquilla and submit periodic reports on its progress in commencing those services. At the first opportunity to move away from the strictures of Order 2007-8-28, American has attempted to convert restrictive frequencies specifically assigned to Barranquilla to the Bogota market. American can not reallocate those frequencies on its own. That is the role of the Department.

Based upon the September 28, 2007 exchange of Notes, twenty-one US.-Colombia frequencies will become available as a result of the new bilateral agreement. Thus, a total of twenty-eight frequencies for U.S.-Colombia will be available for allocation, 21 from the new exchange of Notes and 7 from the prior agreement. JetBlue has indicated its interest in instituting U.S.-Colombia service from Florida, as evidenced by its recent Application for a Certificate of Public Convenience and Necessity and exemption authority in the U.S.-Colombia market (filed October 12, 2007). Other carriers have also expressed interest in offering U.S.-Colombia services with the new rights that will become available under the new bilateral agreement between the United States and Colombian governments.

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


October 16, 2007

Reply of Spirit Airlines to Response of Delta Air Lines to DOT Notice and Renewed Application for an Exemption Pursuant to NOAT June 29, 2007 and Order 2007-8-28

There is more than sufficient information in this Docket to support an immediate award of these seven frequencies to Spirit based on advancing the public interest. Accordingly, in keeping with the instructions in the NOAT and Order 2007-8-28 in this Docket, Spirit, in conjunction with this Reply, renews its April 2007 application in this Docket for these frequencies in order to serve the Ft. Lauderdale - Bogota market.

Spirit's service will substantially enhance competition in the U.S.-Colombia market, and specifically in the largest South Florida - Bogota market by offering consumers a significant new low-fare travel option. Spirit's entry into the market will expand the service options available to the traveling public and stimulate additional personal and business travel. Currently there is no U.S. carrier service between Ft. Lauderdale and Bogota and no low-fare service at all between Colombia and the U.S. Bogota is currently the third largest market between South Florida and Latin America. As such, Spirit's proposed new service clearly would advance the public interest more than additional high-fare legacy service by Delta in any market.

Counsel: Kirstein & Young, Joanne Young, 202-742-6644



OST-2007-28057 - Spirit Airlines - Exemption - US-Colombia
OST-2007-29367 - Delta - Exemption - US-Colombia
OST-2007-0017 - jetBlue - Certificate of Public Convenience and Necessity - US-Colombia

October 29, 2007

Consolidated Response of Delta Air Lines

Unfortunately, despite the recent Exchange of Notes between the US Government and the Government of Colombia, which will expand U.S.-Colombia opportunities for U.S. carriers, on the basis of recent filings, it is clear that there is far more demand for U.S.-Colombia frequencies than there are frequencies to award. Delta has had a long-standing interest in expanding its U.S.-Colombia service both from its Atlanta hub and its international gateway at JFK airport, and filed an application for 14 U.S.-Colombia frequencies (filed September 27, 2007; Docket OST-2007-29367). Delta also actively participated in and supported the U.S. Government's recent and successful efforts to negotiate the Exchange of Notes. In addition, Spirit, Continental, JetBlue, and US Airways have recently expressed interest in using up to 42 U.S.-Colombia frequencies. Furthermore, American has notified the Department of its desire to use 7 long-dormant frequencies which Delta has requested be included in the pool of frequencies for allocation in a carrier-selection proceeding.

Accordingly, Delta urges the Department promptly to institute such a proceeding during which Delta will demonstrate the superiority of its U.S.-Colombia service proposals over those of the other carrier-applicants.

In this regard, Delta opposes the recently filed JetBlue Application to the extent it seeks the 14 U.S.-Colombia frequencies for which Delta has applied.

Spirit's attempt to derail any such comparative selection proceeding through e-mails or otherwise to the Department should be rejected. There has not yet been any consideration of the merits of these applications by the DOT, and thus a carrier selection proceeding is required.

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



October 31, 2007

Answer of jetBlue Airways to Renewed Application of Spirit Air

JetBlue agrees with Spirit that the Department should award these seven frequencies to a new entrant to the U.S.-Colombia market. Like Spirit, JetBlue is a potential new entrant, and has indicated its interest in instituting low-fare US.-Colombia service from Florida, as evidenced by its recent Application for a Certificate of Public Convenience and Necessity and exemption authority in the U.S.-Colombia market (filed October 12, 2007). JetBlue has proposed instituting its award-winning, low-fare service between Orlando, Florida and Bogota, Colombia by April 1, 2008, and between Fort Lauderdale, Florida and Bogota by October 1, 2008.

The Department should consolidate its action on these twenty-eight frequencies into one proceeding to allow all interested carriers to participate. Such a proceeding would permit all interested carriers to have a voice in the allocation of these valuable frequencies in the limited-entry US-Colombia market.

Although Spirit suggests that the Department disregard the interests of other carriers in the seven frequencies held by American that did not participate in the earlier proceeding instituted by Spirit (in this Docket), such a result would unfairly deprive carriers such as JetBlue of an important opportunity to institute service to Colombia. Indeed, when Spirit instituted this proceeding to obtain American's seven frequencies in April 2007, no carriers, including Spirit, could have anticipated that the United States would reach a new agreement with Colombia that would make additional US.-Colombia frequencies available, and that American would alter its proposed service using these seven frequencies as a result. Excluding JetBlue and other carriers from participation in this proceeding and awarding these seven frequencies to Spirit without a comparative selection proceeding would unfairly penalize JetBlue and other carriers. Accordingly, the Department should institute a new proceeding to allocate all twenty-eight available frequencies for U.S.-Colombia service.

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



November 1, 2007

Reply of Spirit Airlines to Answers of jetBlue Airways and Delta Air Lines

As a result of the hard-earned amendments to the air transport agreement between the U.S. and Colombia, seven existing frequencies have become available to reallocate immediately because they are no longer needed by American to serve Barranquilla. Spirit urges the Department to disregard the misdirected views of JetBlue and Delta that those existing frequencies should be considered in the proceeding to allocate the 21 new frequencies created by the U.S.-Colombia agreement. The Department should not be misled or confused by the multiplicity of filings by various carriers in other Dockets.

These seven frequencies should be immediately allocated to Spirit in this Docket which has been open since April 2007. As discussed below, the holding in Ashbacker Radio Corp. v. FCC does not require that these existing frequencies be considered in the same proceeding as the new frequencies, nor does it require additional process in this Docket before making an award.

In April, 2007, during the ongoing negotiations with Colombia, Spirit brought to the Department’s attention the fact that there were 14 frequencies held by American which had been virtually unused for more than 5 years. At that time – specifically April 25, 2007 - Spirit applied to use the 14 frequencies. On May 3 American filed an Answer and on May 8 Delta filed a response saying it would apply for the frequencies. On May 15 American filed a reply announcing new service including the use of seven frequencies for Barranquilla service.

JetBlue, Continental, US Airways and every other U.S. carrier had every opportunity to participate in that proceeding and seek those unused frequencies. None of them, except Delta, chose to participate. Accordingly, no carrier has or will be prejudiced by allocating those 7 frequencies which are available to use today, in the current proceeding in this Docket. Indeed, merging those frequencies into the proceeding to allocate the new frequencies would by unfair and prejudicial to Spirit, which came forward with a plan to use the frequencies that American had been wasting and is still not using, seven months later. JetBlue is not even seeking these immediately available existing frequencies but rather is applying for new frequencies that become available on April 1, 2008 and October 1, 2008. It is ridiculous for JetBlue to argue that these existing frequencies should be included in a new proceeding, when it is only applying for the new frequencies that become available in mid-2008.

Spirit urges the Department to take the steps it said it would take with respect to these seven frequencies. It should properly withdraw the frequencies from American and based on the filings in this Docket, award those frequencies to Spirit. As soon as possible the Department should issue a Notice starting a proceeding to allocate the newly acquired 21 frequencies by requesting applications or supplemental applications from all interested carriers.

If the Department believes that any additional process is required to allocate these seven frequencies it should issue a show cause order and request comments.

Counsel: Kirstein & Young, Joanne Young, 202-331-3348



November 16, 2007

Re: Final Status Report of American Airlines

Effective December 13, 2007, American will be using all 42 of the weekly combination U.S.-Colombia frequencies we have been allocated by the Department:

  • Miami-Bogota - 21
  • Miami-Medellin - 14
  • Miami-Cali - 7

In addition, starting December 13, American will operate daily nonstop service between Miami and Barranquilla, a city in Colombia that no longer requires a frequency allocation.

The additional flights to Bogota have been open for reservations and sales since May 20, 2007 (4) and October 14, 2007 (3); to Medellin, since May 20, 2007 (3) and October 14, 2007 (4) ; and to Barranquilla since May 20, 2007 (7). All of these operations have been approved by the Colombian aeronautical authorities.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com


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