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					                            BEFORE THE
                   DEPARTMENT OF TRANSPORTATION
                         WASHINGTON, D.C.
___________________________________
                                    :
Application of                      :
                                    :
GREATER BATON ROUGE                 :    Docket OST-99-5532
AIRPORT DISTRICT                    :
                                    :
for an Exemption from 14 C.F.R.     :
Part 93, Subparts K and S,          :
under 49 U.S.C. § 41714 to allow    :
nonstop service to Chicago O'Hare :
International Airport               :
                                    :
___________________________________
                                    :
Application of                      :
                                    :
HUNTSVILLE-MADISON COUNTY           :    Docket OST-99-5533
AIRPORT AUTHORITY                   :
                                    :
for an Exemption from 14 C.F.R.     :
Part 93, Subparts K and S,          :
under 49 U.S.C. § 41714 for         :
nonstop service to Chicago O'Hare :
                                    :

          CONSOLIDATED ANSWER OF ATLANTIC COAST AIRLINES

     Atlantic Coast Airlines ("ACA"), operating as United Express,

hereby   files   this   consolidated   answer   in   opposition   to   the

Application of the Greater Baton Rouge Airport District (Docket

OST-99-5532) and the Application of the Huntsville-Madison County

Airport Authority (Docket OST-99-5533).     Each community is seeking

four exemption slots with which American Eagle Airlines, Inc.

("American Eagle") would provide to each two daily round trip

regional jet flights to Chicago's O'Hare International Airport. To

make way for these community applications, American Eagle uncere-

moniously plans to drop regional jet service between O'Hare and
Shreveport and Montgomery, Alabama for which American Eagle was

previously awarded eight O'Hare exemption slots for this specific

purpose, and none other.       Order 98-4-21.

     On April 22, 1999, ACA filed two joint applications requesting

a total of nine O'Hare exemption slots (Joint Application of the

Charleston County Aviation Authority and Atlantic Coast Airlines

(Docket-99-5583) and the Joint Application of the Mobile Airport

Authority and Atlantic Coast Airlines (Docket 99-5581)), with which

it would offer nonstop roundtrip service between Charleston, South

Carolina and Mobile, Alabama, on the one hand, and O'Hare, on the

other.   Since the DOT has only a total of nine O'Hare exemption

slots to award, the applications of Baton Rouge and Huntsville and

the joint ACA-Charleston and ACA-Mobile applications are mutually

exclusive.   For the policy and other reasons set forth below, the

Department should reject the Baton Rouge/Huntsville applications in

favor of the ACA-Charleston and ACA-Mobile requests for nonstop

O'Hare access.

I.   American Eagle Is Manipulating the Community
     Applicants and the DOT's Slot Exemption Policy

     American    Eagle   has   launched   an   all   out   assault      on   the

integrity of the authority of the Secretary of Transportation to

award slots to small and medium non-hub communities.          By forsaking

its commitment to the communities of Montgomery, Alabama and

Shreveport, Louisiana, and importuning the communities of Baton

Rouge,   Louisiana   and   Huntsville,    Alabama    to    seek   the    slots

previously awarded to Montgomery and Shreveport, American Eagle is

                                    -2-
cynically seeking to manipulate the processes of the Department to

its sole advantage.

     AS a result of the DOT's award of eight slots to American

Eagle     to   serve   Shreveport    and    Montgomery   and     the   carrier's

announcement that it is terminating regional jet service to O'Hare,

the DOT is witnessing the spectacle of American Eagle "shopping"

the slots, which do not belong to the carrier, by dangling them in

front of       other   communities   promising    service   to    O'Hare.     If

American       Eagle   could   not   profitably     serve      Montgomery   and

Shreveport, what makes it think it can provide consistent O'Hare

service to Baton Rouge and Huntsville?1/            What other Alabama and

Louisiana cities will be asked to participate in this shameless

process whereby Eagle pits one city against another by offering

temporary access to O'Hare?

     The plain fact is that, like it is doing with Montgomery and

Shreveport by enhancing their access to Dallas/Ft. Worth ("DFW"),

American Eagle can best provide connecting service opportunities to

more points in the U.S. and to international destinations by

connecting Baton Rouge and Huntsville to American's vast network

hub at DFW than by offering longer haul routes to O'Hare where



     1/
        American Eagle has not offered an explanation as to why
it cannot continue service to Shreveport and Montgomery. If the
service has not been profitable, then what factors will permit it
to profitably serve the smaller Baton Rouge market (compared to
Shreveport). On the other hand, if American Eagle's service to
Shreveport and Montgomery was profitable, then why is the carrier
failing to meet its obligation to the DOT and the communities to
continue to provide nonstop service to O'Hare?

                                      -3-
American serves    20   less   domestic   and   6   fewer   foreign   cities

compared to DFW.

     Rather than squander the limited nine O'Hare exemption slots

that will be available on June 1 when American Eagle's Montgomery

and Shreveport service will terminate, the Department should look

to make this exemption authority available to communities with more

substantial ties to the midwest and which can truly be advantaged

if they had access to the largest O'Hare network carrier -- United

Airlines -- with which ACA has a longstanding and successful code

share relationship.

     ACA, along with the cities of Charleston and Mobile have

jointly applied for the eight exemption slots relinquished by

American Eagle plus the one O'Hare slot that was withdrawn from

Great Lakes and remains unallocated.        See Order 99-3-12, page 6,

footnote 7.   ACA's use of these slots to serve these deserving

markets constitutes the best and highest use of these limited slot

resources and, therefore, ACA should be selected to provide this

service over those being proposed by American Eagle, Baton Rouge

and Huntsville.

     On the other hand, American Eagle deserves no more chances to

serve O'Hare using limited slot exemptions.           As the wholly-owned

subsidiary of American Airlines, American Eagle should be compelled

by the Department to play out its O'Hare route ambitions using its

own vast array of O'Hare slots. Contrast this situation with that

of ACA, which is neither owned nor controlled by its code share


                                   -4-
partner, United Airlines, and which must rely on its own resources

and   access   to   the   capital   markets      on   which    to   expand   its

operations.    Likewise, ACA must primarily rely on the DOT slot

exemption policy to improve access to O'Hare.

      ACA has been awarded 16 exemption slots with which to serve

the   communities    of   Charleston,     West   Virginia,      Wilkes   Barre-

Scranton, Pennsylvania and Springfield, Missouri.                   ACA has not

defaulted on its commitment to well and faithfully serve these

markets precisely as outlined in its prior application for O'Hare

exemption slots. ACA will also commence, on May 17, 1999, regional

jet service between Savannah/Hilton Head utilizing three slots

awarded to Savannah/Hilton Head for this purpose.              Order 99-3-12.

Finally, ACA has had transferred to it by Great Lakes Aviation,

slot exemptions with which to operate between Fargo and Sioux Falls

and O'Hare thereby upgrading turboprop service to the passenger

pleasing regional jet aircraft.      No community promised and offered

jet service by ACA has been disappointed nor lost its service to

another community as has Montgomery and Shreveport despite the fact

that the O'Hare markets served by ACA are substantially smaller

than those served by American Eagle.        Exhibit 1.        Indeed, American

Eagle's preference for serving cities much larger than those

characterized as "small non-hub" strongly suggests that the slot

exemptions are misdirected when they are made available to American

Eagle.   ACA has earned the trust of small non-hub and small hub




                                    -5-
communities for which it offers nonstop regional jet service to

O'Hare.

II.    The Communities of Charleston and Mobile are Better
       Candidates for Slot Exemptions than Baton Rouge and Montgomery

       It is unfortunate that O'Hare is subject to the FAA's High

Density Airport Rule (14 C.F.R. Subparts K and S of Part 93).      But,

because it is, communities like Charleston, Mobile, Baton Rouge and

Huntsville must compete for the few remaining O'Hare exemption

slots.       In deciding which communities and carriers are to provide

O'Hare service using DOT allocated exemption slots, the DOT has

consistently sought to maximize public service benefits. See Order

99-3-12 (". . . we find it especially important to allocate these

slot exemptions where they will produce the maximum transportation

benefits.").       In   the case of the four above-mentioned cities,

maximum public benefits will result from the selection of ACA and

Charleston and Mobile than from the selection of Baton Rouge and

Huntsville.

       On the basis of the exchange of local traffic between each of

the four communities and O'Hare, the Charleston and Mobile markets,

whether or not aggregated with traffic from within their respective

catchment areas, are larger than the Baton Rouge and Huntsville

markets.

      CITY                    PDEW         City Ranking   ORD Ranking
                                             From ORD     From City
  CHS                         89.4               1           4
  CHS Catchment              160.4


                                     -6-
   MOB                     43.9              7             2
   MOB Catchment          111.3
   HSV                     31.7             12             8
   HSV Catchment           31.7
   BTR                     24.2             17             8
   BTR Catchment           49.9

     The potential size of the market, as measured by the number of

passengers which will benefit from new nonstop O'Hare service has

always played a key role in the DOT's carrier/city selection

process. Orders 98-4-21 and 99-3-12. This DOT decisional standard

is compelling in this case.   In ranking the size of markets which

lack nonstop O'Hare service, the Charleston and Mobile markets rank

number one and seven, respectively.     Combined with their realistic

catchment areas Charleston/Myrtle Beach and Mobile/Pensacola, they

rank one and two.   Huntsville ranks twelfth and Baton Rouge ranks

seventeenth.2/   This simple ranking is all the analytical analysis

the Department need accomplish in order to make the required public

benefit determinations.

     By this critical measure, Charleston and Mobile are better

candidates for selection than Baton Rouge and Huntsville thereby


     2/
        The only way Baton Rouge could catapult itself into
fifth place was by including traffic from Alexandria (140 miles
away), Lake Charles (132 miles away) and Lafayette (60 miles
away) to make up the Baton Rouge catchment area. Baton Rouge is
only 91 miles from New Orleans, which, using this logic, must be
within the New Orleans catchment area. Since there are six daily
large jet flights between New Orleans and Chicago, Baton Rouge
would not appear to be as deserving of O'Hare exemption slots as
larger communities since it falls within the New Orleans service
area. ACA makes this point not to argue Baton Rouge does not
deserve access to Chicago, but rather to question the relative
merits of the Baton Rouge application.

                                  -7-
giving the DOT confidence ACA will sustain, both economically and

operationally, its proposed O'Hare service.              See Order 98-4-21.

The DOT can draw this conclusion even if American Eagle did not

have    a   history   of   withdrawing   from   O'Hare    markets    which    it

represented it could profitably serve if the DOT made exemption

slots available for this purpose.

       There is simply no question that ACA has a stronger commitment

to serving Charleston and Mobile than American Eagle's commitment

to Baton Rouge and Huntsville.          With ACA's growing base at O'Hare

it is establishing itself as willing to offer popular regional jet

service to smaller communities which seek access to United's large

domestic and international route network.              Indeed, ACA forecasts

that it will transport over 72,000 Charleston passengers and over

46,000 Mobile passengers in the first full year of regional jet

service and both services will produce a segment operating profit.3/

Neither Baton Rouge nor Huntsville has entered into the record a

traffic     or   financial   forecast    raising   a    question    about    the

potential for their markets.4/      The last thing the DOT should do is



       3/
        ACA has forecast Charleston will earn a segment
operating profit of over $1.3 millon on an annual basis. The
comparable result for Mobile is forecast at over $885,000.
       4/
        It is instructive to note that American Eagle declined
to provide the Department any forecast of its results for service
to Shreveport or Montgomery when it applied to serve these
markets. See Order 98-4-21, page 16, footnote 9 and Application
of Simmons Airlines d/b/a American Eagle, October 9, 1997, Docket
OST-97-2985. The DOT should be cautious in making additional
slots available to American Eagle in the absence of such basic
data.

                                    -8-
award slots to communities to be used by American Eagle if it is

not certain of the financial viability of the markets thereby

possibly leading to a similar display of a start-up and quick

termination of O'Hare service using exemption slots.         ACA's O'Hare

traffic and financial forecast have proven to be conservative and

the DOT can and should rely upon them for making its carrier

selection decision.

III. Conclusion

     ACA regrets that not all communities deserving nonstop O'Hare

service can obtain it.     However, there are two principal barriers

to such service -- the High Density Airport Rule and the economics

of the individual routes.        The DOT's slot exemption policy can

overcome the first barrier.          In the case of Baton Rouge and

Huntsville, while both may be under served cities, neither fits the

profile of   a    community   the   DOT   generally   considers   the   best

candidates for nonstop O'Hare service.        Further, the record lacks

any data to permit the Department to conclude that Baton Rouge and

Huntsville service can be sustained. Certainly the track record of

American Eagle is poor and lacks the kind of commitment to small

community-O'Hare service as demonstrated by ACA.

     WHEREFORE, for the reasons set forth above, Atlantic Coast

Airlines urges the Department to deny the applications of Baton

Rouge and Huntsville for O'Hare slots exemptions.

                              Very truly yours,

                              BAGILEO, SILVERBERG & GOLDMAN, L.L.P.


                                    -9-
                        Attorneys for
                        ATLANTIC COAST AIRLINES



                        By:
                              Robert P. Silverberg


Dated: April 27, 1999




                              -10-

				
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