BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

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1 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. ) 2007/2008 U.S.-Colombia Combination ) Frequency Allocation Proceeding ) Docket DOT-OST ) ) CONSOLIDATED ANSWER OF JETBLUE AIRWAYS CORPORATION Communications with respect to this document should be addressed to: Robert C. Land Jonathan B. Hill Senior Vice President, Lynn M. Deavers Government Affairs & Dow Lohnes PLLC Associate General Counsel 1200 New Hampshire Ave., NW JetBlue Airways Corporation Suite 800 P.O. Box 1927 Washington, D.C Rockville, Maryland (202) (301) jhill@dowlohnes.com ldeavers@dowlohnes.com Counsel for JetBlue Airways Corporation December 13, 2007

2 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. ) 2007/2008 U.S.-Colombia Combination ) Frequency Allocation Proceeding ) Docket DOT-OST ) ) CONSOLIDATED ANSWER OF JETBLUE AIRWAYS CORPORATION This proceeding presents the Department with the opportunity of reaffirming the status quo or applying pressure to open up a market exclusively served by incumbent carriers, to the extent they are utilizing the rights DOT has awarded them. The Department has the opportunity to shake up the Colombian market by allowing the opportunity for true price competition from a proven, successful low-fare carrier for the first time. Awarding the four legacy network carriers, American, Continental and Delta more frequencies, or in the case of U.S. Airways its first frequencies, does not provide for public benefits. It provides for the benefit of those carriers alone and offers the traveling public more of the same. As the President of U.S. Airways has candidly admitted, his carrier simply does not provide very good international service. 1 Likewise, granting frequencies to American, Continental or Delta simply entrenches the haves and provides nothing to the have nots as well as leaving the traveling public with no competitive alternatives. 1 See Tom Belden, At US Airways: The Good, Bad and Indignant, Philadelphia Inquirer, Oct. 26, 2007, available at: story/ _at_us_airways The_good bad_and_indignant.html (U.S. Airways international service in summer 2007 was a very bad international operation, which a number of our customers experienced ). 2

3 JetBlue Airways Corporation ( JetBlue ) will offer the traveling public fares that will stimulate market demand and provide the traveling public with true benefits that are not now available. As demonstrated below, of the two low cost carriers in this proceeding, JetBlue s combination of low fares, exceptional service, customer satisfaction and comfort, together with a superior route structure for the Colombian market require the selection of JetBlue for fourteen (14) of the twenty-eight (28) frequencies available for allocation in this proceeding. Colombia is a market that may have resisted low fares in the past. JetBlue recognizes that this resistance could resurface. The possibility that this resistance may resurface, however, is far outweighed by the clear public benefits that JetBlue s proposed service would provide. Because of this fact, JetBlue s proposal more than justifies the Department s selection of JetBlue for the award of fourteen (14) U.S.-Colombia frequencies. JetBlue respectfully submits this Consolidated Answer in opposition to the applications filed by Delta Air Lines, Inc. ( Delta ), Continental Airlines, Inc. ( Continental ), Spirit Airlines, Inc. ( Spirit ), and U.S. Airways Corporation ( U.S. Airways ), and the response of American Airlines, Inc. ( American ) regarding the allocation of twenty-eight (28) newly available U.S.-Colombia frequencies. It is clear that JetBlue s service is superior to other carriers and that the Department should grant JetBlue s request for certificate or exemption authority and fourteen (14) frequencies (seven (7) frequencies for MCO-BOG service and seven (7) for FLL-BOG service) for the following reasons: 1. Unlike American, Continental, Delta and Spirit, JetBlue would be a new 3

4 entrant to the U.S.-Colombia market, and would stimulate economic growth in the market by generating over 300,000 new passengers annually and will save travelers more than $58 million annually in the Bogotá to Orlando, Ft. Lauderdale/Miami, New York, Washington DC, and beyond markets, based upon JetBlue s successful history of stimulating markets upon its entry. 2. Unlike other applicants, JetBlue would bring award-winning low-fare service to the U.S.-Colombia market, and would offer fares that average approximately 23% below the fares to Colombia currently offered by incumbent carriers. 3. JetBlue s proposed service would provide the first U.S.-flag carrier service from Orlando and Fort Lauderdale to Bogotá, the first non-code-share U.S.-flag carrier service from New York/JFK to Bogotá, and a strong new U.S. gateway to Colombia in Orlando, both O&D and with 18 connecting options. 4. JetBlue s single-plane, single flight-number behind-gateway service from New York/JFK on its MCO-BOG route would provide the New York City metropolitan area s substantial Colombian population with the first lowfare air travel service to Colombia. Today, this large community enjoys multiple daily nonstop flights from both JFK and EWR, but they lack a proven high-quality, low-fare carrier. 5. JetBlue s single-plane, single flight-number behind-gateway service from Washington, D.C./IAD on its FLL-BOG route would link the U.S. and 4

5 Colombian capital cities and attract government travelers. JetBlue participates and actively pursues preferential carrier status in the City Pair Program, and will continue to do so by offering fares significantly lower than current Colombia fares in the program. 6. JetBlue is uniquely able to dedicate additional aircraft to its proposed service as warranted by consumer demand, and has firm orders for the delivery of new A320 aircraft throughout 2008, which no other carrier can match. 7. JetBlue is committed to providing large jet, year-round daily low-fare service to Colombia and would accommodate more passengers and offer superior travel benefits to the public than U.S. Airways service with mixed sized seating capacity, varying on the time of year. 8. JetBlue s proposed service would be more attractive to passengers seeking ultra low-cost carrier service to Colombia than Spirit s service, through JetBlue s superior connections, service and amenities for its passengers. 9. An award of frequencies to American, Continental or Delta is inappropriate because those carriers, along with their code-share partners, already provide extensive nonstop U.S.-Colombia service in each market they seek in this proceeding and control all of the seats in the U.S.- Bogotá market. An award to those carriers would neither increase competition nor benefit the public, because those carriers would only become further entrenched and established, with still no competitive incentive to offer low-fare service to passengers. 5

6 JetBlue is the only carrier able to offer all of the above benefits through its proposed U.S.-Colombia service. JetBlue s proposed service will promote the public interest as a new entrant and the first low-fare carrier, offering daily year-round service to Bogotá. It is clear that no other carrier matches JetBlue s unique combination of awardwinning low-fare service, potential to grow the U.S.-Colombia market through JetBlue s proven stimulation of established markets, and connecting service options for passengers in its proposed service. JetBlue looks forward to instituting its award-winning service to Bogotá and bringing low-fare benefits to its customers. I. JetBlue is the Best-Suited Applicant to Serve the U.S.-Colombia Market. JetBlue is the best-suited applicant for U.S.-Colombia frequencies, and should be awarded fourteen (14) frequencies for its proposed MCO-BOG and FLL-BOG routes. 2 In its Order, the Department stated: Our principal objective will be to maximize public benefits that will result from award of the authority in this case. In this regard, we will consider which applicant will most likely offer and maintain service that best meets that needs of the traveling and shipping public. We will also consider the effects of the applicants service proposals on the overall competitive environment, including effects on the market structure and the level of competition in the U.S.-Colombia market. In addition, we will consider other factors historically used for carrier selection, where they are relevant. Order , at 4 (emphasis added). Based upon the Department s stated criteria JetBlue s proposed service would best meet the needs of the traveling and shipping public, and will enhance competition in the U.S.-Colombia market. 2 JetBlue refers to and incorporates its original Application (filed October 12, 2007 in Docket OST ) and its Supplemental Application (filed Dec. 6, 2007 in this Docket) in their entirety. A system-wide map of JetBlue s current route system is set forth in Exhibit A-1. 6

7 First, JetBlue would be a new entrant to the U.S.-Colombia market, and would offer important benefits in that market, such as competition to the very entrenched incumbent carriers also seeking additional frequencies. The Department has repeatedly emphasized new entry in limited entry markets as a key aspect of enhancing competition. See, e.g., Order , at 11 (Sept. 11, 2006) (awarding JetBlue primary authority in the New York/Newark-Cancun market because JetBlue would offer important newentrant benefits, not only at Cancun, but also in the U.S.-Mexico market overall, including superior market structure benefits and connecting service advantages ); see also Order (May 4, 2005) (awarding Alaska Airlines primary exemption authority in the Los Angeles-Mexico City market because it will bring new service options to consumers, and a competitive impetus to incumbents to improve their service offerings ). Since the Department s award of authority to JetBlue for U.S.-Cancun service, JetBlue has increased its service to three times per day from JFK and five times per day from Boston, with an application pending for service from Orlando. In addition, traffic has increased by 23% in the NYC-CUN market since JetBlue s entry. 3 Here, American, Continental, and Delta already provide service to Colombia, and have held frequencies for U.S.-Colombia service for several years. Spirit also has been granted authority to fly to Cartagena, Colombia. By contrast, JetBlue s entry in the U.S.- Colombia market, and, in particular, the U.S.-Bogotá market, would increase competition among all carriers serving that market, resulting in stimulated economic growth and 3 U.S. DOT Origin & Destination Survey, 2Q 2007 versus 2Q 2006 via Airline Planning Group s APGDat. 7

8 greater benefits to the public. 4 JetBlue s proposed service will serve over 300,000 new passengers annually, and will save travelers more than $58 million annually in the Bogotá to Orlando, Ft. Lauderdale/Miami, New York, Washington DC, and beyond markets. This is consistent with JetBlue s history of stimulating already mature international markets upon its entry. By way of example, JetBlue s entry in the JFK-AUA market stimulated travel by 33% and reduced fares by 14%, 5 and its entry in the JFK-STI market stimulated travel by 81% and reduced fares by 46%. 6 Similarly, JetBlue s entry in the JFK-SJU market stimulated travel by 14% and reduced fares by 20%, 7 and its entry in the MCO-SJU market stimulated travel by 25% and reduced fares by 11%. 8 Unlike other carriers, JetBlue is in a unique position to significantly increase public benefit above and beyond the frequency authorizations it requests. While the direct consumer benefit may be only from the seat and cargo capacity JetBlue introduces to the market, JetBlue has a proven history of revolutionizing market dynamics, which ultimately force its competitors to utilize their resources more effectively in producing the maximum public benefit. In the JFK-STI market, for example, which JetBlue launched in June of 2004, not only did JetBlue generate significant additional customers of our own, but JetBlue s lower fares were also matched by its competition, generating 4 U.S. Airways does not presently provide service to Columbia, but for the reasons discussed below, it provides limited benefits, if any, to the traveling public. 5 U.S. DOT Origin & Destination Survey, 2Q 2007 versus 2Q 2006 via Airline Planning Group s APGDat. 6 U.S. DOT Origin & Destination Survey, 1Q 2005 versus 1Q 2005 via Airline Planning Group s APGDat. 7 U.S. DOT Origin & Destination Survey, 1Q 2003 versus 1Q 2002 via Airline Planning Group s APGDat. 8

9 substantial additional public benefit. Prior to our entry, in 4Q 2003, American carried 449 passengers per day each way at an average one way fare of $158, and Continental carried 92 at $184. In 4Q 2004, after JetBlue introduced a customer-friendly low-fare structure to the market, American s traffic surged by 36% to 612 passengers per day each way, even as it dropped its average fare by 37% to $99 to become competitive with JetBlue, and Continental s traffic surged by 31% to 121 passengers per day each way, while its average fare dropped by 34% to $ In addition, JetBlue has created substantial consumer demand in new leisure markets through its service. See Supplemental Application of JetBlue Airways Corporation, at 10 (filed Dec. 6, 2007) ( (1) JetBlue offered the first service in the MCO- BQN market in May 2006, and stimulated service from 0 to 91 passengers per day each way; (2) JetBlue offered the first service in the JFK-PSE market in June 2005, and JetBlue s entrance in the JFK-PSE market stimulated service from 0 to 173 passengers per day each way. ). JetBlue believes the MCO-BOG and FLL-BOG markets will see similar stimulation, which provides substantial benefits to the traveling public through increased capacity and lower overall fares. Second, JetBlue would provide the first low-fare air travel options for consumers in the U.S.-Bogotá market. Over the past several years, low-fare carriers in the U.S. market have grown, and low-fare carriers now account for nearly 30% of all domestic air 8 U.S. DOT Origin & Destination Survey, 1Q 2007 versus 1Q 2006 via Airline Planning Group s APGDat. 9 U.S. DOT Origin & Destination Survey, 4Q 2003 versus 4Q 2004 via Airline Planning Group s APGDat. 9

10 transportation. 10 However, there is currently no low-fare service to Colombia. Although Spirit has been granted authority to fly to Cartagena, it has not yet instituted service. Colombia s capital city, Bogotá, is not served by any low-fare U.S. carriers. JetBlue s proposed service would provide much-needed low-fare service to Bogotá, and would remedy the current deficiency of low-fare service in the U.S.-Colombia market. JetBlue s lowest fares would average approximately 42% below the fares to Colombia currently offered by incumbent U.S. carriers (Based JetBlue s fare structure and DL s lowest selling fare in FLL-BOG. The benefits of a low-fare competitor in a market are well-established and long recognized by the Department. The Department has observed: The entry of a low-fare competitor into a hub-spoke route normally results in increased capacity in the market. While the new entrant adds frequency and seats, the incumbent carrier also typically maintains seats and frequencies. It is evidence that a strong demand for low-fare seats remains unmet in markets without low-fare competition, and that the pentup demand for low-fare service is enormous. 11 JetBlue s entry as a low-fare competitor in the U.S.-Colombia market would enable more travelers to benefit from the recently achieved bilateral expansion of rights. This is the epitome of the Department s stated goal to maximize public benefits. Order at 4. Moreover, JetBlue s low-fare service has won significant industry and consumer satisfaction awards, including Condé Nast Traveler s Readers Choice Award for Best Domestic Airline for several years, and J.D. Power and Associates Top Low Cost Airline for Customer Satisfaction. JetBlue has won multiple significant customer 10 See DOT Inspector General Report, Aviation Industry Performance, at 12 (Aug. 4, 2006). 10

11 satisfaction awards in 2007 and A list of awards received by JetBlue in 2007 and 2006 is set forth in Exhibit A-3. No other carrier can match JetBlue s proven highquality customer service and its low-fare flights. Third, JetBlue would provide the first U.S.-flag carrier service to Bogotá from Orlando and Fort Lauderdale, two cities that can support frequent U.S.-Colombia service. Orlando is the primary hub for air travel in Florida, with more nonstop scheduled service to more U.S. cities, and more passengers per year (nearly 36 million in the past year) than any other Florida airport, yet it lacks service to Colombia. 12 Moreover, as of 2006, 32% of all persons of Colombian origin living in the United States resided in Florida. 13 In fact, between 1990 and 2000, the number of persons of Colombian origin residing in central Florida rose 136 percent. 14 Central Florida is a increasingly popular destination for Colombians visiting the United States; more than 20% of Colombians who traveled to the United States in 2006 visited Orlando. 15 Overall, Orlando is the second-most popular U.S. destination for Colombian visitors, behind Miami/Fort Lauderdale. Florida also has strong economic ties to Colombia, and exported $1.6 billion to Colombia in Orlando is accessible from many areas of Florida because it is centrally located in the state, and JetBlue has the strong support of the Orlando community, as shown by the numerous letters of support being sent to the Department in support of JetBlue s 11 Dominated Hub Fares, Office of the Assistant Secretary for Aviation and International Affairs, Dep t of Transportation (Jan. 2001). 12 See 13 U.S. Census Bureau, 2006 American Community Survey. 14 U.S. Census Bureau, 2000 Census. 15 U.S. Dep t of Commerce, Office of Travel & Tourism Industries. 16 Sec y of Commerce Carlos M. Gutierrez, History will Severely Judge a Rejection of FTAs, Miami Herald, Sept. 20, 2007, available at: 11

12 proposed service (see Exhibit A-2). Thus, Orlando, perhaps uniquely among the proposed new gateways, can support frequent U.S.-Colombia service especially with the behind gateway service originating in New York City. Similarly, the Miami/Fort Lauderdale metropolitan area is home to the largest percentage of persons of South American origin and the largest percentage of persons of Colombian origin. The Miami/Fort Lauderdale metropolitan area contains over five million people, with 419,912 persons of South American origin (7.69% of the total Miami/Fort Lauderdale population), and 176,214 persons of Colombian origin (3.23% of the total Miami/Fort Lauderdale population). 17 Moreover, South Florida-Bogotá is the third-largest U.S.-Latin America air travel market. 18 In 2006 alone, over 49% of the total passengers traveling in the U.S.-Colombia market traveled through south Florida. 19 As of 2006, 68% of all persons of Colombian origin in Florida resided in Broward, Miami- Dade, and Palm Beach counties in South Florida. 20 Fort Lauderdale/Hollywood International Airport is located in Broward County, and would be more convenient for residents in Broward and Palm Beach counties than Miami International Airport, where U.S.-Colombia service is currently provided by American and Avianca/Delta. Thus, the population in South Florida can clearly support increased travel options from Fort Lauderdale to Colombia through JetBlue s proposed FLL-BOG service. In the MIA- BOG market, American s fare ranges from $188 to $614, while in a similar international market served by JetBlue, JFK-STI, fares are 35-42% lower, ranging from $109 to $ U.S. Census Bureau, 2006 American Community Survey. 18 See U.S. DOT DB1B 2Q 2007 passenger traffic database (South Florida includes Fort Lauderdale, Miami, and Palm Beach). 19 U.S. Census Bureau, 2006 American Community Survey. 20 Id. 12

13 JetBlue s proposed low-fare service in the MCO-BOG and FLL-BOG markets would provide travelers with eighteen (18) convenient large mainline jet connecting options. Travelers on JetBlue s MCO-BOG and FLL-BOG routes will be able to connect to the following cities: New York/JFK, Washington/Dulles, Buffalo, Newark, Stewart/Newburgh, Portland (Maine), Boston, San Juan, New York/LaGuardia, Raleigh- Durham, Charlotte, White Plains, Richmond, Chicago/O Hare, Burlington, Pittsburgh, Syracuse and Rochester. A list of connecting cities for each route in JetBlue s proposed low-fare service is set forth in Exhibits 1 and 2 to JetBlue s supplemental application. In addition to providing friendly low-fare service to residents of Colombia, South Florida, Central Florida, and beyond, JetBlue s proposed U.S.-Colombia service will also best serve the major tourism markets of Orlando, Fort Lauderdale/Miami and Bogotá. (See, e.g., Letters of Support, Exhibit A-2). Orlando is an ideal destination for Colombian visitors due to its proximity to major attractions, such as Disney World, Sea World, and Cape Canaveral. Similarly, Fort Lauderdale is located near world-renowned beaches, hotels, dining, and entertainment. Bogotá, Colombia s capital city, is an increasingly popular travel destination, and was recently named one of the best places to visit in 2008 by the New York Times. 21 Travelers on JetBlue s proposed MCO-BOG route have easy connections to cruises through Port Canaveral, which is located less than one hour away, and served 4.5 million cruise passengers in Similarly, travelers on JetBlue s proposed FLL- BOG route have easy connections to cruises through the adjacent harbor of Port 21 See Denny Lee, The 53 Places to Go in 2008, N.Y. Times (Dec. 9, 2007), available at &en=7e247eb246f4f30a&ei=5087%0A (Bogotá is #21). 13

14 Everglades, which serves more than 5,300 ships per year and offers daily and multi-day cruises. 23 Fourth, JetBlue s low-fare, single-plane, single flight-number behind-gateway service from JFK on its MCO-BOG route will stimulate air travel to Colombia from the New York City metropolitan area, which has the greatest number of persons of South American and Colombian origin in the United States. The New York City metropolitan area contains over eighteen million people, with 763,624 of South American origin, and 227,296 of Colombian origin. Currently, however, only two daily flights to Colombia (Continental from Newark and Delta from JFK, both to Bogotá) are available. Even though Delta has applied for nonstop JFK-BOG service, Delta will not materially affect demand in the New York market because it already provides nonstop service to Bogotá from New York City through its code-share service with Avianca on its JFK-BOG route and with its global Skyteam partner Continental on its EWR-BOG route. Delta also provides one-stop service from New York over Atlanta on its ATL- BOG route. Thus, an award to Delta is both non-competitive and unnecessary, and would have no benefit to the traveling public. See pp , infra. In addition, Delta s fares range from $232 to $820 each way in economy class, which is substantially higher than JetBlue s likely fares of $159 to $499. Unlike Delta s proposed service which would not stimulate significant additional travel, JetBlue would offer average fares that are 23% lower than the current fares to Colombia offered by incumbent carriers, and would save the traveling public $58 million annually in the Bogotá to Orlando, Ft. Lauderdale-Miami, New York, Washington DC, and beyond markets. 22 See 14

15 JetBlue is the largest U.S. carrier at JFK with 27% of total market seats, and has a very large, loyal and growing customer base in the New York metropolitan area (as well as throughout the United States). Thus, the New York City metropolitan area can support more U.S.-flag service to Colombia, and JetBlue s proposed service to Bogotá originating in JFK would best provide that service through low fares and convenient travel through Orlando. Fifth, JetBlue s low-fare, single-plane, single flight-number behind-gateway service from IAD on its FLL-BOG route will provide a crucial link between the U.S. capital city of Washington, D.C. and the Colombian capital city of Bogotá. Currently, there is no non-stop service to Bogotá from IAD, and no one-stop service on that route over FLL or any other U.S. point. JetBlue s proposed service would provide convenient one-stop capital-to-capital service between Washington and Bogotá, which will likely attract government and business leaders from each capital. JetBlue has a history of strong growth in the D.C. market. In November 2001, JetBlue launched service from IAD with one (1) flight per day to FLL, yet today, JetBlue offers up to twenty two (22) flights per day from IAD to BOS, FLL, JFK, LAS, LGB, MOC, OAK, and SAN. JetBlue is now the second-largest carrier at IAD. Finally, JetBlue s strong economic presence and ongoing growth and development makes it uniquely able to dedicate additional aircraft to its proposed U.S.- Colombia service. JetBlue has firm orders for the delivery of seven (7) new A320 aircraft in 2008, and will take delivery of those aircraft throughout the year. No other carriers are adding this many aircraft to its fleet over the next year. For example, Delta 23 See 15

16 has taken delivery of ten (10) aircraft to be used in international markets, but admits that of those 10, eight (8) are currently flying domestic routes. Delta also estimates that its domestic capacity will shrink by 4-5%. 24 By contrast, JetBlue is uniquely positioned to continue to grow its U.S.-Colombia service based upon customer demand and available frequencies without reassigning aircraft from other routes. No other carrier can match the benefits offered by JetBlue s proposed service, and no other carrier better meets the needs of the traveling public and enhances the overall competitive environment than JetBlue. Thus, JetBlue is best-suited for an award of fourteen U.S.-Colombia frequencies, and the Department should grant its application. JetBlue strongly urges the Department to grant its full request of fourteen (14) frequencies. In order to fulfill the greatest public benefit and provide the most possible options to the communities JetBlue serves, JetBlue needs the full service package of both MCO-BOG and FLL-BOG routes. JetBlue plans to aggressively market its Bogotá service, both in the United States and in Colombia, and in order to do so, it must be able to advertise a significant breadth of service to and from South Florida, Central Florida, and eighteen (18) communities beyond. II. JetBlue s Proposed Service Would Provide Greater Benefits to the Public Than Other Carriers. Unlike American, Continental, Delta, and Spirit, JetBlue would be a new entrant in the U.S.-Colombia market, and is best-suited to stimulate growth and competition in that market. In addition, neither Spirit nor U.S. Airways can match JetBlue s awardwinning ultra low-cost service. i. The Incumbent Carriers Proposed Service Would Not Enhance the 24 See Delta Airlines, Inc. Form 8-K, filed Dec. 7,

17 U.S.-Colombia Market. Here, an award of frequencies to American, Continental or Delta, all of whom already provide service to Colombia, would provide no benefits to the public through enhanced service options or new competition. Indeed, unlike JetBlue s proposed service, the service proposed by the incumbent carriers would offer no low-fare service, and would not even introduce a new U.S. gateway and would provide competition to their own existing service. In addition, an award of frequencies to American, Continental or Delta would have no beneficial effect on the overall competitive environment of the U.S.- Colombia market. Instead, such an award would only further entrench those carriers in the high-fare U.S.-Colombia market. JetBlue s application, however, would bring important low-fare service to travelers in the U.S.-Colombia market as a new entrant, and would stimulate growth and competition among U.S. carriers and U.S. gateways in that market. The proposals of American, Continental and Delta for frequencies would not provide the same benefits as JetBlue s proposed service, and therefore the incumbent carriers applications should be denied. First, Continental s application should be denied as not meeting the Department s stated criteria for awarding U.S.-Colombia frequencies because Continental s proposed service would neither meet[] the needs of the traveling and shipping public nor enhance the market structure and the level of competition in the U.S.-Colombia market. See Order , at 4. Continental requests seven frequencies to increase its Houston- Bogotá service, which it already operates. Continental admits that the primary benefit of its proposed service would be alternative departure and arrival times for passengers 17

18 already traveling to Bogotá from Houston. Moreover, Continental s proposed service would not enhance the market structure or the level of competition in the U.S.-Colombia market. Continental is a wellestablished incumbent carrier, with twenty-one (21) U.S.-Colombia frequencies. It already uses 14 of those frequencies to provide service to Colombia from Houston, and unlike JetBlue s proposed service, Continental s proposed service would neither introduce a new U.S. gateway nor enhance gateway competition. Its proposed additional service from Houston would not even increase competition in the Houston-Colombia market, because Continental is the only U.S.-flag carrier providing service to Colombia from Houston. In addition, Continental already has a code-sharing relationship with Colombian-flag carrier AeroRepublica, through which it provides further service. Thus, Continental s application would run contrary to all of the interests emphasized by the Department in its Order. Finally, with respect to Continental s desire to increase its presence in Bogota, it operates its IAH-BOG service using a 124-seat Boeing , yet it could operate any of its larger aircraft. Continental has seven additional larger fleet types, collectively reaching over 200 aircraft, ranging from the 155-seat to the 283-seat The Department should be curious about Continental s stated interest in increasing its IAH-BOG frequencies to accommodate more passengers when it already has the ability to accommodate those passengers using larger aircraft on its current IAH-BOG flights. While it is understandable that Continental would like to strengthen its existing service to Colombia with additional flights on its established route, its proposal is clearly not the best use of any available frequencies by providing any benefit to the traveling public. 18

19 Second, Delta s application should be denied, because it already provides extensive U.S.-Colombia service through its seven (7) frequencies and its broad codeshare relationship with Colombian carrier Avianca. Delta s claim that it would be a new entrant in the JFK-BOG market is false and disingenuous, because Delta already provides daily service in that market through its code share partner. In its application, Delta admits that its DL* designator code is currently displayed on several Avianca-operated flights, including BOG-JFK. Nevertheless, Delta states that it does not expect the proposed New York- Bogotá and Atlanta-Medellin/Cali services to result in any material changes to the existing codeshare offerings, and it currently plans to keep the DL designator code and AV designator code on all existing codeshare routes. Supplement No. 1 and Amendment to Application of Delta Air Lines, Inc., at (filed Dec. 6, 2007). The daily JFK-BOG service provided by Delta through Avianca is the only JFK- BOG service currently provided. Delta also offers one-stop service from New York/LaGuardia and JFK over Atlanta via its code-share ATL-BOG route. Thus, if the Department awarded frequencies to Delta for such service, with Delta s intention to continue its code-sharing arrangement with Avianca on the JFK-BOG route, it would only enhance Delta s presence in this market and allow it to be competing against itself. Similarly, Delta already provides service to Medellin and Cali. Delta admits that the DL* designator code is currently displayed on the following flights: CLO-MIA, JFK-MDE, MIA-MDE, BOG-CLO, BOG-MDE, and CLO-MDE. Thus, contrary to Delta s assertions that it would be a new entrant in the U.S.-Medellin and U.S.-Cali markets, it already provides service in those markets. Finally, Delta admits that it already has a solid presence in South America. Like its Skyteam Alliance partner 19

20 Continental, then, an award of frequencies to Delta would not enhance the level of competition in the U.S.-Colombia market, because Delta already provides extensive service to Colombia and other South American countries, through its own service as well as its code-sharing relationships. In Delta s supplemental filing, it states that Delta s ability to expand service to Colombia has been stymied due to the frequency restrictions under the bilateral air transport agreement, which had limited Delta to only a single daily nonstop flight. In that filing, Delta also provided its fleet size, which includes a number of aircraft larger than the 183-seat Boeing used for its ATL-BOG route, including seat aircraft, seat aircraft, and seat aircraft. Delta launched its ATL-BOG service in January 2001, and since then, has only dedicated a larger aircraft on that route for a single month, in November Delta s sudden interest in expanding its Colombia presence by adding JFK-BOG, ATL-CLO and ATL- MDE service appears to be targeted more at locking out new entrants than truly expanding service options or benefiting the public, as Delta has had ample opportunities to increase its equipment size in its ATL-BOG service. Additionally, as noted above, Delta is already able to serve all of its requested origins and destinations on its own service or through code-share service. If awarded the frequencies it requests, Delta would simply be reallocating customers from its existing Atlanta service and its multiple code-share flights to its proposed JFK-BOG service. The Department should question Delta s dedication to the New York market because Delta has had the opportunity to make JFK a single-flight, single-aircraft through service to Bogotá via Atlanta, but has opted not to do so since it launched service to 20

21 Colombia. Finally, Delta has a history of not maintaining or growing service on international routes from JFK and ATL. For example, Delta entered the ATL-BJX market in October 2000, exited that market in August 2001, and only returned in December Similarly, Delta entered the JFK-NAS market in December 2004, but abandoned that market in April By contrast, JetBlue entered the JFK-NAS market in November 2004 and continues to provide daily nonstop service in that market. Delta s inability to maintain service on international routes from JFK and ATL should make the Department curious as to whether it will be able to maintain the JFK-BOG service it now seeks, particularly in competition with its own code-share service on that route through Avianca and the EWR-BOG service provided by its Skyteam partner, Continental. Thus, contrary to Delta, JetBlue is dedicated to the markets it serves and always maintains a minimum of daily service in every market it serves. The restricted U.S.-Colombia market needs a true new low-cost entrant to enhance competition and growth through low-fare service, and Delta does not meet those needs. Third, American s request for reallocation of the long-unused seven (7) frequencies should be denied. American proposes using those seven frequencies for U.S.-Colombia routes on which it already provides service. American already provides eighteen (18) weekly nonstop MIA-BOG flights, ten (10) weekly nonstop MIA-MDE flights, seven (7) weekly nonstop MIA-CLO flights, and seven (7) weekly nonstop MIA- BAQ flights. American requests reallocation of its previously-held seven (7) dormant frequencies to add three (3) MIA-BOG flights and four MIA-MDE flights. American s proposed service would not enhance any inter-gateway competition 21

22 or offer new benefits to the traveling public. Indeed, American s proposed use of the seven (7) frequencies it requests would only augment its already substantial service to Bogotá and Medellin. American proposes service using its Miami hub, from which it already offers extensive service to Colombia. In addition, American would offer no lowfare service, a benefit needed in the U.S.-Colombia market. Instead, American s proposed use of seven (7) frequencies would only further entrench American as the dominant U.S. carrier in the restricted U.S.-Colombia market, and it would continue to control the MIA-Colombia market. Like Continental, American s proposed U.S.- Colombia service would merely be more of the same. Moreover, American should not be rewarded for not using its U.S.-Colombia frequencies in the past. A decision by the Department to reallocate seven (7) frequencies to American for its proposed U.S.-Colombia service would do exactly that. American should not be given seven (7) valuable U.S.-Colombia frequencies when it has previously demonstrated an unwillingness to use them. Its proposal overall is a continuation of the same old song, would not serve any of the interests emphasized by the Department in its Order, and should be denied. ii. JetBlue is the Best-Suited New Entrant for the U.S.-Colombia Market. JetBlue is far better-suited as a new entrant in the U.S.-Colombia and U.S.- Bogotá market than either U.S. Airways or Spirit. While U.S. Airways would be a new entrant in the U.S.-Colombia market, it cannot match JetBlue s low fares or awardwinning customer benefits. Compared to JetBlue, U.S. Airways would use smaller and less comfortable aircraft and would upgauge to larger aircraft only during peak periods. Similarly, Spirit cannot match the award-winning customer benefits that JetBlue provides 22

23 on its flights for the same cost. In addition, JetBlue would provide more expansive connections on its proposed U.S.-Colombia routes than Spirit. Thus, JetBlue would clearly offer greater flight options for travelers to Colombia. U.S. Airways cannot provide the low fares and award-winning customer benefits offered by JetBlue. JetBlue s proposed service has all of the benefits touted by U.S. Airways in its application and in addition provides low fare service from the same gateways. For example, like U.S. Airways, JetBlue would be a new entrant and would provide daily U.S.-Colombia service. Like U.S. Airways, JetBlue would provide service to Bogotá from the new U.S. gateway of Orlando, and JetBlue would also provide the first non-stop and non-code-share U.S.-flag service from Fort Lauderdale. JetBlue would also provide enhanced inter-gateway competition through the continental United States, and its proposed service would provide connections to eighteen (18) cities, first one-stop online connecting service to IAD and BOS, and first competitive service to three (3) points. Moreover, JetBlue s proposed FLL-BOG service would serve the Washington, D.C. metropolitan area through its behind-gateway service from Dulles International Airport (IAD), which would connect the U.S. and Colombian capital cities and attract the same government and business leaders as U.S. Airways proposed behind-gateway service from Reagan National Airport (DCA). Finally, U.S. Airways claims it can upgauge its fleet during peak travel periods, but JetBlue will provide year-round service on its large A320 aircraft, which will accommodate more passengers in a more comfortable environment than U.S. Airways proposed A319 aircraft throughout the entirety of the year. 23

24 In addition to offering all of the same benefits emphasized by U.S. Airways, JetBlue s proposed U.S.-Colombia service would give customers significant additional options. First, JetBlue will offer low fares for its U.S.-Colombia service, while U.S. Airways will not. JetBlue s proposed service will reach consumers interested in low-cost air travel to Colombia that will not be served by U.S. Airways proposed service, and will contribute to greater growth and competition in the U.S.-Colombia market. Second, JetBlue has award-winning customer service and extra benefits for all passengers, such as the most leg room of any U.S. carrier, with inches of leg room, DirecTV and XM radio, while U.S. Airways does not. 25 Finally, JetBlue has the ability, perhaps unique in the industry, to dedicate additional new aircraft to its proposed U.S.-Colombia service, which U.S. Airways cannot match. Thus, it is clear that JetBlue s proposed service is far superior to U.S. Airways proposal. In fact, U.S. Airways own President recently admitted that its international service in summer 2007 was a very bad international operation, which a number of our customers experienced. 26 In light of its own admission of international service problems, the Department should not reward U.S. Airways for poor international service with authority to expand that service to the U.S.-Colombia market. 25 In fact, JetBlue just announced this week that has partnered with LiveTV, Yahoo! And Research in Motion (RIM) to become the first U.S. domestic carrier to provide complimentary in-flight and instant messaging services, starting with BetaBlue, an onboard wireless network on its A320 aircraft. See JetBlue Press Release, BetaBlue Flies High with In-flight and Instant Messaging: JetBlue Airways Joins with LiveTV, Yahoo! And RIM to Become the First U.S. Domestic Carrier to Provide Free Inflight Connectivity (Dec. 11, 2007). 26 See Tom Belden, At US Airways: The Good, Bad and Indignant, Philadelphia Inquirer, Oct. 26, 2007, available at: story/ _at_us_airways The_good bad_and_indignant.html. 24

25 Similarly, Spirit s low-fare service cannot match the substantial customer benefits provided by JetBlue for the same price. In its supplemental application, Spirit emphasizes that it is an ultra low-cost carrier (ULCC) and would provide much-needed low-fare air travel options to Colombia. JetBlue offers the same low fares as Spirit, but does so with numerous accolades and above-standard treatment of all customers in a superior coach aircraft. In 2007 alone, JetBlue won every prestigious award for its expansive customer benefits and reliable service, even after much-publicized weatherinduced operational difficulties in winter 2007, including awards from J.D. Power and Associates, Consumer Reports, Condé Nast Traveler, and others. See Exhibit A-3. JetBlue s A320 aircraft has the widest fuselage of any single-aisle aircraft, and offers customers wider seats and aisles, all-leather pre-assigned seats, more overhead storage space, and inches of leg room, the most of any airline s coach class. All seats on JetBlue s A320 aircraft are equipped with DirecTV and XM Satellite Radio, and for international flights, complimentary in-flight movies. JetBlue has partnered with LiveTV, Yahoo! And Research in Motion (RIM) to become the first U.S. domestic carrier to provide complimentary in-flight and instant messaging services on its A320 aircraft. 27 JetBlue allows one carry-on bag and one personal item for each customer on all of its flights, and offers free and unlimited non-alcoholic beverages and snacks. By contrast, Spirit offers merely inches of leg room on its A319 aircraft, with its eight (8) Big Front Seat only matching the 36 inches of leg room provided in 27 See n. 25, supra. 25

26 the first eleven rows on JetBlue s A320 aircraft. 28 Spirit does not pre-assign seats, so customers must check-in before receiving their seat assignment. Spirit allows only one carry-on bag for free, and charges its customers $ for every checked bag. Finally, Spirit charges $1 for soft drinks and $2-4 for snacks. Spirit s approach to ultra low-cost service simply does not compare to JetBlue s award-winning and extensive service for the same price. Accordingly, customers seeking low-fare air travel options to Colombia from South Florida would receive greater benefits from JetBlue than Spirit. CONCLUSION Only JetBlue s proposed service would offer consumers low-fare service from a new entrant in the U.S.-Colombia market. JetBlue s proposed service meets all of the Department s requirements, and presents the Department with the opportunity to open up the Colombian market to competition with the entry of a successful, low-fare carrier. JetBlue s history indicates that its entry to the U.S.-Colombia market with award-winning customer service and low fares will increase competition among carriers, stimulate growth in the market, and lower overall fares. By contrast, the service currently provided by American, Continental, and Delta is substantial. These carriers already have extensive service to Colombia, and their selection for extra frequencies would add little to the restricted U.S.-Colombia market. The U.S.-Colombia service proposed by these carrier would be merely more of the same. Moreover, the service proposed by U.S. Airways and Spirit cannot match the public benefits and competitive growth that would result from JetBlue s proposed service. JetBlue is a true new entrant to the U.S.-Colombia market, and has a very large, 28 For details regarding the leg room available on Spirit s A319 aircraft, see 26

27 loyal and growing customer base throughout the United States. JetBlue s proposed service would liberate the restricted U.S.-Bogotá market from exorbitant fares, just as JetBlue has done in other international markets, and bring substantial new low-fare travel options to communities that presently have limited or no service to Colombia. JetBlue s proposed U.S.-Colombia service would provide the greatest public benefits and best meets the Department s criteria for an award of U.S.-Colombia authority, and its application should be granted. For the foregoing reasons, JetBlue respectfully requests that the Department grant its Application for a Certificate of Public Convenience and Necessity for Foreign Scheduled Air Transportation of persons, property and mail between the United States (Orlando and Fort Lauderdale) and Bogotá, Colombia, or grant it exemption authority, and allocate fourteen (14) frequencies for daily MCO-BOG and FLL-BOG service to JetBlue. JetBlue requests that the Department provide any other relief it finds to be in the 27

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29 EXHIBIT A-1 JetBlue s Route System

30 EXHIBIT A-2 Letters of Support for JetBlue s Proposed U.S.-Colombia Service

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32 December 5,2007 The Honorable Mary E. Peters Secretary Department of Transportation 400 Seventh Street, S.W., Room Washington, DC Re: Docket DOT-OST Aer Lingus Limited's Application for an Support for JetBlue's Application to Offer Orlando-Bogota Service Dear Secretary Peters: The OrlandoIOrange County Convention & Visitors Bureau, Inc. (Orlando CVB) joins the many other travel industry colleagues supporting JetBlue's application to offer the first non-stop service between Bogota, Colombia and Orlando. As Central Florida's number one industry, tourism brings nearly 50 million visitors to Orlando representing $29.6 billion to the local economy. The proposed air service between Bogoth and Orlando has the potential to positively impact the local economies of both South America and Central Florida with increased tourism and business activity. In partnership with the leading Colombian tour operators and wholesalers, as well as with our local tourism industry partners, the Orlando CVB has worked to grow Orlando's share of the Colombia visitor market. Currently it is estimated that the region attracts 80,000 Colombian visitors out of the nearly 365,000 visitors to the U.S. annually. This non-stop air service will provide a much-needed convenient alternative for packaging and selling travel to Orlando. On behalf of the entire Orlando tourism industry, we respectfully request your approval of JetBlue's application. Many thanks in advance for your consideration. Sincerely, President WEO Michael Reynolds, Deputy Assistant Secretary Susan McDennott, Deputy Assistant Secretary

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43 EXHIBIT A-3 Docket OST JetBlue Ex. A-3 Page 1 of 2 Awards earned by JetBlue in 2007: Best Low Cost Airline in North America Business Traveler, 2007 Best in Business Travel Awards Best Low-Cost Carrier Executive Travel, 2007 Leading Edge Awards Best Airline Kiplinger's Personal Finance Best Domestic Airline - Silver Award The Out Traveler, 2007 Readers' Choice Awards Best Domestic Airline Condé Nast Traveler, 2007 Readers' Choice Awards Best In-flight Entertainment Experience in the Americas World Airline Entertainment Association Avion Awards Best Passenger Experience The Budgies Best North American Low Cost Airline Skytrax World Airline Awards Best Domestic Airline Rated no. 2, Travel + Leisure World's Best Awards Top Low Cost Airline for Customer Satisfaction J.D. Power and Associates Best Airline Consumer Reports Best Domestic Airline for Service Rated no. 2, Travel + Leisure, World's Best Service Awards World s Most Reliable A320 Fleet Airbus Operational Excellence Awards Best Low Cost/No Frills Airline OAG, 2007 Airline of the Year Awards