BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

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1 BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. ) Application of ) ) JETBLUE AIRWAYS CORPORATION ) Docket DOT-OST ) 2016 U.S.-Cuba Frequency Allocation Proceeding ) ) CONSOLIDATED ANSWER OF JETBLUE AIRWAYS CORPORATION Communications with respect to this document should be addressed to: James G. Hnat Executive Vice President General Counsel & Government Affairs Evelyn D. Sahr Drew M. Derco Reese Davidson Eckert Seamans Cherin & Mellott, LLC 1717 Pennsylvania Ave., N.W. Twelfth Floor Robert C. Land Senior Vice President Government Affairs & Associate General Counsel Washington, D.C Tel: (202) Adam L. Schless Fax: (202) Director, Aircraft Transactions & International Counsel JetBlue Airways Corporation 1212 New York Avenue, N.W. Suite 1212 Washington, D.C Tel: (202) Fax: (202) March 14, 2016 Counsel for JetBlue Airways Corporation

2 TABLE OF CONTENTS PAGE I. INTRODUCTION... 1 II. JETBLUE S SERVICE PROPOSAL IS THE BEST OVERALL AND CLEARLY MERITS A MAXIMUM AWARD OF U.S.-CUBA FREQUENCIES... 1 III. IMPORTANCE OF FLORIDA... 2 IV. JETBLUE S SERVICE PROPOSAL GENERATES GREATER PUBLIC BENEFITS THAN ANY OTHER AIRLINE S PROPOSAL... 3 A. Delta... 3 B. Southwest C. United D. American E. Spirit F. Alaska G. Eastern H. Dynamic I. Frontier J. Sun Country K. Silver V. SUPPORT LETTERS VI. CONCLUSION... 47

3 BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. ) Application of ) ) JETBLUE AIRWAYS CORPORATION ) Docket DOT-OST ) 2016 U.S.-Cuba Frequency Allocation Proceeding ) ) CONSOLIDATED ANSWER OF JETBLUE AIRWAYS CORPORATION I. INTRODUCTION Pursuant to DOT Order , JetBlue Airways Corporation (JetBlue) submits this consolidated answer to the various applications of U.S. airlines requesting authority to serve Cuba. As explained below, JetBlue s frequency request will best maximize public benefits and should be granted without modification. JetBlue has a history of consistent and sustained growth in the Caribbean, competitive airfares and award-winning customer service that will thrive in the United States-Cuba market. Further, its balanced package of frequency requests will serve the largest and most important markets that exist between the United States and Cuba. II. JETBLUE S SERVICE PROPOSAL IS THE BEST OVERALL AND CLEARLY MERITS A MAXIMUM AWARD OF U.S.-CUBA FREQUENCIES A common theme in competing applications was unrealistic service proposals to cities in the United States that simply will not generate demand to Havana for the foreseeable future. As such, JetBlue urges the Department to carefully evaluate the benefits of granting scarce frequencies to some of the cities proposed by its competitors that cannot realistically support Havana service (i.e., Denver, Chicago, Dallas, etc). Should the Department nonetheless grant frequencies for service to those cities, JetBlue urges the Department to make back-up awards in each market

4 because many of the applicants simply will not be able to sustain long-term scheduled service to Havana. As demonstrated in its application and in this Answer, JetBlue s service proposal is the most superior option available to the Department. JetBlue s proposal combines its low airfares and exemplary customer service with flights to key focus cities that have significant and established Cuban-American populations and are immediately prepared to sustain the reasonable service levels JetBlue requests. For these reasons, and as explained more fully below, JetBlue urges the Department to grant it all of the United States-Cuba frequencies it has requested. III. IMPORTANCE OF FLORIDA JetBlue notes the wide geographic variety of proposals submitted to the Department and the brewing public policy question that the Department will soon address regarding how many frequencies should be used to connect Havana with Florida. The reason this is even a question for the Department to address is because of the inescapable fact that the vast majority of the population base that will utilize scheduled air service to Havana under the current travel restrictions lives in Ft. Lauderdale/Miami, Orlando and Tampa. 1 The second largest Cuban population center in the country is in the New York City metropolitan area. The record in this proceeding clearly demonstrates these straightforward facts and JetBlue urges the Department not to ignore the practical realities of market demand for Cuba service. South Florida s natural air links to Havana exist because of the strong cultural and familial connections between the two metropolitan areas, as exemplified by the large population of Cuban-Americans in South Florida. The population of Cuban-Americans living there, combined with South Florida s role as Capital of the Americas, 1 67% of the Cuban-American population of the United States lives in Florida. Within Florida, 79% of the Cuban- American population in the state lives in Miami/Ft. Lauderdale/Pompano Beach, all in the catchment area of FLL. See Exhibit B6-ANS-101 Slides 7 and 8. 2

5 means that frequencies between Florida and Havana will be the most important that the Department can grant in this proceeding. This inescapable fact does not, however, mean the Department should entirely ignore other geographic regions. JetBlue, for example, has applied to connect Havana with the important cities of New York and Boston. Nonetheless, JetBlue urges the Department to take a realistic approach to evaluating demand for extremely limited scheduled air service and to allocate the majority of frequencies for service to Florida. JetBlue also notes that it announced new service at Ft. Lauderdale/Hollywood International Airport (FLL) last week including a daily non-stop flight to New Orleans and two additional daily non-stop flights (for a total of five) to Nassau, Bahamas. 2 Such new service is demonstrative of JetBlue s longstanding and continuous commitment to FLL and South Florida. As noted in its application, JetBlue plans to operate an average of 140 daily flights in the winter at FLL in the coming years. This expansion will result in roughly 75 percent growth from JetBlue s current size at FLL. IV. JETBLUE S SERVICE PROPOSAL GENERATES GREATER PUBLIC BENEFITS THAN ANY OTHER AIRLINE S PROPOSAL A. Delta The Department should evaluate Delta s application in light of two well-demonstrated and documented patterns: Delta s casual disregard for operating limited international route rights for which the Department has previously granted it authority; and The Delta Dartboard strategy of adding new routes and then quickly discontinuing service. 2 See <http://www.businesswire.com/news/home/ /en/>. 3

6 The writing is already on the wall with regards to Delta s proposed U.S.-Cuba service, which is likely not sustainable and will certainly not maximize benefits for the traveling public. The Department should not entertain the Delta Dartboard strategy when it comes to limited-entry international markets, particularly the Cuba market where so many carriers are capable of and better positioned to provide quality long-term service as opposed to hoarding frequencies to prevent meaningful competition. Delta s proposed services are inherently uncertain, reliant on misleading claims and facts, and should be denied for the reasons explained below. 3 New York: JetBlue disputes Delta s various assertions regarding New York: Delta is NOT the regional leader in New York. 4 Delta does NOT provide convenient, one-stop options for travelers from 77 different points outside of Latin America. 5 Delta s Terminal 4 at JFK faces significant customer obstacles and numerous infrastructure issues. Delta appears to have padded its proposed schedules in order to give the false impression that it offers more connecting options than it actually does. For example, Delta boasts of providing Santiago, Dominican Republic-New York (JFK)-Havana service despite the great circuity 3 JetBlue also observes that Delta s application did not comply with the Department s instituting order, which invites U.S. carriers to apply for exemption authority and allocation of newly available frequencies and mandated that all applicants for allocation should also file corresponding requests for exemption authority. Delta s application did not request an exemption for the underlying economic authority and in fact did not once mention the word exemption, yet alone comply with the requirements of 14 C.F.R. Part 302, Subpart C. JetBlue reminds the Department that the instituting order noted that [a]ny carrier not in full compliance in any material respect with the Department s request will be subject to elimination from consideration for an award in this case. Five days after the Department s deadline, Delta filed a motion for leave to file an otherwise-unauthorized application for exemption authority. Delta claimed the exemption request had earlier been inadvertently omitted and blamed a technical omission. This technical omission in such an important proceeding is bewildering and proof that Delta is not committed to serving the United States-Cuba market. The Department should evaluate Delta s late-filed application in light of this technical omission and what it demonstrates about Delta s lack of serious interest in this historic route proceeding. 4 Delta application at 2. 5 Id. at 3. 4

7 involved (an over 16 hour trip with a 9-hour connection at JFK in the middle of the night) and the fact that offering Dominican Republic-Cuba service via the United States on a blind-sector basis provides no benefit to the U.S. traveling public. 6 Further, other airlines provide nonstop service from nearby SDQ to HAV today, making remote the prospect of Dominican Republic travelers ever considering this absurd option Delta highlights. Delta similarly boasts about the connecting options it offers over JFK for passengers from Israel, Guatemala, Colombia, Brazil, Iceland, Senegal and additional countries. Yet these connections also are intended entirely for blind-sector traffic and provide zero benefit for the U.S. traveling public. 7 A comparison of the domestic connecting destinations that Delta and JetBlue would offer for JFK-Havana service is illuminating and shows that JetBlue provides superior connections in the vast majority of city-pairs. The chart below shows that JetBlue offers all connections on mainline aircraft while a large percentage of Delta connections are on commuter-size aircraft. 6 See Exhibit DL JetBlue notes that it too provides international service both on its own metal and through its numerous codeshare agreements, including four two-way codeshare agreements by which JetBlue provides service to points in Africa, Asia and Europe. Unlike Delta, however, JetBlue did not attempt to mislead the Department by relying on Cuba-3 rd country blind-sector traffic in calculating its connecting options and preparing its schedule exhibits. 5

8 In fact, almost half of Delta s domestic JFK flights are on small commuter-size aircraft. All of JetBlue s connections, by contrast, are offered on large-jet aircraft, providing more comfort for customers than Delta s commuter aircraft. Moreover, JetBlue, not Delta, is the leading domestic airline at JFK. As a result of JetBlue s pioneering approach to domestic service at JFK starting in 2000, the airport is now busier than ever with service to many cities that never had a link to JFK before JetBlue. As the Department is aware, Delta even used several airlines-within-an-airline, Delta Express and later Song, in an attempt to mimic the JetBlue experience and serve the same domestic routes from JFK that JetBlue served on a more competitive basis. Both Delta Express and Song failed to replicate JetBlue s successful model. It is ironic for Delta to now claim that it is the leading airline at JFK when JetBlue offered more seats and flights from JFK than any other airline in 2015 and has invested over $1 billion at JFK for new facilities including a new terminal, customs facility and aircraft hangar. In addition, JetBlue has made additional investments in New York City including $40 million dollars for its new corporate headquarters in Long Island City. JetBlue s JFK-Havana service proposal, operated with a larger aircraft than Delta, is clearly the superior proposal. As detailed in its application, JetBlue has become the # 1 airline from JFK to the Caribbean because of its customer-friendly policies, new aircraft and low airfares. It also has a demonstrated history of stimulating service. Equally as important, JetBlue is committed to significant expansion in the Caribbean and Central and South America. Delta, on the other hand, has a demonstrated legacy carrier yo-yo history of adding service from JFK to the Caribbean to compete with JetBlue and then withdrawing such service when it is unsuccessful in head-to-head matchups with JetBlue. For example, as explained in Exhibit B6-ANS-101 Slide 12, Delta has ended service from JFK in 10 of 22 of its Caribbean markets. Between 2004 and 2016, Delta 6

9 ended service in 44 of 88 of its Caribbean markets. Furthermore, JetBlue continues to grow at JFK in a slot-limited environment by upgauging routes to its largest A-321 aircraft and attempting to maximize the use of each and every limited slot pair. 8 JetBlue s service proposal is also superior to the travel experience Delta would provide JFK-Havana customers. Despite the hollow spin by Delta s public relations office, it is a big stretch to proclaim that JFK s Terminal 4 is new. In 2013, Delta completed an expansion of one concourse of Terminal 4, but the terminal, built in the late 1990s, originally opened sixteen years ago, and the vast majority of the terminal structure dates from that time. Critics of Delta s new Terminal 4 are plentiful. One described being drenched in sweat after what felt like a ten miles long schlep while flying Delta out of Terminal 4. 9 These critics have also noted the inherent disadvantages Delta faced in trying to build a new terminal that is essentially an extension of the old terminal s concourse. For example, Delta s solution to the complex logistics of Terminal 4 was to laterally extend the narrow, finger-like concourse with low ceilings such that some passengers have to walk as far as almost an entire mile from their gate to the customs facility and then almost a mile back to their gate for a connecting flight. At the opening ceremony for the new Terminal 4, one U.S. Congressman from Queens joked I did need a plane ride to get from the entrance to here today. 10 For customers connecting to and from Havana, this would be no joke. Other critics have described needing hiking boots to navigate the maze of Terminal JetBlue notes that the U.S. Department of Justice is currently suing Delta and United to prevent a proposed JFK/EWR slot swap that the Justice Department alleges is anti-competitive. The record in this proceeding is unclear as to what, if any, effect the proposed slot transaction has on Delta s plans for JFK-Havana service. See <https://www.justice.gov/opa/pr/justice-department-files-antitrust-lawsuit-block-uniteds-monopolization-takeoffand-landing>. 9 See <http://onemileatatime.boardingarea.com/2015/04/22/review-delta-skyclub-terminal-4-jfk-airport/>. 10 See JetBlue Exhibit B6-ANS-101 Slide See <http://crankyflier.com/2015/01/12/delta-moves-most-regional-flights-to-terminal-4-at-jfk-tomorrow/>. 7

10 And those connecting passengers are the lucky ones; some have connecting flights at Terminal 2. Delta s application boasted about its new Terminal 4 but made no mention of Terminal 2, Delta s other terminal at JFK that dates from 1962 and is not even connected to the JFK AirTrain or to Terminal 4. Delta s split operation at JFK continues to confuse passengers, especially those who do not know if their flight will depart from Terminal 2 or 4 as they arrive at the airport and international passengers who exit customs and need to navigate their way to Terminal 2 without being able to take the AirTrain; some even have to switch terminals via a city bus. Delta s attempt at branding the commute a ride on the Jitney bus service has not made matters any easier for Delta passengers. Some passengers opt to walk, dragging their bags, often in inclement weather, between the two terminals and often are not informed that they will be making such a long trek when they deplane. All of this stands in stark contrast to JetBlue, which operates out of a state-of-the-art terminal, opened in late 2008, with its own newly-constructed customs facility that opened in 2014 allowing JetBlue customers to connect in the same terminal without ever having to step outside. JetBlue s Terminal 5, which is centered on a concert area and food court, has minimal walking involved for its 29 gates, features an outdoor park, a farm, award-winning dining and retail options, and is far more customer-friendly and easy to use than Delta s two separately located JFK terminals. Finally, the Department should not be swayed by Delta ranking JFK-Havana as its first priority. JetBlue reminds the Department that in 2010, Delta ranked Seattle-Haneda as its # 1 priority. The Department ultimately awarded Delta its # 2 and # 3 priorities (Detroit and Los Angeles). As the Department is well aware, Delta s Detroit-Haneda service was a failure and Delta eventually sought protection from the government in the form of a request to shift a limited 8

11 route right from Detroit to Seattle. The Department allowed Delta to do this in 2013 over the objections of other airlines. Then, only a year later, Delta squandered this DOT-bestowed opportunity, virtually abandoned its Seattle-Haneda route and ultimately sued the Department in the U.S. Court of Appeals for the District of Columbia Circuit when the Department instituted a proceeding to examine whether the public interest was being harmed. Despite prevailing in its quest to maintain the Seattle-Haneda route and, after abandoning its lawsuit, Delta ultimately abandoned the route in 2015 despite its being Delta s # 1 priority. If Delta s actions with Haneda are any guide, as they should be, the Department should be wary of Delta s commitment and reliability to operate Havana routes on a long-term basis. In fact, what is likely to result is Delta operating the route two days a week during certain months and then suspending the route for months at a time. The Department should not bet against the odds (and Delta s recent history) and should not reward Delta s past disappointing performance which resulted in harm to the traveling public. The frequencies at issue here are quite important and should not be squandered, particularly in this proceeding where there are clearly superior alternatives to Delta. Atlanta: There is no public benefits rationale for the Department to grant a scarce limited entry frequency to a city that has no natural market to Cuba. Delta s assertion that its proposed Atlanta- Havana service will have to aggregate other sources of traffic 12 is an admission of the obvious: there is simply no O&D market for such service. Delta admits that Atlanta s Cuban-American 12 Delta application at 1. 9

12 population is only 18,000, well behind much larger markets such as New York and Orlando and even behind smaller markets such as Houston and Las Vegas. 13 As the Department is well aware from its careful, repeated examinations of Delta s Haneda service proposals, some level of local O&D demand is necessary for any international service to be sustainable. ATL-Havana is likely to fail as a route and join the ranks of other failed Delta international routes out of Atlanta including Dubai, Kuwait City, Mumbai, Seoul, Shanghai, Tel Aviv and others. By contrast, each and every one of JetBlue s city-pair proposals involves cities with substantial local demand to Havana that is much greater than that from Atlanta. Finally, Delta claims that Atlanta will offer travelers ease of access to Delta s entire portfolio of connecting flights 14 with unsurpassed connectivity and convenience, 15 but recent news reports tell a dramatically different story about the convenience of Delta s Atlanta experience. Specifically, security lines at the airport have become unwieldy, sometimes causing fliers to miss flights when they get stuck in unexpectedly long queues with 30 to 60 minute backups becoming more common. 16 The situation has resulted in numerous negative customer surveys by Delta passengers and has become so unreliable that the airport is considering replacing TSA with qualified private contractors. 17 Miami: JetBlue agrees with Delta that the South Florida area has the highest concentration of Cuban-Americans in the entire country, with over 50% of the population located in the catchment area of FLL and MIA, and that the region is deserving of a large amount of the available Havana 13 The small Cuban-American population in ATL is likely the reason Delta has operated so few ATL-HAV charter flights. 14 Delta application at See Exhibit DL See < 17 Id. 10

13 frequencies. However, JetBlue strongly disagrees that Delta is in a unique position to offer meaningful competition to fellow legacy carrier American and, as explained below in Section IV (D), with Delta s assertion that FLL is not a substitute for MIA. Delta might be the second largest carrier at MIA, but this is simply a reflection of American s fortress hub dominance of MIA and Delta s status as one of the three largest U.S. airlines following industry consolidation. 18 Most savvy travelers in the metropolitan area realize that Delta is not a significant player in the South Florida market as it has for years failed to commit to properly investing resources in the area. Its ranking at MIA is mere happenstance rather than part of an overall Latin America strategy worthy of the Department s consideration in this contested proceeding. In fact, the Delta Dartboard history at MIA, like JFK, is illuminating of the weakness of Delta s MIA-Havana service proposal: In 2011, Delta launched an aggressive expansion at Miami, including the creation of a mini-hub to facilitate Delta s growth. Delta launched daily service from MIA-London Heathrow as well as 5x daily MIA-MCO service, 4x daily MIA-Jacksonville service, 5x daily MIA-Tampa 18 After its merger with Northwest, Delta operates primarily from Miami to its fortress hubs. See Application of JetBlue Airways Corporation for Exemption Authority and U.S.-Cuba Frequencies at 17 for a chart showing the effects of consolidation on industry concentration. 11

14 service and 2x daily MIA-Washington National (DCA) service. 19 The services were quickly deemed a failure; Delta promptly downgauged the MIA-DCA service from MD-88s to regional jets and ended almost all of the remaining service from MIA in Delta failed at Miami in 2012, less than four years ago, and there is no reason to think it will be more successful in Unlike JetBlue, which enters legacy carrier markets with lower airfares, stimulates traffic, and welcomes competition, Delta has a consistently poor track record of successfully providing service from other legacy-carrier hubs, as demonstrated by Delta s drawdown of its Miami mini-hub in 2012 and closure of its Dallas hub in Delta s closure of its Orlando hub in 2008, notably, can be directly attributed to the increased competition from JetBlue and other carriers. Orlando: JetBlue agrees with Delta that there is robust local demand to Havana with a large Cuban- American population of over 40,000 and an additional 100,000 Cuban-Americans within a twohour drive from Orlando. Delta s claims about the strength of its Orlando service proposal, however, are misleading. Delta historically operated a hub at Orlando but closed it in The service that remained includes mainline service to Delta s largest hubs and regional jet service to several smaller cities, often served only on a seasonal basis, and notably none to the Caribbean. JetBlue, on the other hand, is committed to Orlando, which has long been one of JetBlue s most important focus cities. JetBlue operates all service to Orlando on a year-round basis and is growing at Orlando with new service just launched to Mexico City. Further, JetBlue recently completed construction of The Lodge at Orlando Support Center, a boutique hotel that serves 19 See < 20 Delta ended service from Miami-London/Jacksonville/Tampa/Washington and reduced Miami-Orlando service from 5x daily to 1x daily, timed to connect to Delta s Orlando-Sao Paulo flight and not to cater to O&D demand. 12

15 the thousands of JetBlue crewmembers who travel to Orlando for orientation and initial and recurrent training. JetBlue invested $35 million in the expansive facility, which underscores the importance of Orlando to JetBlue and the long-term commitment JetBlue has to continued growth in Orlando. Since 2008, JetBlue has more than quadrupled the number of annual international departures from Orlando, as shown in the following chart: Delta, on the other hand, has not served any Caribbean destinations from Orlando since 2009 and recently ended its Orlando-Brasília service. Further, unlike Delta, which closed its Orlando hub despite the negative consequences for Orlando and its residents, JetBlue is fully committed to Orlando. Exhibit B6-ANS-101 Slide 20 provides multiple examples of JetBlue s involvement in the Orlando community. Furthermore, Delta s service proposal to Orlando is demonstrably weaker than JetBlue s competing proposal. For example, Delta proposes 160-seat Boeing service (including 16 first class seats) compared to JetBlue s proposed 200-seat Airbus A321 service. This difference of 40 seats each-way per day translates to approximately 30,000 additional seats per year that JetBlue would offer, which means that JetBlue would offer 13

16 additional market stimulation and value for Orlando-area passengers in addition to price savings that would result from JetBlue s more affordable airfares. JetBlue would offer almost 30,000 seats more per year than Delta 21 : Delta also claims that its Orlando service will include feed from 11 beyond destinations and offer through-service from Los Angeles. Delta s change-of-gauge connection times, however, are unattractive and unlikely to attract Los Angeles travelers, with a nearly four-hour connection eastbound and a nearly six-hour connection westbound. JetBlue s proposed Ft. Lauderdale- Havana service, on the other hand, will offer Los Angeles travelers more convenient connections, with two-hour connections both eastbound and westbound, nearly 100% more efficient connection times than Delta. Finally, Delta s claim that it will offer connections from 11 beyond destinations is misleading as Delta s own exhibits show that only six domestic flights will connect to Delta s 21 Based on 1x daily roundtrip frequency for a year. 14

17 MCO-HAV flight, which would depart at 0930 in the morning, including some connections on small regional jets, and such one-way connections provide limited benefits. 22 Delta s connecting schedules from HAV-MCO are likewise misleading in that some connections are only 60 minutes, which does not leave enough time for passengers to clear U.S. customs, re-check baggage, and clear security. B. Southwest JetBlue agrees with Southwest s data regarding the population of Cuban-Americans in Florida, particularly the fact that Florida s Cuban-American population represents approximately 68% of the population in the United States and is 14 times larger than the second largest state. As Southwest correctly noted, approximately 80% of Florida s total Cuban-American population resides in the Ft. Lauderdale/South Florida metropolitan area, which itself is larger than the population of Cuban-Americans found in any other state, with the remaining large population clusters located in and around Orlando and Tampa. JetBlue also agrees with Southwest that the best use of limited U.S. - Cuba frequencies, especially to Havana, is to allocate them where the O&D travel demand exists and that many cities that might justify nonstop service if pure leisure travel to Cuba were authorized simply will not have the number of passengers to support nonstop service. 23 However, JetBlue does not agree with the remainder of Southwest s application and urges the Department to reject Southwest s conditions and attempt to coerce the Department to grant it HAV frequencies by linking those frequencies to non-hav markets. 22 Delta also boasts about offering connecting service from Cancun, Mexico and Sao Paulo, Brazil to Havana over Orlando, despite it offering no benefit to the U.S. traveling public, but elsewhere in its application indicates that Latin American O&D traffic [to/from Cuba] is unlikely to flow over Florida due to the unattractive, overly circuitous routings involved, as well as the more stringent travel certifications that would be required relative to other, non-u.s. service operators. See Delta application at Southwest application at 6. 15

18 As an initial matter, JetBlue notes that Southwest proposes to operate all of its Havana frequencies with 175-seat Boeing aircraft, with 25 fewer seats than JetBlue s proposed FLL/MCO-Havana flights. 24 This translates to JetBlue offering 18,250 seats per year more than Southwest s competing proposal, for a single roundtrip FLL/MCO-HAV routing, as shown in the chart below: Southwest s application also raises important questions as to whether Southwest is committed or even prepared for the Cuba service it has requested. Southwest claims that it is in the midst of an aggressive U.S.-Caribbean/Latin America expansion program but disingenuously fails to mention that it is still cutting international routes that it inherited from AirTran as it continues to struggle to integrate its international operation with its historically domestic operation. JetBlue, in contrast, has steadily grown its international operation organically since 2004 and faces none of these growth issues in international markets. 24 As explained in its application, JetBlue intends to operate one of two MCO-HAV flights on an A-321 and two of four FLL-HAV flights on an A

19 Southwest s less-than-successful attempt to transition from a domestic airline into an international carrier has been well-documented. These struggles include basic technology shortfalls prohibiting the airline from interlining, codesharing or cooperating at any level with foreign airlines as well as ticket distribution issues abroad. 25 When Southwest has launched new international service on its own aircraft, it has overwhelmingly catered to ex-u.s. demand that is familiar with Southwest s direct distribution channels in the United States. Southwest has admitted its shortfalls in the Mexico market because of its internal technology issues that limit working through international distribution channels. 26 The Wall Street Journal recently reported that Southwest is showing its age and facing a steep learning curve as it begins international flying. The newspaper described the various challenges Southwest faces and noted that international flying: will require it to master marketing in foreign countries, hire overseas workers and even make sure its flight attendants have passports and undertake costly upgrades to its outdated computer systems a holdover from its simpler days to bring them in line with industry standards. 27 Another Wall Street Journal article a few months later elaborated on the obvious requirement that Southwest flight attendants and pilots must obtain passports in order to be able to crew 25 Despite announcing cooperation agreements with WesetJet in 2008 and Volaris in 2010, no cooperation ever materialized due to internal Southwest issues. 26 For us, these are -- we re adding service to cities where -- we try to add them to cities where customers will know us. Most of the traffic on these international flights are U.S. citizens, they're our customers already; we're giving them more product. It is pretty, I wouldn't call it easy but it's easier for us to penetrate those new markets. As compared to launching service to a new country where we're dependent upon travelers from that country knowing who we are and booking on Southwest that's a much bigger challenge. Southwest Airlines' CEO Gary Kelly on Q Results - Earnings Call Transcript, available at <http://seekingalpha.com/article/ southwest-airlines-luv-ceo-garykelly-on-q results-earnings-call-transcript?part=single> 27 See <http://www.wsj.com/articles/sb >. The article also described a recent operational meltdown that Southwest faced. The newspaper described the post-operationalmeltdown events as follows: After Southwest began requiring ramp workers to provide doctor's notes, the union sued the carrier for breach of contract in U.S. district court in Dallas. In court documents, Southwest alleged the sick calls were "widely perceived to be a coordinated job action to protest the slow progress" of contract negotiations. The union said there was no work action, but rather a spike in illnesses fueled by mandatory overtime that exhausted workers. The union also produced work logs that it said contradicted the company's sick-call figures. 17

20 international flights. It noted the resulting turmoil, including a requirement that employees receive cultural-awareness training and observed that [f]or some employees, it hasn t been a joke. 28 The Department should not use this important route proceeding, with so few HAV frequencies available and the future U.S.-Cuba relationship at stake, to reward an airline that is not equipped to handle these flights and that would essentially be using HAV frequencies as international training flights. Unlike JetBlue, which has had a consistent commitment to and focus on growth in the Caribbean and Latin America region, and has been continuously implementing its growth plan, Southwest has demonstrated a lack of commitment to the region. 29 Southwest proclaimed plans to greatly expand service to Mexico in 2016 but instead cut routes to Mexico. 30 It recently ended multiple routes to the Caribbean including Atlanta-Aruba/Bermuda/Montego Bay/Nassau/San Juan and Baltimore-Bermuda. 31 More importantly, Southwest s new markets often are only served with one daily flight, unlike JetBlue which continuously strives to add frequencies in order to stimulate traffic and grow international markets. Southwest claims that it is a low-fare leader, but these claims ring hollow in Southwest, along with American, Delta and United, collectively control more than 80% of seat capacity in the United States. Southwest is no longer a price-leader, or even an innovation leader, 28 See <http://www.wsj.com/articles/steep-learning-curve-for-southwest-airlines-as-it-flies-overseas >. 29 JetBlue notes that Southwest has not added any international destinations from Orlando since acquiring AirTran in Southwest ended San Antonio-Mexico City service as of March 9, See <http://www.travelweekly.com/travel-news/airline-news/southwest-ends-san-antonio-mexico-city-service>. 31 Southwest also inadvertently allowed certain of its DOT economic authority to expire for 3-months in late During that 3-month period, Southwest s authority to serve Aruba, the Bahamas, the Dominican Republic, Jamaica and Mexico was expired and Southwest was thus operating to the Caribbean without a proper DOT license. Such a lapse is indicative of Southwest s lack of commitment to the Caribbean and demonstrative of the lack of internal control necessary to successfully support an international operation. In renewing Southwest s lapsed authority in January 2016, the Department noted that Southwest s failure to maintain the proper economic authority may make the airline subject to enforcement action by the Assistant General Counsel for Aviation Enforcement and Proceedings. See Docket DOT-OST

21 but rather is increasingly moving into the legacy carrier category in terms of pricing and customer service. 32 In its application, Southwest even compared itself to legacy carriers in terms of its network coverage and admitted that it resembled a legacy carrier. 33 In this historic proceeding, Southwest simply cannot have it both ways. If Southwest wants the Department to conclude that its network is no different than legacy carriers, then the Department should treat Southwest no differently than other legacy carriers while evaluating its service proposal and not reward the airline as if it was the dynamic new entrant it was forty years ago in a regulated era. 34 Southwest s application is also misleading as it relates to its terminal facilities at FLL. Southwest s international terminal will not open for another year-and-a-half, assuming it does not succumb to delays common with airport construction projects. If the Department were to grant its request, Southwest would have no choice but to use the same existing FLL CBP facilities that JetBlue currently uses in Terminal 4 (which will connect to JetBlue s terminal 3 post-security as of Fall 2016 when the first Cuba flights begin). Southwest s lack of a CBP facility will disrupt passengers and result in significantly longer connection times until Southwest completes its new terminal, which is at the furthest opposite end of FLL from Terminal 4. In fact, Southwest will be at a major disadvantage compared to JetBlue until it completes its new facility in JetBlue has already made the necessary investments into FLL, where it is a much larger airline than 32 Southwest, like American, Delta and United, is under federal investigation by the U.S. Department of Justice regarding possible pricing collusion. See American, Southwest and other U.S. airlines under investigation for collusion by the DOJ, available at: <http://www.star-telegram.com/news/business/aviation/sky-talkblog/article html>. 33 See color maps in Southwest application at The Wall Street Journal recently described the toxic labor battles rattling Southwest and observed: The recent acrimony is one way that Southwest is showing its age. Once the industry's brassy upstart, the airline, which took wing 43 years ago, has begun to resemble the mainstream rivals it rebelled against in its youth: carriers that were slowgrowing, complex and costly to run. The Wall Street Journal article also noted in April 2014 that: some of its operational ratings have plummeted. Last year, it lost more bags per passenger than any other carrier. And after years as one of the most punctual airlines, just 72% of Southwest's flights were on time in the fourth quarter dead last in the industry. See <http://www.wsj.com/articles/sb >. 19

22 Southwest and offers online connecting service to important destinations that Southwest does not serve. JetBlue is the superior airline at FLL: Finally, Southwest s linkage of its request for FLL-VRA/SNU frequencies with a demand that the Department grant it FLL-HAV frequencies illustrates its lack of commitment to Cuba. Southwest pays lip service to the merits and strengths of the FLL-VRA/SNU markets but then later indicates that it would not institute service to either of these markets unless it received at least two daily FLL-HAV frequencies. 35 Such preconditions, buried towards the end of its application, demonstrate inflexibility and do not bode well for the success of Southwest s proposed Cuba service. The demand is not consistent with Southwest s declaration that its service proposal will maximize consumer benefits. In fact, such a demand closely resembles a more typical legacycarrier DOT filing. It is also a major blow to Ft. Lauderdale, which would not benefit from 35 See Southwest application at

23 Southwest s service to the other Cuban cities should it not receive a HAV frequency. JetBlue, of course, made no such threat to the Department or any other kind of linkage dictate. JetBlue is passionate about beginning scheduled Cuba service and expanding its successful charter service into scheduled service so that Cuba travelers can experience JetBlue s awardwinning service. Cuba is a focus and growth market for JetBlue. In contrast, Southwest is not an airline that is enthusiastically expanding service to Caribbean destinations and has repeatedly demonstrated that it does not appreciate the cultural and operational sensitivities of the region. It also appears that Southwest is misleading the Department about its stated desire to serve Cuba with the frequency levels included in its application. If it was serious about all its requests, Southwest should recant its Delta-like linkage demand. JetBlue also notes that Southwest s stated service pattern preferences do not comport with any other applicants request for HAV authority. Specifically, Southwest indicated its day-ofweek preferences as: (1) Monday/Thursday/Friday/Saturday/Sunday, (2) Friday/Sunday, or (3) Saturday/Monday/Thursday/Wednesday/Tuesday. JetBlue, by contrast, clearly indicated its preference for daily service (without cherry picking) as well as its willingness to accept Saturdayonly and/or Sunday-only frequency allocations, if necessary. The allocation that JetBlue suggests would be much simpler for the Department to manage, and, more importantly, much more convenient for the traveling public, as opposed to allocating day-of-week frequencies to match Southwest s complicated preference for Monday/Thursday/Friday/Saturday/Sunday frequencies. C. United JetBlue agrees with United s assertion that [n]early 90 thousand Cuban Americans reside in Newark Liberty s catchment area but notes that those Cuban-Americans are also notably in the catchment area of JFK. Moreover, JetBlue s service proposal for JFK-Havana is superior to 21

24 United s EWR-Havana service proposal and offers 46 more seats each-way on a daily basis, or 35,580 additional seats per year. 36 United also boasts of extensive U.S.-Caribbean service offerings yet United is a small operator in the Caribbean and has steadily reduced Newark-Caribbean service by ending routes to Barbados, Curacao, Puerto Rico and other markets, often in the face of competition from JetBlue at JFK, as shown in the following table: Similarly, United has steadily reduced domestic and international service at Houston and Washington-Dulles. United s former CEO was recently in a public feud with the city of Houston over its decision to allow Southwest Airlines to begin international service at Houston s Hobby 36 Based on 1x daily frequency for one year. 22

25 Airport. After the city rebuffed United s threats, United announced that it would cut 1,300 jobs at Houston and reduce capacity there by 10%. 37 And that was in 2012, before the recent collapse in oil prices and its associated negative effects on the oil industry. More recently, in January 2016, United announced plans to shift capacity away from Houston to Denver and San Francisco, two markets for which United did not apply for Havana frequencies. 38 Similarly, United has steadily shrunk its Washington Dulles hub, ending service to Accra, Buenos Aires, Dubai, Kuwait City and Moscow, reducing service to Sao Paulo, reducing its domestic hub banks and ending service to key destinations like New York City s JFK. 39 JetBlue also notes that United s declaration that it will cater to government travel is hardly credible as Saturday-only service is unlikely to cater to this official governmental business market, or any other non-leisure market, that disproportionately travels on business days. Indeed, United would likely be ineligible to even bid on the GSA city-pair contract for Washington-Havana with Saturday-only service. Even if United is granted its proposed Newark-Havana daily service, government traffic would have to backhaul to connect over Newark, one of the least reliable airports in the world. Government travelers in Washington, D.C. are sophisticated customers and already know to avoid the turboprops and other small commuter aircraft on DCA/IAD/BWI-EWR that are operated by United s regional partners and are often delayed or cancelled. 40 By contrast, JetBlue will provide government travelers with convenient large jet connecting options from Washington-area airports to Havana over Ft. Lauderdale and Orlando with daily flights and JetBlue s award-winning service. For all of these reasons, United s application should be denied. 37 See <http://www.bloomberg.com/news/articles/ /southwest-wins-houston-council-support-for-flightsabroad>. 38 See <http://www.houstonchronicle.com/news/article/united-to-throttle-down-in-houston-even-as php> 39 United has also reduced its IAD-New York LGA service. 40 Many government travelers fly on United s codeshare partners from Washington Dulles in order to avoid United s subpar and unreliable service and to avoid the unpleasant airport facilities of Dulles Concourse C/D and Newark. 23

26 D. American American s overly ambitious request, especially its request for ten year-round daily MIA- HAV frequencies, should not be seriously considered by the Department. While JetBlue does not oppose a grant of a modest number of frequencies to American in response to its entire application, JetBlue urges the Department to carefully evaluate the public benefit that would actually be realized if American s application were approved as requested. A grant by DOT of a majority of allowed frequencies to one carrier, on a single route, would only serve to unjustly reward American s already dominant market position with its lack of innovation and subpar service, result in further industry concentration, reduce competition and lead to higher airfares, all to the detriment of the traveling public. If American were truly attempting to maximize public benefits, as opposed to merely heaping on to its already dominant position in the region, it could have requested fewer frequency allocations (thereby allowing for additional competition in the South Florida-Havana market or, alternatively, providing for additional frequencies from other worthy U.S. destinations such as New York, Boston, Orlando or Tampa) and simply upgauged the aircraft it planned to operate on the MIA-HAV route. For instance, if the demand for MIA-HAV service is robust enough to justify ten daily frequencies on this city-pair, American could have proposed to operate fewer daily flights with larger aircraft, such as Boeing 767s or 777s, rather than proposing to operate all ten frequencies with smaller 160-seat Boeing B or 144-seat Airbus A319 aircraft. JetBlue, by contrast, has proposed to operate 200-seat Airbus A-321 aircraft on the FLL- HAV route, the largest aircraft in its fleet and the largest aircraft proposed by any major airline in this proceeding. American s strategy is clearly more focused on pushing out competitors than in serving the public interest. Several U.S. carriers, including American, currently operate widebody 24

27 aircraft on domestic routes with significant demand 41 and this model could easily be applied to the Miami-Havana route, thus making additional HAV allocations available for use by other carriers. For many decades, American operated wide body aircraft from Miami to the Caribbean to cater to such large-volume markets. In all likelihood, American will ultimately upgauge whatever frequencies the Department grants it, obviating the need to grant American 10x daily MIA-HAV frequencies. If the Department ultimately grants American 2x daily MIA-HAV, American would simply upgauge the aircraft to cater to the market and make efficient use of these scarce frequencies. There is no possible justification for one legacy carrier to have 50% of available frequencies for use on one route and any decision granting such a level of frequency would not be in the public interest. In determining the number of frequency allocations, particularly to South Florida, the Department should prioritize selecting a balanced mix of carriers in order to maximize competition. It is clear that in South America markets where American controls a predominant market share, average fares are consistently higher than in markets of similar size and stage length that have a healthy competitive mix of other airlines providing service. An example is the South Florida-Belize market, where air fares are vastly greater than in the South Florida-Puerto Rico market, a market of greater stage length yet with a healthy competitive mix of airlines providing service. Finally, JetBlue s FLL-HAV proposal would present the best competitive restraint against American s fortress hub in Miami, as demonstrated by the chart on the next page: 41 See <http://onemileatatime.boardingarea.com/2015/10/06/american-launching er-flights-between-losangeles-and-miami/> (American Airlines operates daily non-stop service between Los Angeles and Miami with B ER aircraft); <http://www.usatoday.com/story/todayinthesky/2015/04/23/united-fleet-shake-up-includesdreamliner-swap-widebodies-on-domestic-flights/ /> (United operates domestic service with B and B aircraft). 25

28 The Department should also not be influenced by American s reference to its commitment to Miami-Dade County and investment to refresh its fleet, airports, and lounges. While a noble sentiment, these upgrades are not as significant as American would have the Department believe and hardly beneficial to the traveling public. In fact, just days after its application was filed in this proceeding, American s very own pilot union criticized the airline s subpar product offering and customer service in a letter to CEO Doug Parker, stating: the new American Airlines product is outright embarrassing and we re tired of apologizing to our passengers [w]e hear from many valuable corporate clients and premiere status passengers that the product is not what they ve come to expect from American Airlines. 42 There is no way a grant of frequencies to American can maximize public benefits if its own employees are embarrassed about their product offering. Moreover, press releases available on the company s website seem to indicate that the company s fleet renewal plans are focused on improving the international widebody product, 43 which will have no impact on customers traveling between Miami and Cuba on American s B or A319 aircraft. Unlike JetBlue, in which 42 See <http://www.bloomberg.com/news/articles/ /american-airlines-pilots-blast-return-of-toxic-culture>. 43 See https://www.aa.com/i18n/amrcorp/newsroom/fp_invest_intl_widebody_fleet.jsp. 26

29 aircraft cabins are uniform across the particular fleet, all with the most legroom in coach, American has at least three versions of B aircraft and at least two versions of A319 aircraft. Conversely, as detailed in its application, JetBlue operates one of the youngest and most fuel-efficient fleets among all U.S. carriers. JetBlue is also in the process of making its awardwinning and market-leading product even better by significantly further enhancing its A320 interiors by expanding the number of DIRECTV television channels available for free to customers, upgrading in-flight entertainment hardware with new 10-inch, high definition touch screen monitors, and extending the use of its free high-speed wireless internet service, Fly-Fi. Every single customer traveling between the United States and Havana on JetBlue will be able to enjoy the company s new product offerings. On American, by contrast, passengers will have no ability to predict if they will be on an A319 that, for example, already has personal televisions installed or not. Similarly, there is absolutely no predictability as to whether an American flight will have slow wi-fi for a fee or no wi-fi at all. Many American aircraft that do have wi-fi installed do not actually have wi-fi that works well. In fact, American recently sued Gogo, the wi-fi provider on its Boeing 737 fleet, for delivering unacceptably slow internet service speeds. As CNN described the lawsuit, American Airlines said that ViaSat, which powers Wi-Fi on United Airlines (UAL), JetBlue (JBLU) and Virgin America, is significantly faster than Gogo's service. 44 There is no doubt American, like JetBlue, has experience operating charters between the United States and Cuba. Together, the two companies operated the vast majority of all U.S.-Cuba charter flights by large U.S. carriers in the last five years. While a history of successfully operating charter service does give both carriers an advantage over those who are completely unfamiliar with 44 See <http://money.cnn.com/2016/02/16/technology/gogo-american-airlines-wi-fi/>. 27

30 the Cuban market, operations and culture, it should be considered together with each carrier s history, practices and long-term goals in serving the Caribbean and Latin American Markets. American thrives, for example, in offering service in markets where it dominates with high fares and disappointing service. However, in markets where American faces competition, particularly by innovative carriers like JetBlue offering low fares, a superior product, and excellent customer service, American has a history of reducing service or ceasing operations altogether. For example, American, since the early 2000s, has been reducing capacity to several Caribbean markets (e.g., New York-San Juan, which was at one time served with 8x daily A300 aircraft 45 but is now sometimes served with 1x daily narrowbody aircraft) and terminating service to others (e.g., New York-Santo Domingo, New York-St. Lucia, and New York-Montego Bay, all of which are no longer operated) when faced with competition from JetBlue and other carriers. JetBlue, on the other hand, has made the Caribbean a focus of its entire operation and continues to add frequencies and routes to the Caribbean where it consistently stimulates new traffic. As the chart on the next page demonstrates, American has reduced its average number of daily flights in the Caribbean by 53% from 2004 through 2016: 45 See <http://airlineroute.net/2016/02/17/rp-aab6-sju/>. 28

31 Competition between the United States and Cuba and between South Florida and Cuba in particular will surely be fierce, to the benefit of the traveling public. Against the backdrop of American s past service reductions in the region when faced with competition, JetBlue does not believe that American will be able to remotely deliver on its service proposal. The public interest would surely not be served if American were granted ten frequencies for MIA-HAV service and subsequently reduced or eliminated such service in the face of competition from carriers like JetBlue. American, like Delta, also has a history of not fully utilizing limited route rights in Brazil, Colombia, Japan, China and elsewhere. 46 Miami: JetBlue agrees with American that the South Florida areas is home to the largest concentration of Cuban-Americans in the United States and that a large number of frequencies 46 American also sued the Department in 2010 over U.S.-Colombia frequencies that American was hoarding to the detriment of the traveling public. 29

32 should be awarded to carriers for South Florida-Havana service. However, MIA is not the only South Florida airport that serves Cuban-Americans; FLL is the favored airport for many customers in the region. FLL, South Florida s leading low fare airport, is centrally located in the heart of the metropolitan area encompassing three counties boasting large Cuban-American populations. 47 MIA and FLL are just a twenty-five minute drive apart, and South Florida locals (including the Cuban-Americans who would predominantly take advantage of travel options to Cuba) generally prefer flying from FLL because of the time savings associated with quicker access, more efficient customs, fewer delays, and more customer-friendly terminal facilities. South Florida locals prefer FLL over MIA: 48 In addition, the average cost per enplaned passenger at FLL is approximately one quarter of the cost at MIA, which allows carriers like JetBlue to offer lower fares than competitors like American that operate from MIA. The appeal of FLL is demonstrated by the successful franchise JetBlue has built operating service from FLL to the Caribbean and Latin America that historically was only operated from MIA. JetBlue now boasts service to seventeen international destinations from FLL. 47 The three counties are Dade, Broward and Palm Beach. 48 Source: U.S. CBP Average Wait Time: Flight Arrivals July 19-25, 2015, retrieved on 30

33 Finally, JetBlue s FLL-Havana service proposal offers 40 more seats each-way on a daily basis than American s proposed MIA-Havana service, or approximately 30,000 additional seats per year, as demonstrated in the following chart: 1 Based on 1x daily frequency for 1 year. While JetBlue has grown its Caribbean franchise at FLL, American has shrunk its own. As the chart on the next page demonstrates, American s average number of daily flights from FLL to the Caribbean has shrunk 80% from 2004 through 2016: 31

34 Los Angeles: As explained below in Section IV(F), there is no justification for an award to Los Angeles based on American s history of charter service to Havana, the multiple connecting options that will be available to Havana after the resumption of scheduled service, and the fact that there is very little non-stop service from Los Angeles to the Caribbean today. TWA once operated daily non-stop service from LAX-San Juan; after American acquired TWA, the service ended. It is likely that American s proposed LAX-HAV service would similarly fail. Charlotte: With just 20 frequencies available between the United States and Havana, JetBlue urges the Department to be judicious in granting frequencies for service from hub cities that are entirely dependent on connecting traffic. Most of the significant traffic flows that Charlotte would cater to are covered by American s Miami hub. Unlike South Florida or New York, Charlotte is not 32

35 home to a significantly sized Cuban-American population. In fact, Charlotte s Cuban-American population is not even in the top 10 in the United States. Awarding this frequency to American, especially when it would be offering largely redundant connections already available through MIA, would not maximize public benefits when other cities with demonstrable demand and established Cuban-American populations have been proposed for U.S.-Cuba service. JetBlue also notes that Delta applied for daily HAV-ATL service. Atlanta and Charlotte, like Miami, are both anchor hubs in the southeastern United States and largely serve overlapping traffic flows. In no circumstances should the Department waste frequencies on both ATL and CLT, two cities with almost no local demand to Cuba. Dallas: Similarly, American s request for a daily frequency to HAV from DFW should not be granted because it will offer far fewer public benefits than proposals offered by other carriers such as JetBlue. Despite being the third-busiest airport in the world, American s service to DFW is, again, largely redundant and offers just 39 cities not already connected through the carrier s service to MIA, most of which have little demand for service to Cuba. Furthermore, while the Dallas/Fort Worth area boasts a large Hispanic population, the population is predominantly of Mexican and Central American descent as opposed to Cuban-Americans. Service by JetBlue to any one of its focus cities would offer far more public benefits than American s proposed service to Dallas. Chicago: An analogous argument exists for American s proposed ORD-HAV service. This service again over a hub city with an insignificant population of Cuban-Americans will offer connections to approximately just 20 destinations not already connected via American s service to MIA. The public benefit certainly does not warrant award of a valuable frequency on this city- 33

36 pair, given the fact that United has already proposed weekly service between ORD and HAV and other more deserving cities exist where the frequency could be used to better serve the immediate needs of the traveling public. In sum, when analyzing carrier requests for frequency allocations, JetBlue urges the Department to consider the anti-competitive effects of granting a single carrier a significant portion of available U.S.-Havana frequencies. The Department should refrain from its traditional approach of making route awards to legacy carriers based largely on the apparent strength of their networks rather than their product, demonstrated record of commitment to a region, and unique Cuban- American demographic issues that exist in this proceeding. Unlike American, JetBlue has demonstrated its steadfast commitment to the Caribbean by increasing traffic in the market over the last 14 years through its low fares, superior product, and renowned customer service. Its service proposal for U.S.-Cuba frequencies is superior to American s, offers additional public benefits, and should receive favorable treatment. E. Spirit JetBlue s unique combination of low cost, high quality service and numerous online connections for customers traveling to or from Cuba will maximize public benefits by providing competitive air service in major markets where high-volume United States-Cuba traffic actually exists. JetBlue's service proposal demonstrates its commitment to maximizing public benefits by ensuring its flights will serve a broad array of potential travelers. However, the best evidence of JetBlue's goal to serve the public is the company's history and corporate philosophy of treating customers with respect, its dedication to providing customers with an ever improving product offering, its steadfast efforts to provide the traveling public with the most reliable service possible, and its investment and potential for long-term growth in the 34

37 Caribbean and Latin America. These are qualities JetBlue will bring to Cuba if it receives authority to provide United States-Cuba service. These are also qualities that have stood the test of time and that reflect the culture of JetBlue. Spirit Airlines proposal, by contrast, shares none of these qualities. Spirit proposes to operate 2x daily roundtrip service between Fort Lauderdale and Havana using 145-seat A-319 aircraft. Spirit argues that an allocation of frequencies to it would prevent unreasonable industry concentration, excessive market domination, monopoly powers, and other conditions that would tend to allow at least one carrier or foreign air carrier to unreasonably increase prices, reduce services, or exclude competition in air transportation. 49 This argument ironically applies far more to JetBlue than to Spirit. The argument would have substantially more merit if Spirit were capable of offering a product that was nominally competitive with JetBlue and other carriers. The vast majority of travelers do not consider Spirit a competitive alternative to travel on airlines like JetBlue that offer a substantially better product and better customer service. When passengers select an airline for travel, air fare is relevant but it is not dispositive - this is especially true if one of the potential carriers has been ranked as the number 1 U.S. airline and another ranked as the worst airline in the U.S. in the same survey. 50 Further, the Department released data showing that passengers out of 100,000 who flew Spirit filed complaints - the industry average is 1.9. One of the reasons travelers prefer JetBlue is that Spirit's so-called ultra-low-fare service is rife with fees and unconventional charges that can greatly increase the cost of an ultra-lowfare ticket if a passenger is not on his or her toes - these include a charge of up to $100 for carry- 49 Application at See 2015 Consumer Reports Airline Travel Ratings. 35

38 on bags, a charge of $200 to sit near the front of a single-class aircraft, and a $10 charge if the carrier has to print your boarding pass. The willingness of passengers, particularly in the Ft. Lauderdale/South Florida region, to select JetBlue over Spirit is well-documented. When JetBlue entered the Ft. Lauderdale-Kingston, Jamaica and Dallas/Ft. Worth-Boston markets, Spirit reduced its service to seasonal on these routes. When JetBlue entered the Ft. Lauderdale-Nassau, Bahamas market, Spirit ended service completely on this route. It was clear that travelers overwhelmingly preferred JetBlue to Spirit. The Centre for Aviation (CAPA) described the trend and noted that it does seem that Spirit would prefer to expand where JetBlue does not operate, concluding it can better stimulate traffic in markets with a higher concentration of legacy competition. 51 Additionally, there are questions as to Spirit s long-term commitment to FLL. Recent press reports suggested that Spirit was in negotiations to move its FLL operation to MIA. 52 The Department should not consider an award to Spirit at FLL if Spirit may no longer be operating at FLL in the near future; the public interest would be harmed by such an award in these circumstances. Spirit should not be afforded the prized opportunity to represent the United States in Cuba. If the Department were to allocate any frequencies to Spirit, there would be little competitive benefit but there almost certainly will be substantial reputational risks for the United States. It is likely that Cuba will reject Spirit s unconventional pyramid of ancillary fees and that the Cuban Government might think twice about allowing additional U.S. airlines into the market if, after 50 years without scheduled air service, the United States Government chooses to send Spirit s bright >. The report also noted that The reality is that Spirit during the last two years has turned its attention from growing traffic into and out of the Caribbean and Latin America from Fort Lauderdale to larger US domestic markets where it believes it can stimulate traffic, so it is not suprising the carrier is opting to redeploy aircraft from relatively minor markets to regions where those assets can hit the carrier s average aircraft utilisation of 13h per day. 52 See <http://www.miamiherald.com/news/business/article html> 36

39 yellow school bus colored aircraft to Havana instead of far more deserving U.S. airlines such as JetBlue. The South Florida-Havana market is far too important to risk squandering a frequency on Spirit. F. Alaska Alaska devotes much of its application to a lengthy discussion of Los Angeles' large Cuban-American population and the Cuban-American presence throughout California. While Alaska's demographic analysis may be accurate, it is clear that the presence of a large Cuban- American population has not generated significant demand for the LAX-HAV charter service that American Airlines currently operates and that Alaska's forecast LAX-HAV traffic of 190,000 passenger per year is wildly optimistic and misleading. American, which is actively growing LAX as an international hub, only requested authority to operate a single weekly flight between LAX and HAV, based on its own unique and very telling experience operating one weekly charter flight between LAX and HAV. As demonstrated in Exhibit B6-ANS-101 Slide 33, American s weekly charter flight routinely has a load factor well under 50%. When American's sobering traffic statistics for LAX-HAV service are taken into account, the idea that Alaska's twice-daily service, with one stop connecting service to Anchorage, Alaska and Salt Lake City, Utah will stimulate substantial traffic from the island nation of Cuba defies logic. American itself referenced the limited Los Angeles-Havana demand in its application: "American s proposed weekly frequency to HAV from LAX is based on anticipated demand, which currently supports one weekly LAX-HAV charter flight operated by American. American s proposed frequency will meet the needs of the local Cuban American population... " See application of American at

40 If one takes Alaska's proposed schedules into account, which are characterized by early morning departures and late evening arrivals (e.g., Alaska's westbound flight from HAV would arrive in Seattle at 2:12 in the morning), Alaska s traffic forecast is even more in doubt. Alaska's proposal to dump giant sums of capacity into the LAX-HAV market, with its history of demand ranging from tepid to weak, is a recipe for failure and will almost certainly end with a dramatic reduction in service or a complete cessation of operations to HAV from LAX. JetBlue notes that Alaska and American recently completed a commercial transaction in which Alaska sold a limited route right to American. Specifically, Alaska held one of two designations allowing it to operate on the Los Angeles-Mexico City route. The Department approved the transfer in It is entirely possible given the strong partnership between the carriers that Alaska and American might pursue such a transaction for the Los Angeles-Havana route in the near future, should the Department grant Alaska any frequencies without backup authority. In order to prevent any kind of anti-competitive transaction from occurring later, JetBlue urges the Department, in the event Alaska is awarded any frequencies, to make explicit that any LAX-HAV frequencies Alaska no longer intends to use must be forfeited to the Department for re-allocation. In the event Alaska is awarded any frequencies, JetBlue also urges the Department to be particularly thoughtful and selective in making a back-up award in this market for there is a high likelihood that such backup authority will be activated in the near future. G. Eastern Eastern is a new charter air carrier that only obtained economic authority from the Department in 2015 to engage in interstate and foreign charter air transportation of persons, property and mail. 55 It now requests an exemption to engage in scheduled foreign air 54 See Docket DOT-OST See DOT Orders and See also 49 U.S.C (a)(13). 38

41 transportation of persons, property and mail on several U.S.-Cuba routes. However, Eastern has not yet applied to the Department for certificate authority to engage in scheduled interstate or foreign air transportation. Eastern concedes that it currently lacks authorization from DOT to conduct scheduled service and that it does not currently possess FAA operations specifications that would permit it to operate the flights for which it seeks a frequency allocation. Instead, Eastern notes that information officially noticeable under Rule 24(g) of the Department s Procedural Regulations supports a finding that Eastern is fit to operate the scheduled service proposed herein, which is similar in scope and stage length to existing charter operations. 56 Eastern has not provided a single example of the Department or Civil Aeronautics Board ever using a fitness finding for a certificate to engage in interstate or foreign charter air transportation to support a grant of an exemption to engage in interstate or foreign scheduled air transportation. Even if such an example exists, it is an anomaly and the Department s historical practice has been to consistently require new air carriers to apply for certificate authority so that the Department s Air Carrier Fitness Division can make a fitness finding that would justify the grant of authority to engage in scheduled air transportation. 57 It is somewhat common for air carriers to initially obtain charter certificate authority (as Eastern has) and then subsequently apply for scheduled certificate authority but Eastern has not done so. Moreover, such proceedings can take in excess of six to twelve months. Instead, Eastern asks the Department to short cut its wellestablished procedure and issue it an exemption to engage in scheduled air transportation based on a fitness finding regarding its ability to engage in charter air transportation. JetBlue notes that 56 Eastern application at In the Show-Cause Order tentatively establishing Eastern s fitness, the Department explicitly noted its conclusion that Eastern is a U.S. citizen and has met the fitness test to conduct interstate and foreign charter operations. DOT Order The Department made no such conclusion regarding Eastern s fitness to conduct interstate and foreign scheduled operations. 39

42 such an approach would eviscerate the presidential review provisions of 49 U.S.C JetBlue and most of the other carriers in this proceeding have effective certificates to engage in interstate and foreign scheduled air transportation based on their fitness to conduct scheduled air transportation. Routine grants of exemptions, such as those sought here, to JetBlue and other U.S. air carriers are possible precisely because of that fitness finding and ongoing compliance with their fitness obligations. Finally, JetBlue notes that Eastern is still in its first year of interstate and foreign charter operations and is thus still within the one-year window in which the Air Carrier Fitness Division closely monitors new air carriers. It is simply too soon to tell whether Eastern is fit to provide scheduled air transportation, yet alone deserving of a frequency award. Eastern s first year progress report is likely soon due to the Department. It would be especially unwarranted and unwise for the Department to grant an exemption in these circumstances. If the Department does nonetheless evaluate Eastern s application on its merits, it should still deny the application in its entirety. Although Eastern has provided some charter service to Cuba in the last year, its small size inherently limits the amount of public benefits that can flow from its service proposal. It is unclear if Eastern s small fleet of four Boeing 737 aircraft can even reliably provide all of the service sought by the airline. Because Eastern also lacks any established network or route structure, it would not offer any connecting options to non-miami markets and would be relegated to offering travelers point-to-point service for the foreseeable future. Eastern may at some point in the future obtain authority to engage in scheduled air transportation. It may also acquire additional aircraft that would allow it to develop a network with sufficient geographic scope sufficient to justify a Cuba frequency. At this time and based on the record in this proceeding, there is no question that Eastern s application is premature. JetBlue 40

43 urges the Department to dismiss it as not ripe and to not grant any of the frequencies sought by Eastern, even in the non-hav markets for which there are ample frequencies available. H. Dynamic While Dynamic can point to a recent history of operating charter service to various Caribbean and Latin American markets, it has presented a proposal for U.S.-Cuba service that is profoundly unrealistic and almost guaranteed to generate immense financial losses and an eventual departure from the market. Dynamic has proposed more service to Chicago, a city with a rather small Cuban-American population, than either American or United, both of which operate large hubs at Chicago. 58 Unlike American and United, Dynamic lacks access to connecting traffic at any of the cities for which it has proposed service. Furthermore, Dynamic admits that it does not hold effective certificates from the Department to engage in scheduled air transportation. Dynamic s certification process may take many more months. Moreover, it is unclear if the Department can even grant Dynamic s requested exemption if it does not hold an effective certificate to engage in scheduled air transportation. 59 JetBlue references its above comments regarding a similar issue pertaining to Eastern s application. Dynamic has no experience operating into Cuba. JetBlue also notes that Dynamic has a nefarious record outside the United States. During the World Cup in 2014, Dynamic was reportedly banned from operating to Brazil because of numerous violations including alleged 58 It appears that Dynamic does not currently operate to ORD. Logistically, given gate constraints at ORD. it would be difficult for Dynamic to begin service in November as proposed. 59 JetBlue notes that Dynamic alternatively requested frequencies to VRA. Should the Department wish to grant Dynamic VRA frequencies, it should carefully consider the precedential effect of granting an exemption to an air carrier that does not yet hold an effective certificate to engage in scheduled air transportation. In these circumstances, JetBlue urges the Department to dismiss Dynamic s application as premature and moot and welcome Dynamic to apply in the future after it has obtained the requisite effective scheduled authority from the Department. 41

44 cabotage. 60 When the Department issued Dynamic (non-effective) certificates in October 2015, it included an unusual reporting requirement that likely reflects the Department s concern over Dynamic s fitness. The reporting requirement mandated that: 4. We direct Dynamic Airways, LLC d/b/a Dynamic International Airways to report within 7 days of occurrence (1) any charge of unfair or deceptive or anticompetitive business practices, or of fraud, felony or antitrust violation, brought against any relevant corporation, or member of the key personnel employed (or to be employed) by any relevant corporation; (2) investigations, enforcement actions, or formal complaints filed by the Department or other government agency, involving any relevant corporations, personnel employed (or to be employed) by any relevant corporations or person having a substantial interest in any relevant corporation; and (3) any aircraft accidents or incidents experienced by Dynamic Airways, its personnel, or any relevant corporation. 61 A mere two months later, the Chief of the Department s Air Carrier Fitness Division notified Dynamic that it was not in compliance with the reporting requirement after Dynamic failed to contact the Department regarding a regulatory compliance issue. 62 Given the historic significance of this proceeding, it is crucial that the Department select carriers with a proven track record of exceptional customer service, familiarity with operating in and out of Cuba, and realistic service proposals. Dynamic s request presents none of these attributes. For these reasons, JetBlue strongly objects to Dynamic s proposal and urges the Department to not squander any frequencies on Dynamic s unrealistic proposal. I. Frontier JetBlue agrees with Frontier s assertion that Cuba travelers should have access to low fare service but disagrees that Frontier is the correct carrier to provide this important public benefit. 60 See <http://www.ch-aviation.com/portal/news/29203-dynamic-airways-booted-out-of-brazil-for-illegaloperations>. 61 See DOT Orders and See Letter from Lauralyn J. Remo to Mark Atwood, December 21, 2015, Dockets DOT-OST and DOT- OST The letter also chastised Dynamic for the recurring nature of its failure to provide required financial and traffic reports to the Departments Bureau of Transportation Statistics (BTS) and noted that these failures might support a finding that Dynamic lacks an adequate compliance disposition. 42

45 JetBlue is ideally suited and willing to provide such low fare service. The current industry-wide consensus is that Frontier s performance and customer service is simply unacceptable, low fares not withstanding. In the Department s February 2016 Consumer Air Travel Report, Frontier received the second worst ranking for customer complaints, exceeded only in percentage per flight by Spirit Airlines. In the Consumer Air Travel Report issued immediately prior to the February 2016 report, Frontier posted the worst on-time performance for November 2015 of any U.S. carrier, according to the Bureau of Transportation Statistics, worse even than Spirit Airlines. Furthermore, only.44% of its delays related to weather, with the vast majority due to air carrier delay or late arriving aircraft. At the same time, the airline was ranked second worst with respect to consumer complaints received. The airline s online reservation system was frequently incapable of booking tickets and airline personnel were repeatedly characterized as surly and unhelpful. Frontier has also developed a reputation for exiting markets with little or no warning, having most recently ceased service at Delaware s New Castle Airport without advance notice and leaving the airport without any scheduled service. 63 While Frontier s CEO has promised reforms, many analysts attribute Frontier s rapid decline in performance and reputation to its outsourcing efforts. Either way, at this current juncture, the Department should ensure that Cuba gets to experience the finest carriers the U.S. has to offer when service resumes, namely JetBlue. Frontier s city-pair service proposals will also not maximize public benefits. It has provided no justification for why Denver service would be viable. JetBlue notes that neither United or Southwest, two airlines with significant Denver operations, applied to serve HAV- Denver, a city with no significant Cuban-American population. In addition, Frontier has been 63 See <http://www.usatoday.com/story/todayinthesky/2015/06/29/frontiers-pullout-leaves-delaware-without-airlineservice/ />. 43

46 steadily shrinking its DEN hub and transitioning Denver from a hub operation to an O&D operation. Frontier s boast about offering connections to 14 cities at DEN is thus misleading; as Frontier continues to shrink its DEN hub, it will likely soon offer no useful connections at DEN at all. Like Southwest, Frontier makes unacceptable linkage demands such that the Department would have to grant it both DEN and MIA frequencies, an unattractive proposition for an unattractive proposal. Like Spirit, an award to Frontier could jeopardize the United States warming relations with Cuba, including its new aviation relationship. JetBlue urges the Department to deny Frontier s application. J. Sun Country Sun Country's application for an allocation of U.S.-Cuba frequencies is noteworthy in that none of its proposed service to the island nation would be on a daily basis and thus hardly of benefit to the traveling public. In contrast, JetBlue s proposals are all superior in multiple regards including larger aircraft, more O&D and connecting traffic, daily service, and more. Sun Country hinted that it would use its smallest aircraft, a 126-seat Boeing , which is smaller than JetBlue s 200-seat A321s and 162-seat A320s. Sun Country made no mention of connecting traffic, most likely because its departure time from MSP at 7:25AM suggests that there will be minimal, if any, connecting traffic. And finally, Ft. Myers has a small Cuban-American population compared to the Miami/Ft. Lauderdale region, Orlando and Tampa. Whatever traffic exists would be more likely to desire a weekend-only flight rather than a Monday/Friday-only flight. Similarly, Sun Country made no mention of what traffic it hopes to carry on its Minneapolis-Havana flight. This is perhaps because there is no discernible traffic likely to travel on that route. If American and United, hub carriers at Chicago, only applied for 1x weekly Chicago-Havana, it is quite 44

47 illogical that there is more Minneapolis-Havana traffic that would warrant two weekly, year-round flights. JetBlue also notes that Sun Country has a demonstrated history of not effectively using limited route rights. For example, despite extraordinary administrative relief from the Federal Aviation Administration in 2012, Sun Country ceased flying Lansing-Washington National in 2015 and placed the Department in a difficult situation regarding Sun Country s Washington National slot pair. The Department is well aware of the risk of air carriers not being able to fulfill their service proposals using limited assets. The Department should not risk another repeat of Lansing with extremely important and limited Havana frequencies. K. Silver JetBlue applauds Silver for its innovative service proposal, under which a strong cross section of Cuban points would receive new scheduled service. Silver has developed detailed traffic forecasts, has a legitimate network of destinations and can offer travelers a variety of connecting destinations. Furthermore, JetBlue knows from firsthand experience as a codeshare partner of Silver that its management understands how to provide excellent service in the Caribbean in a cooperative spirit. 64 Unfortunately, Silver is proposing to operate U.S.-Havana service with aircraft that lack sufficient capacity to make maximum and most efficient use of the valuable route rights being allocated in this proceeding. If given the opportunity, JetBlue will operate large A-320 and A-321 aircraft with seat capacities ranging from 162 to 200 seats in its smallest configuration, a single JetBlue flight will have over four times the capacity of any Silver flight. In short, the United States 64 See Notice of Action Taken, July 31, 2015, Docket DOT-OST

48 has worked too hard, expended too many resources, and taken too many risks, to settle for a service proposal that would transport a maximum of 34 customer per Havana frequency allocated. JetBlue fully supports Silver s service proposal for non-hav frequencies and urges the Department to grant Silver s full request for those frequencies; JetBlue would even consider seeking to include this service in its existing codeshare relationship. 65 Unfortunately, Silver s fleet of Saab 340 s lack the capacity to make the best possible use of U.S.-Havana route rights. V. SUPPORT LETTERS JetBlue has received numerous letters in support of its Cuba service proposal from the following individuals and organizations: Associated Independent Colleges and Universities of Massachusetts Associated Industries of Massachusetts Governor Charles D. Baker Boston Convention & Visitors Bureau Brooklyn Nets Broward County Aviation Department Colonnade Hotel Conventures Educational Travel Alliance NYC Deputy Mayor Alicia K. Glen Greater Boston Chamber of Commerce Greater Fort Lauderdale Alliance Greater Fort Lauderdale Convention & Visitors Bureau Greater Hollywood Chamber of Commerce Greater Orlando Aviation Authority Hispanic Chamber of Commerce Mayor Theresa Jacobs Representative David W. Jolly Senator Edward J. Markey Massachusetts Biotechnology Council Massachusetts Competitive Partnership Massachusetts Medical Device Industry Council MassEcon Massport 65 JetBlue would anticipate exploring the possibility of expanding its existing codeshare relationship with Silver to include Cuba service in the future, subject to any regulatory constraints. 46

49 Mayor Stephanie A. Miner New Balance New England Board of Higher Education New England Council New York Jets The Ocean Foundation PANYNJ Partnership for New York City Save the Harbor & Save the Bay Vision Orlando Volusia Hispanic Chamber VII. CONCLUSION For the reasons explained above, JetBlue s application is the superior choice to maximize public benefits and to serve the largest and most important markets that exist between the United States and Cuba. JetBlue should be granted the maximum number of frequencies possible. Respectfully submitted, Dated: March 14, 2016 Robert C. Land Senior Vice President of Government Affairs & Associate General Counsel 47

50 JetBlue is best positioned to serve South Florida-Havana 150,000 Seats per Frequency per Year 146,000 for FLL-HAV 127, , , ,000 Seats per Frequency per Year for MIA-HAV 131, , ,800 B6 FLL-HAV OA FLL/MIA-HAV 107,310 24,820 0 JetBlue A321 Southwest B737-8 Spirit A319 Silver Saab 340B 0 JetBlue A321 Frontier A320 American Delta Eastern JetBlue offers the most seats per departure than any other carrier in consideration for the South Florida to Havana market 1 Based on 1x daily frequency for 1 year. A321 represents first 2 FLL-HAV frequencies proposed by JetBlue. DOT-OST Exhibit B6-ANS-101 1

51 FLL is a better airport for Florida customers travelling internationally CBP Average Wait Time for Flight Arrivals Fort Lauderdale/Hollywood Miami Minutes Time of Day Wait times in Miami are on average twice as long as they are in Fort Lauderdale/Hollywood, significantly offsetting any potential proximity advantage for the pockets of Cuban- Americans in South Florida Source: U.S. CBP Average Wait Time: Flight Arrivals Jul 19-25, 2015 retrieved on DOT-OST Exhibit B6-ANS-101 2

52 American/US Airways has reduced its presence in Caribbean over the years AA/US Average Daily Caribbean Flights¹ % decrease YE Aug 2004 YE Aug 2005 YE Aug 2006 YE Aug 2007 YE Aug 2008 YE Aug 2009 YE Aug 2010 YE Aug 2011 YE Aug 2012 YE Aug 2013 YE Aug 2014 YE Aug 2015 YE Aug 2016 Diio schedules for US-Caribbean, Caribbean-US, and intra-caribbean flights for Aug 2004 Aug 2016, retrieved on March 13, 2016 for AA and US DOT-OST Exhibit B6-ANS-101 3

53 American/US Airways has reduced its presence by 80% from FLL - Caribbean market over the years AA/US Average Daily Caribbean Flights to/from FLL % decrease YE Aug 2004 YE Aug 2005 YE Aug 2006 YE Aug 2007 YE Aug 2008 YE Aug 2009 YE Aug 2010 YE Aug 2011 YE Aug 2012 YE Aug 2013 YE Aug 2014 YE Aug 2015 YE Aug 2016 Diio schedules for FLL-Caribbean flights for Aug 2004 Aug 2016, retrieved on March 13, 2016 for AA and US DOT-OST Exhibit B6-ANS-101 4

54 JetBlue offers the best competition to American in South Florida with the most domestic flights out of FLL 72K Domestic flights originating from South Florida airports with proposed HAV service 22.2K 19.5K Annual Domestic Flights 13.4K 10.2K 4.3K 2.0K 0 American (MIA) JetBlue (FLL) Southwest (FLL) Spirit (FLL) Delta (MIA) Silver (FLL) Frontier (MIA) Eastern (MIA) Diio schedules for Nov 2015-Oct 2016, retrieved on March 7, 2016 DOT-OST Exhibit B6-ANS-101 5

55 In South Florida and FLL specifically, JetBlue is the most relevant carrier South Florida 15 Largest O&Ds: Destination PDEW B6 Served WN Served LGA 4,502 EWR 2,536 JFK 2,451 ATL 2,323 BOS 2,053 ORD 1,843 BWI 1,664 LAX 1,616 PHL 1,558 DCA 1,474 DTW 1,312 DFW 990 SFO 980 SJU 967 DEN 923 ASMs (Millions) 5,000 4,000 3,000 2,000 1,000 0 FLL ASMs Year Ending October 2016 B6 WN Markets Served: Source: U.S. DOT O&D data year ending Q for 3,000nm markets and shorter, retrieved via Diio Mi on March 9, South Florida airports include MIA, FLL, and PBI DOT-OST Exhibit B6-ANS-101 6

56 Cuban-American Population of United States is heavily concentrated in Florida Cuban-American Population of United States Florida California New Jersey New York Texas Georgia All Other States and Territories New York, 4% All Other States and Territories, 16% Georgia, 2% Texas, 3% New Jersey, 5% California, 5% Florida, 67% Source: Census, American Community survey, 5 year estimates DOT-OST Exhibit B6-ANS-101 7

57 JetBlue proposed Havana service in Florida will provide nonstop service to 90% of Cuban-Americans living in Florida Top 10 Florida Communities by Cuban-American Population Florida Miami-Fort Lauderdale-Pompano Beach Tampa-St. Petersburg-Clearwater Orlando-Kissimmee Cape Coral-Fort Myers Naples-Marco Island 97,350 44,446 23,542 21,300 1,051,587 1,331,893 % of Florida Cuban-American Population 100% 79% 7% 3% 2% 2% 90% of Cuban- > American population of Florida State Jacksonville Lakeland Sarasota-Bradenton-Venice Port St. Lucie Palm Bay-Melbourne-Titusville Other Florida communities 12,365 10,877 10,401 7,666 5,539 25,679 1% 1% 1% 1% 0% 2% Source: Census, American Community survey, 5 year estimates DOT-OST Exhibit B6-ANS-101 8

58 FLL is within 35 min reach to 500,000 Cuban-Americans Cuban-American Population of South Florida: (darker green indicates higher concentration) FLL Examples of highly populated Cuban-American towns in South Florida that are located closer to MIA than FLL, where locals would save on overall trip time by driving further distance to FLL due to a shorter processing time at FLL CBP City Driving Distance to FLL Driving Distance to MIA Driving Distance + 12 min CBP Delay Cuban- American Population Hialeah 30 min 24 min 36 min 82,711 Zip code min 22 min 34 min 30,214 Zip code min 25 min 37 min 26,712 Zip code min 25 min 27 min 25,785 Hollywood¹ 32 min 29 min 41 min 18,825 MIA Opa Locka 26 min 24 min 38 min 19,661 Subtotal of Cuban-American Population Total South Miami Area % of South Miami Area Daily traffic, each way² 121,197 1,051,587 12% 332 daily passengers Source: Census, American Community survey, 5 year estimates ¹ Zip codes used in this examples: (Cuban-Amer. Population of 9,901) and (Cuban-Amer. Population of 8,924) ² Daily traffic is calculated as daily equivalent of subtotal (121, =332) Longer processing times at MIA CBP translate into at least 2 additional daily HAV frequencies that should be awarded to FLL 30 min driving radius from FLL 30 min driving radius from MIA before CBP delays Real MIA catchment area, where proximity results in true benefit after adjusting for CBP delays DOT-OST Exhibit B6-ANS-101 9

59 Applications for less than daily HAV service come from cities with minimal Cuban-American presence 1,052 Cuban-American Population of Cities with Proposed HAV Service 1, % Thousands Source: Census, American Community survey, 5 year estimates DOT-OST Exhibit B6-ANS

60 Delta lacks the commitment to provide public benefit in terms of continued, sustained air service Discontinued DL/NW Routes (World) Discontinued DL Routes (Caribbean) Of over 1,700 markets DL/NW served in the last 10 years ( ), it fully exited more than 750 routes, including 70+ routes from ATL, nearly 50 routes from JFK, and 30+ routes from MCO. Of 88 Caribbean markets DL served in between 2004 and 2016, it fully exited 34 (or 38%), including 8 routes from ATL, and 8 routes from JFK. Delta exited more than a third of markets they operated in the past 10 years. Diio schedules for , retrieved on March 7, 2016 for DL and NW DOT-OST Exhibit B6-ANS

61 Delta is little committed to Caribbean flying from JFK US Org Intl Dest ATL BGI Start X Start BQN Start X CUR Start X ELH Start X Start FDF Start X GGT Start X Start KIN Start X Start POP Start X POS Start X PSE Start X PTP Start X STI Start/X Start X Start STX Start X Start TAB Start X BOS NAS Start X Start CVG MBJ Start X NAS X PUJ Start X Start X SJU Start X FLL NAS Start X SDQ Start/X IND MBJ Start X NAS Start X JFK ANU Start X BGI Start X BON Start X FPO Start X GCM Start X Start KIN Start X Start X NAS X Start PAP Start X POP Start X POS Start X LGA AUA Start X BDA Start/X Start X NAS X Start MCO NAS X SJU X MEM MBJ Start X SJU Start/X PIT NAS Start X PUJ Start X RDU NAS Start X TPA NAS Start X Between Delta ended service in 44 of 88 of its Caribbean markets¹: The carrier no longer flies to 34 markets it previously served during this period. 13 markets experienced irregular service by Delta (with exits and re-entries) In JFK Delta ended service in 10 of 22 of its Caribbean markets: The carrier fully exited 8 markets and has had exited/re-entered in 3 ¹ schedules provided by Diio; retrieved on March 7, Northwest (NW) flights are not included in the statistics DOT-OST Exhibit B6-ANS

62 JetBlue s JFK proposal provides greater public benefit to the customers that really count JetBlue s domestic passenger traffic at JFK is 33% higher than DL: Daily Passenger Traffic at JFK International¹ Connecting Domestic Local Domestic 10,565 4,103 19,807 18,299 4,089 13,843 JetBlue Delta Potential public benefit from JFK-HAV service Potential Public Benefit of direct JFK-HAV service JetBlue Delta Local Domestic Daily Passengers 19,807 13,843 Connecting Domestic Daily Passengers 4,103 4,089 Total Domestic Public Benefit (Daily Passengers) 23,910 17,932 U.S. DOT O&D Segment Report for Q Q3 2015, retrieved via Diio on March 7, 2016 ¹ At least one segment of the trip begins or ends outside of United States DOT-OST Exhibit B6-ANS

63 In JFK, JetBlue has the most domestic departures on mainline aircraft and the highest seats per departure Annual Flights (thousands) 54 JFK Domestic Flights vs. Seats per Departure Top 3 US Carriers at JFK All Domestic Departures Domestic Departures on Mainline Aircraft Seats/Departure Average Seats/Deparute 0 Delta JetBlue American 0 Although DL has more domestic departures at JFK, almost ½ of them are on regional jets (see next slide) Diio schedules for Nov 2015 Oct 2016, retrieved on March 7, DOT-OST Exhibit B6-ANS

64 Majority of Delta s domestic JFK flights are on Regional Jets¹ 18 of 49 (or 37%) Delta s domestic destinations from JFK are served exclusively on RJ s 26 of 49 (or 53%) Delta s domestic destinations from JFK are served in most part 2 on RJ s % of Delta domestic JFK departures served on RJ s ORF BWI ACK ROC BNA CVG IAD CMH CLE JAX DFW PIT IND SYR MVY RIC SAV PHL ORD RDU BUF RSW DTW DCA MSY BOS MSP TPA CHS SAT PBI MCO AUS ATL JAC HNL STT PDX PHX DEN SAN SEA MIA FLL SLC LAS SJU SFO LAX 6% 5% 5% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 29% 12% 50% 87% 84% 78% 72% 67% 61% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 96% 18 destinations are 100% on RJ s 8 destinations are 50% or more on RJ s Diio schedules for Jan 2016 Dec 2016, retrieved on March 7, ¹RJ s are regional jets or any other aircraft type with fewer than 100 seats. 2 At least 50% of flights are served on RJ s on annual basis DOT-OST Exhibit B6-ANS

65 JetBlue offers the most seats at JFK for US domestic passengers Domestic Seats at JFK by US Carrier 6.0M 5.7M 3.1M 590K 510K 120K 94K 19K JetBlue Delta American Virgin United Sun Country Hawaiian Alaska Diio schedules for Jan 2015 Dec 2015, retrieved on March 7, American seats include US Airways seats DOT-OST Exhibit B6-ANS

66 JetBlue has been more committed to MCO international growth than any other carrier International Departures from MCO 5,000 Southwest Annual Departures Delta JetBlue US Carrier Current Intl. Dest. 0 Oct '05 Oct '06 Oct '07 Oct '08 Oct '09 Oct '10 Oct '11 Oct '12 Oct '13 Oct '14 Oct '15 Oct '16 Southwest Delta JetBlue 2 (AUA, MBJ) 2 (CUN, GRU) 7 (BOG, CUN, MBJ, MEX, NAS, SDQ, SJO) *(exited in Feb 2016) DL has not served any Caribbean destinations from MCO since DL s only international markets from MCO were BSB and GRU (Brazil) in 2015, and has already exited one (BSB) WN hasn t entered any new international destinations from MCO since inheriting AUA, MBJ, and NAS through the merger with AirTran Airways JetBlue is the largest and most committed international carrier in Orlando Diio schedules for Nov 2004 Oct 2016, retrieved on March 9, WN data includes FL DOT-OST Exhibit B6-ANS

67 JetBlue s MCO-HAV proposal offers up to 40 additional seats per departure JetBlue s A321 aircraft proposed for MCO-HAV has 14% more seats than Southwest and 25% more seats than Delta On annual basis, JetBlue will be able to offer 18,250 more seats than Southwest and 29,200 seats than Delta with one daily MCO-HAV Proposed Seats per Departure for MCO-HAV Seats per Frequency per Year¹ for MCO-HAV 146, , ,800 JetBlue A321 Southwest B Delta B JetBlue A321 Southwest B Delta B B6 MCO-HAV Other Carriers MCO-HAV 1 Based on 1x daily frequency for 1 year. A321 represents first MCO-HAV frequency proposed by JetBlue. DOT-OST Exhibit B6-ANS

68 JetBlue is deeply committed to Orlando, as demonstrated by its strong community involvement Leadership Involvement: Warren Christie JetBlue SVP Safety Security & Training Board Member, Boys & Girls Club of Central Florida Board Member, Arnold Palmer Medical Center Community Service: KaBoom completed 2 playground builds Soar With Reading donated $1.75M of books to kids in need Supporting Autism Speaks through JetBlue s Blue Horizons program Supporting over 23 non-profit organizations throughout Central Florida Sponsorships: PGA Tour Arnold Palmer Invitational Orlando City Soccer Florida Music Festival Latin Food & Wine Festival DOT-OST Exhibit B6-ANS

69 Southwest has demonstrated little experience with - and low commitment to international flying US Org Int'l Dest ATL AUA Start X BDA Start X CUN FPO Start / X X Start MBJ Start X NAS Start X BWI BDA Start X FPO X MCO NAS Start X In the last 10 years Southwest has exited 8 of the 35 international routes it had opened Even including the recent announcements (2016), Southwest currently serves merely 39 international routes after more than 48 years in the business By contrast, in its first 16 years of operation, JetBlue now serves 68 international markets, and exited just 2 of them since its start Diio schedules for WN and FL for Aug 2003 Aug 2015, retrieved on March 9, U.S. DOT O&D Diio Mi DOT-OST Exhibit B6-ANS

70 Southwest / Campbell-Hill Econometric Model provides little to no evidence to suggest reliability or accuracy No evidence on any statistically-meaningful validity to this model is provided Dummy variables for carriers are not provided Basic measures of regression strength (R-square and sample size) are not sufficient to attest the validity of the model/finding by any mean Any statistician will attest that more regression output metrics are necessary to test a proper regression analysis, especially of the multivariate type used by Southwest (e.g. F-statistic, P Values, Variance Inflation Factors, Residuals analysis, just to name a few) The methodology used to demonstrate the fare impact of Southwest is inconclusive in its current state Southwest application, pages DOT-OST Exhibit B6-ANS

71 Southwest / Campbell-Hill Econometric Model provides little to no evidence to suggest reliability or accuracy Meanwhile, the traveling public and travel media have started to wonder about the current state of the Southwest effect on airfares DOT-OST Exhibit B6-ANS

72 JetBlue s JFK-HAV proposal offers 46 additional seats per departure vs. United s EWR-HAV JetBlue s A321 aircraft proposed for JFK-HAV has 30% more seats than United On annual basis, JetBlue will be able to offer 33,580 more seats with one daily JFK-HAV than United with EWR-HAV¹ Proposed Seats per Departure for NYC-HAV Seats per Frequency per Year¹ for NYC-HAV , , , JetBlue A321 (JFK) JetBlue A320 (EWR) United B (EWR) JetBlue A321 (JFK) JetBlue A320 (EWR) United B (EWR) B6 JFK/EWR-HAV UA EWR-HAV 1 Based on 1x daily frequency for 1 year. A321 represents first JFK-HAV frequency proposed by JetBlue. DOT-OST Exhibit B6-ANS

73 JetBlue is not supportive of UA s IAD-HAV service since it relies on government traffic yet is only offered on Saturdays UA Application, page 52¹: United applies [ ] for year-round Saturday-only round-trip service between [ ] Washington, D.C. [ ] and Havana, utilizing individually 0.1 daily frequencies [ ]. Washington Dulles is the largest airport in the Washington, D.C. metropolitan area, which encompasses one of the largest U.S.-Cuba markets and is a key destination for political and economic links to international capital cities like Havana. By providing a critical diplomatic and governmental link between the U.S. and Cuban capital cities, United s proposal is singularly situated to fulfill this important role. United s combined summer and winter schedules for its Washington, D.C.-Havana service will offer online connections to over 40 U.S. points JetBlue agrees with UA that there is a demand for diplomatic and government traffic supporting the need to connect passengers from D.C. area to Havana, Cuba. However, JetBlue doesn t believe that that demand could be sustained with once weekly direct scheduled service that UA proposed for Saturdays only. It is well-known that government and diplomatic travel is minimal during the weekends (especially considering relatively short flight time of 3 hrs. 5 min.²). Additionally, most government and political organizations, as well as embassies, are located in close proximity to DCA airport. The employees of such organizations would much rather prefer to travel during the week (Monday-Friday) and from the closest airport to work (DCA) via one-stop connection. Therefore, JetBlue believes that awarding 1 HAV slot to a 1x weekly IAD-HAV service on UA is not going to be sustainable nor in the best of public s interest. 250 IAD Departures 0 Daily Departures at DCA and IAD³ IAD Daily Departures DCA Daily Departures Mon Tue Wed Thu Fri Sat Sun Lowest demand day 50 DCA Departures 0 1 UA Docket page 12; 2 UA Docket page 117; ³ Diio schedules for CY2016, retrieved on March 7, 2016 DOT-OST Exhibit B6-ANS

74 UA has a history of abandoning EWR-Caribbean routes US Org Int'l Dest EWR BGI X CUR Start X FPO X KIN X PAP Start X PSE Start X STI X Start Between United ended service in 7 of 25 of its Caribbean markets from EWR¹: United ended service to Santiago, DR in 2008 and re-entered the market in 2014 just days after JetBlue s announcement of EWR- STI Of the 7 EWR-Caribbean routes UA exited in the past 10 years, many were VFR (visiting friends and family): KIN, PAP, PSE, STI. ¹ schedules provided by Diio; retrieved on March 7, Continental (CO) flights are included in the statistics DOT-OST Exhibit B6-ANS

75 JFK Airport Experience: Delta Long walks Two Terminals (T2, T4) Domestic, then separately, international..or bus rides DOT-OST Exhibit B6-ANS

76 JFK Airport Experience: Delta One Mile at a Time The B Concourse of Terminal 4 must be ten miles long. By the time I finally got to the Delta SkyClub, I was drenched in sweat from the combination of an eight and a half hour flight, a long security line and a haul to the gate. DOT-OST Exhibit B6-ANS

77 JFK Airport Experience: Delta NEW YORK (CBS New York/AP) I did need a plane ride to get from the entrance to here today, joked U.S. Rep. Joe Crowley, D-N.Y. DOT-OST Exhibit B6-ANS

78 JFK Airport Experience: Delta Cranky Flier On the other hand, have you heard any complaints about the long walk required in Terminal 4 today? Yeah, well those people are complaining about walks that currently end at gate B41. Now it s going to extend all the way to B55. In other words, you re going to need your hiking boots just to get to those regional gates. DOT-OST Exhibit B6-ANS

79 JFK Airport Experience: JetBlue International Gates One Terminal (T5) Domestic International..all in one modern, convenient, efficient passenger experience Domestic Gates DOT-OST Exhibit B6-ANS

80 JFK Airport Experience: JetBlue DOT-OST Exhibit B6-ANS

81 Current LAX-HAV charter traffic proves lack of demand from West Coast 80 0 Passengers Daily Passengers Weekly LAX-HAV Weekly Charter Passengers Current Average Daily Charter Demand 67 ~50% Load Factor Jan 30 Feb 6 Feb 13 Feb 27 Mar 5 LAX-HAV Charter Traffic Translated into Daily Demand: Proposed daily seats by AS are equivalent to 5,050% increase of the current LAX-HAV charter demand 5,050% increase 362 Proposed AS Daily Seats *Proposed 2x daily LAX-HAV Alaska service is on B with 181 seats/dept. **Charter Data comes from the public Cuban customs database published online American Airlines Application Page 52: With respect to Los Angeles, Los Angeles has the fourth largest Cuban-American population in the U.S. While it is tiny compared to Miami-Dade Country [ ], it is of a size to warrant some level of service. This has been demonstrated by the fact that, today, American currently operates a weekly LAX-HAV charter flight. [ ], American is realistic about the current demand at LAX for Havana service, given its experience in operating these charters. If American were free to operate as many frequencies in the U.S.-Cuba market as it wished, American might consider requesting additional frequencies now and operating them as demand warranted. [ ] AA is limiting its request to what its experience in the market shows to be the true demand one weekly frequency. Anything more than that would be hoping for significant demand expansion, and, in an environment where every frequency counts to the Department, American is limiting its request to what experience tells it the LAX market will bear. Thus, the Department can allow the limited Havana frequencies to be put to their highest and best use that will maximize the public benefits. DOT-OST Exhibit B6-ANS

82 With cramped cabins and poor customer service, Spirit Airlines is far from appreciated by passengers A 2014 study by the U.S. Public Interest Research Group highlights the number of complaints filed by Spirit s customers: DOT-OST Exhibit B6-ANS

83 With cramped cabins and poor customer service, Spirit Airlines is far from appreciated by passengers DOT-OST Exhibit B6-ANS-101

84 Shortly after JetBlue entered FLL-KIN, Spirit reduced their service to seasonal 90 FLL-KIN Flights Monthly Flights 60 B6 NK 30 0 Jan 2010 Apr 2010 Jul 2010 Oct 2010 Jan 2011 Apr 2011 Jul 2011 Oct 2011 Jan 2012 Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jul 2013 Oct 2013 Jan 2014 Apr 2014 Jul 2014 Oct 2014 Jan 2015 Apr 2015 Jul 2015 Oct 2015 Jan 2016 Apr 2016 Jul 2016 Oct 2016 Diio schedules for Jan 2010 Oct 2016, retrieved on March 7, DOT-OST Exhibit B6-ANS

85 Since JetBlue entered FLL-NAS, Spirit reduced their capacity, and later exited the route 150 FLL-NAS Flights 120 Monthly Flights B6 NK 30 0 Jan 2008 May 2008 Sep 2008 Jan 2009 May 2009 Sep 2009 Jan 2010 May 2010 Sep 2010 Jan 2011 May 2011 Sep 2011 Jan 2012 May 2012 Sep 2012 Jan 2013 May 2013 Sep 2013 Jan 2014 May 2014 Sep 2014 Jan 2015 May 2015 Sep 2015 Jan 2016 May 2016 Sep 2016 Diio schedules for Jan 2008 Oct 2016, retrieved on March 7, DOT-OST Exhibit B6-ANS

86 Since JetBlue entered BOS-DFW, Spirit reduced their service to seasonal 90 BOS-DFW Flights Monthly Flights 60 B6 NK 30 0 Jan 2010 Apr 2010 Jul 2010 Oct 2010 Jan 2011 Apr 2011 Jul 2011 Oct 2011 Jan 2012 Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jul 2013 Oct 2013 Jan 2014 Apr 2014 Jul 2014 Oct 2014 Jan 2015 Apr 2015 Jul 2015 Oct 2015 Jan 2016 Apr 2016 Jul 2016 Oct 2016 Diio schedules for Jan 2010 Oct 2016, retrieved on March 7, DOT-OST Exhibit B6-ANS

87 JetBlue s New York City Headquarters DOT-OST Exhibit B6-ANS-101

88 Future JFK Terminal 5 hotel DOT-OST Exhibit B6-ANS-101

89 Future JFK Terminal 5 hotel DOT-OST Exhibit B6-ANS-101

90

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