Selection of Alaska to Operate U.S.-Havana Air Service Would Best Achieve the Department's Principal Objectives in This Proceeding...

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TABLE OF CONTENTS I. Alaska's Service Proposal... 4 II. Selection of Alaska to Operate U.S.-Havana Air Service Would Best Achieve the Department's Principal Objectives in This Proceeding... 5 A.

2 TABLE OF CONTENTS I. Alaska's Service Proposal... 4 II. Selection of Alaska to Operate U.S.-Havana Air Service Would Best Achieve the Department's Principal Objectives in This Proceeding... 5 A. Alaska's Selection Will Further the Goal of Ensuring a Broad Array of U.S. Carriers Offering Scheduled Service to Cuba... 6 B. Alaska's Selection Will Expand the Geographical Range of U.S. Gateways... 7 III. IV. Alaska's Havana Service Will Establish a Gateway at Los Angeles, Home of the Largest Cuban-American Community Outside the Eastern U.S... 8 Alaska Has a Strong Track Record of Developing Service at Los Angeles to Other U.S. Cities, Mexico and Central America... 9 V. Alaska's Award-Winning Service Combined with Low Fares Provides a Strong Foundation for the Success of Alaska's Seattle/Portland-Los Angeles-Havana Service VI. Alaska Has a Proven Record of Well-Managed Network Growth VII. Alaska's Formal Application for Exemption and Frequency Allocation VIII. Conclusion EXHIBITS

3 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRET ARY WASHINGTON, DC 2016 U.S.-CUBA FREQUENCY ALLOCATION PROCEEDING Application of ALASKA AIRLINES, INC. for an Exemption pursuant to 49 U.S.C and Frequency Allocation (Seattle/Portland-Los Angeles-Havana) ) ) ) ) ) ) ) ) ) Docket DOT-OST DATED: March 2, 2016 APPLICATION OF ALASKA AIRLINES, INC. FOR AN EXEMPTION AND ALLOCATION OF FREQUENCIES Alaska Airlines, Inc. ("Alaska") proposes to operate double-daily scheduled combination service on: 1) a Seattle-Los Angeles-Havana routing; and 2) a Portland-Los Angeles-Havana routing, both using 181-seat Boeing ER aircraft. The core of Alaska's proposal is twice-daily nonstop roundtrip service between Los Angeles and Havana, with once-daily service between its Seattle hub and Havana via Los Angeles and once-daily service between Portland and Havana via Los Angeles. 1 Alaska will institute service on its daily Seattle-Los Angeles-Havana flight as early as August 1, 2016, and on its daily Portland-Los Angeles-Havana flight as early as August 28, 2016, but in any event, both flights will commence no later than 90 days following receipt of all required governmental approvals. 1 Alaska's Portland-Los Angeles-Havana service will operate using a single plane and single flight number in each direction. The Seattle-Los Angeles-Havana service will operate using a single plane/single flight number on the outbound route; on the return, Seattle-bound passengers will connect at Los Angeles.

Application of Alaska Airlines, Inc. Page2 Alaska's service will provide substantial and important public benefits: Alaska offers a unique service proposition to U.S.

4 Application of Alaska Airlines, Inc. Page2 Alaska's service will provide substantial and important public benefits: Alaska offers a unique service proposition to U.S.-Havana travelers: high-quality, award-winning service at low fares across a route network that focuses on the western United States. Alaska will provide nonstop service between Los Angeles and Havana. Los Angeles is an essential choice as a gateway for Havana service because: o Los Angeles is the second most populated metropolitan area in the U.S., with over 18 million people. o Los Angeles International Airport is the third busiest U.S. passenger airport with 74.9 million travelers and ranks third by number of international passengers, with over 20.7 million in o Los Angeles has one of the largest Cuban-American populations of any U.S. city, while California has the second largest Cuban-American population among states (behind only Florida). o Los Angeles was one of three cities originally selected by the U.S. government for air charter service to Cuba. 2 o Passenger demand between Los Angeles and Cuba is estimated at 159,000 local passengers annually and up to 190,000 when connecting passengers are included. o The Los Angeles-Latin America/Caribbean market, with over 5 million passengers annually, has grown by 5 percent since 2014 and 4 percent annually since o California has the second highest projected population growth rate in the U.S., with its population expected to increase by 7.6 million people by Alaska is grateful for Los Angeles World Airports' endorsement of Alaska's service proposal to Cuba. Alaska will offer daily service between its primary hub in Seattle and Havana via Los Angeles. Alaska will offer daily single plane/single flight number service between Portland and Havana via Los Angeles. 2 Airports of Entry or Departure for Flights to and From Cuba, 76 Fed. Reg (Jan. 28, 2011 ).

Application of Alaska Airlines, Inc. Page 3 Alaska will offer convenient one-stop roundtrip connecting service from Anchorage and Salt Lake City to Havana via Los Angeles.

5 Application of Alaska Airlines, Inc. Page 3 Alaska will offer convenient one-stop roundtrip connecting service from Anchorage and Salt Lake City to Havana via Los Angeles. Alaska is the ideal carrier to provide West Coast service to Havana because Alaska's West Coast route network is anchored by its hub at Seattle and substantial focus-city presence at Portland and Los Angeles. Alaska enplaned 1. 7 million passengers at Los Angeles, 10.2 million passengers at Seattle, and 3.6 million passengers at Portland in Alaska has an outstanding track record of offering low and flexible fares, including one-way fare pricing and fewer fare restrictions. Alaska will offer low fares between Los Angeles and Havana, and between Seattle/Portland and Havana. Alaska's substantially lower operating costs provide the ideal foundation for Alaska to offer low fares to stimulate the development of the West Coast Havana scheduled service market. Alaska is the leading provider of West Coast-Mexico service, a market with similar U.S. point-of-sale characteristics to the U.S.-Havana market. Alaska has also recently expanded its network to include Los Angeles service to two cities in Costa Rica. Alaska's West Coast-Mexico/Central America service positions Alaska to build on its success in predominantly leisure, U.S. point-of-sale markets by providing daily nonstop flights in the Seattle/Portland-Los Angeles-Havana market. Since 2010, Alaska has expanded its Los Angeles services by 14%, while its Los Angeles-Mexico/Central America services have grown by 28%. Alaska has demonstrated a strong ability both to prudently and aggressively grow its overall network. Alaska's industry leading financial strength, being one of only three U.S. airlines with an investment grade credit rating, provides vital support for Alaska's considerable expansion against the large U.S. carriers and its ability to successfully maintain new market service. Over the past 10 years, Alaska's network has grown by 55%. Havana will be an excellent and profitable addition to the Alaska network. Alaska is a recognized leader in operating performance, customer service, and reliability. Alaska has achieved the #1 on-time performance ranking six years in a row according to FlightStats. Alaska has won numerous major awards for its service, including the #1 U.S. airline ranking by the Wall Street Journal for the past two years, the #1 in customer service ranking from J.D. Power & Associates for eight consecutive years, and the #I loyalty program ranking from J.D. Power & Associates for two consecutive years.

Application of Alaska Airlines, Inc. Page4 I. Alaska's Service Proposal. Alaska plans to operate double-daily U.S.-Cuba flights between Los Angeles and Havana, with daily Havana service to/from Seattle and Portland via Los Angeles.

6 Application of Alaska Airlines, Inc. Page4 I. Alaska's Service Proposal. Alaska plans to operate double-daily U.S.-Cuba flights between Los Angeles and Havana, with daily Havana service to/from Seattle and Portland via Los Angeles. For Alaska's first daily eastbound service, the aircraft would depart Seattle at 5:00 a.m. with arrival in Los Angeles at 7:40 a.m., and depart Los Angeles at 8:50 a.m. with arrival in Havana at 4:55 p.m. On the return/westbound trip, the aircraft would depart Havana at 5:55 p.m., arrive in Los Angeles at 9:00 p.m., and depart Los Angeles at 11:35 p.m. with arrival in Seattle at 2:12 a.m. For Alaska's second daily eastbound service, the aircraft would depart Portland at 9:40 a.m. with arrival in Los Angeles at 12:00 noon, and depart Los Angeles at 1 :00 p.m. with arrival in Havana at 9:05 p.m. On the return/westbound trip, the aircraft would depart Havana at 8:00 am., arrive in Los Angeles at 11 :05 a.m., and depart Los Angeles at l :05 p.m. with arrival in Portland at 3 :40 p.m. Proposed schedules, including flight numbers, complete routing from origin to destination, elapsed times, airports served, departure and arrival times, and equipment type to be operated are set forth in Exhibit AS-1. A route map showing the proposed service is provided as Exhibit AS-2. Alaska will use ER aircraft (with 16 First Class seats and 165 Economy Class seats for a total of 181 seats) to serve the route. 3 Additional information regarding Alaska's aircraft to be utilized on its proposed service is set forth in Exhibits AS-3 and AS-4. Alaska will also offer convenient one-stop connecting service between Anchorage and Salt Lake City, on the one hand, and Havana, on the other hand, via Los Angeles. 3 Alaska has 36 B ER aircraft in its existing fleet, with additional aircraft on order.

BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. 2016 U.S.-CUBA FREQUENCY ALLOCATION PROCEEDING DOCKET OST-2016-0021 Application of EASTERN AIR LINES GROUP. INC. for an exemption and frequency