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

Transcription

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 REPLY 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 21, 2016 Counsel for JetBlue Airways Corporation

2 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 REPLY OF JETBLUE AIRWAYS CORPORATION I. INTRODUCTION JetBlue hereby submits this consolidated reply in support of its service proposal for United States-Cuba frequencies. As explained in detail below, many of the arguments made by other airlines in this proceeding are flawed and reliant on incorrect analyses. An award to JetBlue will maximize public benefits and provide a valuable competitive alternative in the various markets it seeks to serve. JetBlue is uniquely qualified to provide scheduled service to Cuba and urges the Department to award it frequencies in its requested markets so that it may begin taking steps to inaugurate such service. By selecting JetBlue, the Department will ensure that valuable frequencies are used to enhance the United States-Cuba relationship and foster the people-topeople connections that are central to improving relations between the two countries. II. FT. LAUDERDALE AND SOUTH FLORIDA Despite the arguments made by its competitors, JetBlue s Ft. Lauderdale service proposal is deserving of four daily frequencies because it will cater to the large Cuban-American population of South Florida, offer connecting service to the most important markets in the United States, and

3 inject a competitive alternative and restraint on American s fortress hub in Miami. JetBlue s Ft. Lauderdale service proposal should be granted in full. American suggests an unusually narrow approach to defining the relevant South Florida market that would squander rather than maximize public benefits. Under American s analysis, the sole relevant facts the Department should consider are i.) that Miami International Airport (MIA) is allegedly (but not definitively) the closest airport to the largest population clusters of Cuban- Americans, and ii.) MIA s historic role as the location of many charter flights to Cuba in a time of strained United States-Cuba relations. These two facts are misleading, irrelevant, inapplicable and not the most important decisional criteria as relations between the United States and Cuba normalize. A. FLL is an important international airport that serves all of South Florida and is a competitive restraint on American s MIA fortress hub As an initial matter, American s MIA is the only relevant airport in South Florida argument would be a surprise to the millions of travelers who prefer to use Ft. Lauderdale/Hollywood International Airport (FLL) or Palm Beach International Airport (PBI) each year. American s viewpoint quite literally ignores that there are two other major airports serving South Florida. In fact, a common airline industry code for the region is MFW, which stands for Miami/Ft. Lauderdale/West Palm Beach and demonstrates the airports interchangeability. The South Florida region is no different than other metropolitan areas with multiple airports such as Chicago, Dallas, Houston, Los Angeles, New York City, San Francisco and Washington, D.C. It is quite common for a metropolitan area to have an airport with a dominant legacy carrier fortress hub along with another equally competitive airport offering more 2

4 affordable or convenient service options, usually developed by low-cost carriers such as JetBlue. 1 In fact, airports with low-cost carriers like Baltimore Washington International Airport (BWI) tend to disproportionally cater to familial and educational travel, which are very frequent drivers of legally-permitted travel to Cuba today. 2 In each of the metropolitan areas mentioned above, multiple airports co-exist and complement each other and FLL/MIA are no different. MIA may be the preferred airport for longhaul international flights that traditionally cater to business travelers as evidenced by the multiple A380s that arrive at MIA from Europe each day. But it is common knowledge that MIA is not an easy airport to pass through. In fact, chaotic would be a charitable description of American s hub facility. By contrast, FLL is perhaps the best example in the United States, if not the world, of an airport that is strategically located to serve multiple purposes. For a large majority of travelers planning a trip to South Florida, FLL is often their top choice because of its prime location, low airfares, manageable size, pleasant facilities, and overall ease of use. 3 The fact that FLL s traffic numbers have continuously risen is a testament to its winning formula and its preference by passengers traveling to South Florida. In fact, as a result of its popularity, FLL s second runway was opened recently, a vital investment that the airport undertook because of its strong growth rate. Other terminal enhancement projects are also underway. The airport is now 1 In fact, many airlines and online travel agencies simultaneously offer prospective travelers the ability to quickly search flights at multiple airports near any particular city. In other words, the vast majority of travelers who search for flights to Miami might easily see flights listed for FLL and PBI in addition to MIA. 2 For some perspective on American s exaggerated claims, the driving time between MIA and FLL is not that different than that between JFK and LGA. American regularly offers connecting itineraries that involve an airport change between JFK and LGA. JetBlue questions how American can claim that a drive between JFK and LGA that is offered to American connecting passengers is impossible for hundreds of thousands of residents of South Florida to manage in attempting to find a better airfare or service value. 3 JetBlue notes that international carriers such as Azul and Norwegian Air Shuttle are increasingly choosing to serve FLL instead of MIA. 3

5 perfectly positioned for future growth and much of this will involve Caribbean and Latin American traffic. Domestic travelers heading to Florida are not the only ones who use FLL and MIA interchangeably. South Florida locals, including the many large Caribbean and Latin diaspora communities centered there, long ago recognized the benefits of FLL over MIA. This is demonstrated by the successful international operation that JetBlue and Spirit have created at FLL that caters to Visiting Friends & Relatives (VFR) traffic as well as leisure traffic in the Caribbean and Latin American markets. For decades, many of those routes were exclusively served out of MIA, to the detriment of customers who faced high-prices, lackluster customer service and deplorable facilities. JetBlue helped improve the customer experience and change that dynamic by launching international service from FLL to numerous points in Colombia, Costa Rica, the Dominican Republic, Ecuador, Jamaica, Mexico and more. 4 In the next few years, JetBlue will serve virtually all of the same markets in the Caribbean and Latin America from FLL as American does from MIA. JetBlue s success from FLL to these international points demonstrates the popularity and viability of FLL in capturing traffic that historically used MIA, including from local ethnic communities some of which might be located slightly closer to MIA than FLL but nevertheless still prefer to use FLL. 5 It is no different than residents of Connecticut or New Jersey driving past LGA or EWR on their way to JFK in order to fly JetBlue because of its superior product and affordable airfares. The scheduled Cuba market will be no different. Cuban-Americans are dispersed throughout Dade, Broward and Palm Beach counties. For those living in Broward and Palm Beach 4 JetBlue s FLL-Barbados service begins in April and FLL-Aguadilla, Puerto Rico service begins in May. 5 As explained in Exhibit B6-REP-101 Slide 2, JetBlue disputes Spirit s analysis of the types of markets that JetBlue serves from FLL. Contrary to Spirit s allegations, JetBlue serves many VFR markets from FLL. 4

6 counties, FLL is the closest airport, not MIA. For those travelers who live closer to MIA, a cheaper flight out of FLL, with easier parking, far more manageable terminals, and better Customs and Border Protection facilities, will more than make up for whatever miniscule time savings might have been saved in driving to MIA. Further, the award-winning JetBlue customer service and lower average fares will surely attract Miami-area customers traveling to Cuba as it does today for customers traveling to other international markets. As JetBlue explained in its application and American ignored in its answer, the difference in CPE rates at FLL and MIA alone will lead to major airfare differences between the two airports as it demonstrably does today. These cost savings will be directly passed to travelers, which will further stimulate traffic and enhance United States-Cuba ties. By contrast, American s higher costs at MIA, because of both the higher CPE rate and American s higher costs as a legacy carrier, will mean more expensive fares, less traffic stimulation, and diminished, not enhanced, United States-Cuba connections. B. American s claims about historic charter service are unimportant and ultimately of limited persuasion JetBlue agrees with Spirit that American s claims regarding the importance of prior charter service as a metric to gauge the success of scheduled service on a city-pair are divorced from reality because of the important fact that until 2011, U.S. airlines could only operate charter flights from JFK, LAX and MIA. This fact alone, of course, improperly biases American s data as it had dozens of years to develop and eventually exploit the MIA-Cuba charter market. The Department should not now reward American over innovative carriers that would add competition to the market by continuing to contribute to American s massive dominance at MIA. 6 Historic charter 6 JetBlue notes that in 2010, the Department expressed serious concern about American s monopolistic dominance of certain international markets out of MIA. The Department only agreed to grant antitrust immunity to American Airlines transatlantic joint venture if it agreed to a slot remedy involving service on the Miami-London route. See Docket DOT-OST

7 flight preferences offer very little indication of how scheduled flights will perform in the future in a vastly different context. It is axiomatic but American s misleading arguments require it to be spelled out: JetBlue and other carriers, including American, are not responsible for promoting or selling charter flights or for their financial success. The Cuba charter industry is complex, unique and guided by an entirely different set of rules, regulations and travel preferences. JetBlue s role in performing charter flights is limited to providing safe and reliable transportation to the chartering organization. American improperly relies on the faulty premise that historic charter flight preferences are the best and only indication of future success of scheduled service. 7 Such an argument might have merit if charter flights between the United States and Cuba were ending but this is of course not the case. Scheduled service will complement charter flights and American remains free to provide as many charter flights to Cuba as it desires. In reality, the best indication of how scheduled Cuba flights will perform is JetBlue s (and Spirit s) success at building a large and thriving Caribbean/Latin American operation at nearby FLL, which caters to the exact demographic groups that American claims is inherently anchored permanently to MIA. It is easy and convenient for American to claim that MIA deserves the vast majority of scheduled flights and that other cities should rely on charter service. Such a statement is not surprising from an airline that has a demonstrated history of dominating airports such as Washington National Airport (DCA) as well as dominating international routes such as at London Heathrow. JetBlue does not dispute that there is a market for MIA-HAV scheduled service. But the Department would be making a grave mistake to allow American to monopolize that market, as it has requested, without providing JetBlue frequencies at the equally competitive 7 JetBlue notes that it, like American, operates a substantial number of charter flights to Cuba. Unlike American, however, JetBlue does not believe that charter flights are the best and only indicator of the success of future scheduled service. 6

8 and viable alternative of FLL which has proven to act as a restraint on American s pricing power out of MIA. 8 Forcing all nonstop South Florida-Cuba traffic to operate via MIA, as American suggests, is patently illogical. It would foreclose potential competition between MIA and airports like FLL that cater to the same catchment area, drastically limit consumer travel options, and place the entire operational burden for South Florida-Cuba flights on an airport that is already congested and currently handles the second most international passengers per year of any U.S. port of entry. The record in this proceeding clearly demonstrates that South Florida will be the largest source of traffic for scheduled service to Cuba. Even airlines that did not apply for Florida service acknowledge the size and importance of this market. The Department would have to adopt an extraordinarily narrow view to avoid the conclusion that FLL is a competitive restraint on American s fortress hub at MIA and carriers proposing to operative competitive service from FLL should therefore be allocated a sufficient number of frequencies to Havana. III. ORLANDO AND TAMPA Orlando and Tampa are both prime candidates for Havana service and there are compelling reasons for the Department to grant each city frequencies. JetBlue disagrees with American s and Delta s claims regarding the interchangeability of Orlando and Tampa, which are viewed by the Department and the traveling public as two distinct markets. Both cities have significant demand for service to Havana and both cities deserve their own service. American s and Delta s arguments are hypocritical as there are many examples of those two airlines providing service to multiple airports within the same city in order to cater to traffic flows, not to mention service to different 8 Delta argues that its proposed MIA-HAV will be the best competitive restraint on American s dominance of the MIA-HAV route. Delta s argument ignores their own poor track record of providing competitive service to American at MIA as well the overwhelming evidence of the powerful impact that FLL has exercised as a competitive restraint against American s pricing power at MIA. 7

9 cities more than an hour drive apart. For example, should airlines not provide service to Austin because Dallas is a reasonably short drive away? Or, should airlines not serve Providence because Boston is a short drive away? American and Delta serve multiple identical routes from the three New York-area airports. Orlando and Tampa both merit a flight to Havana and any argument otherwise ignores the demographic and traffic information that is part of the record in this proceeding. JetBlue is the superior choice for both cities. In Orlando, for example, JetBlue would provide 18,250 seats per year more than Southwest s competing proposal and 29,200 seats per year more than Delta s competing proposal, for a single roundtrip MCO-HAV routing. JetBlue does not fundamentally dispute that Southwest is a low-fare carrier. As the Department is aware, JetBlue structured its operation in part on Southwest s model of providing low fares that stimulate service. However, while Southwest has always been a no-frills airline, JetBlue has from day one established itself as a low-fare, high-frills airline. 9 JetBlue also does not dispute the existence of the Southwest effect, which is similar in nature to the JetBlue effect, with the key difference being the value that the customer receives and the fact that the empirical evidence suggests the JetBlue effect is greater today. 10 JetBlue has earned the best customer reviews in the airline industry because of its award-winning product that includes, among others, advance assigned seating, 11 leather seats with the most legroom in coach, unlimited snacks, personal seatback live 9 JetBlue s previous filings have explained these customer-friendly attributes that make JetBlue stand out from the other carriers in this proceeding. 10 A recent MIT study noted that recent work has suggested that the Southwest effect has started to weaken, and no longer provides the same degree of downward pressure on fares in city-pair markets in which mergers of other carriers have occurred and concluded that JetBlue is now the airline whose presence is associated with the largest decrease in average fares. See < 11 For many of the families that will be traveling to Cuba, Southwest s approach to seating is less family-friendly and more stress-inducing than JetBlue s assigned seating approach. 8

10 television, streaming music and free high-speed wi-fi. Southwest, by contrast, offers (literally) peanuts (and not even unlimited peanuts). IV. NEW YORK/NEWARK JetBlue s service proposal for New York-Havana is incredibly important and a top priority for JetBlue. JFK-Havana will be one of JetBlue s flagship routes, operated by brand new state-ofthe-art 200-seat A321s featuring the most customer friendly attributes of any proposed aircraft to Cuba. JetBlue will be proud to be the United States flag carrier on one of the most important commercial air links to emerge as a result of improved United States-Cuba relations. The central tenet of American s argument against New York-Havana service is that historic and existing charter service does not warrant the amount of scheduled service proposed by JetBlue. As explained above, however, historic charter service patterns are a poor indicator and likely inaccurate measure of future scheduled service/traffic patterns. United States-Cuba ties are rapidly evolving and the Department should not use historic, stale and non-relevant charter patterns as a determinative factor when allocating frequencies in a market where past patterns simply cannot predict future traffic. It is undisputed that the New York metropolitan area, including northern New Jersey, has the second largest Cuban-American population in the United States. The Cuban- American population in the region alone would be enough to justify multiple daily frequencies for New York/Newark-Havana service. Beyond demographics, however, New York s importance alone is enough to justify multiple daily frequencies. New York is the world capital of media, finance, fashion as well as the home of numerous other important industries including dozens of educational institutions all categories permitted to travel, even under the current U.S. travel restrictions. New York-Havana ties undoubtedly will grow stronger in the coming years and scheduled air service will facilitate and enhance those important links. When compared with other 9

11 proposed routes for which possible success is a strain on the imagination, such as Charlotte or Dallas, there is little doubt New York-Havana surpasses them. The New York market, with its large Cuban-American population and other sources of future scheduled air traffic, deserves multiple frequency allocations during this unprecedented thaw in United States-Cuba relations. As explained in its application and answer, JetBlue is the best choice to maximize consumer benefits on the New York-Havana route. Delta s claims are disingenuous and mistaken, and partly based on inapplicable factors such as its ability to carry 6 th -freedom traffic. Delta provided no examples or evidence on the record of it having demonstrated a willingness to compete with JetBlue for New York-Caribbean traffic. 12 To the contrary, as JetBlue explained in its answer, what Delta has in fact demonstrated is a commitment to abandoning New York- Caribbean markets in the face of direct competition from JetBlue. Delta claims that customers would likely prefer the superior facilities, service, and operational performance of Delta despite the fact that Delta proposed service on Boeing 757s, many of which were delivered in the 1980s and have sub-standard cabins. It is also easy for Delta to tout operational metrics when a significant portion of its operation, especially its New York City operations, involves regional carriers which hold out the Delta brand and designator code but which are actually distinct and separately owned entities such as GoJet Airlines LLC. These carriers report their operational metrics separately, which means that Delta s mainline standalone operational statistics are skewed. Were the regional carriers statistics included, Delta s performance metrics would be entirely different and an unpleasant picture would emerge. 13 In any event, Delta s claims about its operational metrics are irrelevant in this proceeding and should be ignored. Finally, as JetBlue explained at length in its answer, Delta cannot truly make a plausible claim to have the superior 12 Delta Answer at The Department s pending Consumer Rule # 3 in fact seeks to address this inequity. 10

12 facilities at JFK, with a split operation and two older terminals connected by a bus that has been subject to public Congressional ridicule. JetBlue also notes that Delta CEO Richard Anderson recently publicly criticized the resumption of service to Cuba by U.S. airlines. Mr. Anderson was quoted as explaining that: I don t think it s going to be a game changer and Everyone believes that Cuba is this panacea and I don t see it It s the result of central planning gone awry. I mean, Cuba has no infrastructure. It doesn t have a real economy. How do we think this suddenly is going to support dozens and dozens of non-stop flights a day? 14 Mr. Anderson went on to offer unsolicited advice that: If I were them, I would do two things: I would quickly put together a legal and banking system that would respect private property and private capital. Number two: I would adopt the U.S. dollar as my currency. 15 Mr. Anderson also diminished the future market for United States-Cuba scheduled air service by noting that: Cuba s going to be competing with Cayman Islands and Punta Cana and St. Thomas and St. John and St. Martin and St. Barts, and we can go all the way down the list of all the sunny, white sand, blue water beaches throughout the Caribbean. 16 JetBlue could not disagree more with Delta s CEO. Cuba is not just another beach in the Caribbean and the scheduled service at issue in this proceeding is a historic opportunity to enhance the United States-Cuba relationship and fundamentally alter the United States policy in the Americas. JetBlue requests that the Department take official notice of Mr. Anderson s recent disparaging comments. Mr. Anderson s public positions and proclamations add credence to 14 See < and < 15 Id. 16 Id. These comments from the CEO of Delta show a total misunderstanding of the existing restrictions on travel to Cuba. Delta s answer cherry picked JetBlue quotes explaining why JetBlue is a leading airline in the Caribbean to suggest that it did not understand the existing travel restrictions, despite the fact that JetBlue currently operates charters to Cuba and Delta does not. This quote by Delta's CEO shows a misunderstanding by Delta management of the current aviation regime between the two countries and what is and is not permitted. 11

13 JetBlue s argument that Delta is not really all that interested in serving Havana and that the Delta Dartboard strategy is alive and well. Further, Mr. Anderson s comments are just one in a long list of examples of Delta offending foreign countries and/or ethnic groups. 17 In these circumstances, Mr. Anderson s comments clearly do not reflect the type of carrier the Department should select for this historic endeavor and a grant of authority to Delta might in fact hinder future aviation relations between the United States and Cuba. V. BOSTON Many airlines criticized JetBlue s service proposal because Boston lacks as large a Cuban- American population as South Florida. While Boston s Cuban-American population is smaller, the city has connections to Cuba that are substantial and that stand out in comparison to other cities seeking frequencies that have no such link. As JetBlue explained in its application, Boston is one of the most important cities in the United States and features a flourishing economy anchored by biotechnology, healthcare and educational institutions (including some of the best academic institutions in the United States) that all have connections to Cuba which will drive demand under the existing twelve categories of travel. This is the reason why Boston has enjoyed a significant increase in new international air service over the last few years. Boston has gained more new and varied international service in such a short period of time than perhaps any other city in the United States since the Chicago Convention of Boston-Havana will be a successful O&D route and will nicely compliment what is likely to be a DOT allocation to other cities with large Cuban- American populations or large legacy carrier hubs. Moreover, Boston is uniquely qualified to fit within several of the twelve categories of permitted travel such as educational activities, 17 See < < and < 12

14 professional research and meetings, humanitarian projects, activities of private foundations or research for educational institutes, and more. 18 Finally, the entire Massachusetts delegation in the U.S. House of Representatives has expressed is support for JetBlue s proposal. 19 VI. MISCELLANEOUS JetBlue agrees with the multiple carriers that suggested Federal Express service proposal is an unwise use of a frequency allocation at this time. As Frontier and other carriers noted, Federal Express can serve the Cuba market with unlimited charter service or through partnerships with other carriers and a valuable U.S.-Havana frequency should not be awarded to a carrier that does not need it. JetBlue also clarifies for the record that it clearly stated the cargo capacity of its aircraft in Exhibit B6-102 Slides 2 and 3 of its application. In any event, an allocation to Federal Express at this time is not the best use of a limited operating right. An allocation to a passenger airline would do far more to maximize public benefits and to enhance United States-Cuba ties than a cargo flight that will likely be empty until Federal Express can establish and master local distribution on the island nation. Passenger flights will best promote the people-to-people exchanges that are at the heart of the United States new foreign policy approach to Cuba. Finally, JetBlue wishes to reiterate that it has proposed the single largest aircraft of any properly-licensed airline in this proceeding. 20 JetBlue s 200-seat A321 aircraft, which will be used on the routes JetBlue most prioritized (FLL/JFK/MCO-HAV), will maximize the use of the 18 To reiterate and clarify JetBlue s ranking of city-pair preferences that it included in Section VII(A) of its application (Page 29), JetBlue notes that Federal Express requested Monday-Friday frequencies and that United requested multiple Saturday-only frequencies in certain markets (American also requested a Saturday-only frequency to Chicago). JetBlue reiterates its willingness to accept Saturday-only and/or Sunday-only allocations in the BOS-HAV market. Should the Department grant Federal Express request and one of American or United s Saturday-only requests, JetBlue specifically requests a Sunday-only frequency allocation in the BOS-HAV market, in the event that a daily allocation is not possible. Such an allocation would be sufficient to cater to the O&D demand that exists and JetBlue would plan to expand in the market as soon as possible. 19 See Docket-DOT-OST As explained in multiple answers by various carriers, Dynamic and Eastern lack the requisite DOT authority to serve Cuba at the time. 13

15 valuable scheduled air service rights that the United States Government negotiated with the Cuban Government. There is a long line of Department cases indicating the importance of offering the most capacity in a contested market. 21 In this proceeding, JetBlue is clearly the most superior choice in offering the Department the greatest use of limited frequencies when most other carriers applied to serve Havana with aircraft averaging in the seat range. VII. CONCLUSION It is appropriate that replies in this proceeding are due on the day that President Obama is in Cuba for the first visit by an American President since This historic visit, fully appreciated and celebrated by JetBlue but clearly not by certain other carriers in this proceeding, is symbolic of the warming relations between the United States and Cuba and an indication of what the future might hold. 21 See Consolidated Answer of Alaska Airlines, Inc. at

16 JetBlue congratulates the United States Government for negotiating an aviation agreement that will allow for the resumption of scheduled air service between the United States and Cuba for the first time in more than a generation. JetBlue is uniquely positioned as an experienced charter operator and successful low fare airline to maximize public benefits for the Department. An award of frequencies to JetBlue will ensure that this extraordinary and unique opportunity actually leads to meaningfully enhanced people-to-people connections which will ultimately improve United States-Cuba relations. JetBlue notes the broad, widespread support it has received from members of Congress, local elected officials, airport authorities, civic organizations, and other groups and organizations. 22 In addition, the JetBlue Master Executive Council of the Air Line Pilots Association (ALPA) as well as more than 4,200 JetBlue crewmembers have expressed their 22 Exhibit B6-REP-101 Slides 8-10 include a list of organizations and individuals who have filed letters in support of JetBlue. All of the letters can be found in Docket DOT-OST

17 support to the Department for JetBlue s service proposal. JetBlue respectfully urges the Department to grant its request in full. Respectfully submitted, Dated: March 21, 2016 Robert C. Land Senior Vice President of Government Affairs & Associate General Counsel 16

18 Fort Lauderdale/Hollywood airport is undeniably friendlier than Miami for customer s wallets Top 30 Domestic O&Ds (MIA and FLL combined) Market FLL Avg Fare ($) MIA Avg Fare ($) MIA Fare Premium Market FLL Avg Fare ($) MIA Avg Fare ($) MIA Fare Premium LGA % ATL % JFK % EWR % ORD % LAX % BWI % BOS % DCA % PHL % DTW % SJU % SFO % DFW % DEN % LAS % IAH % MSP % RDU % MDW % MSY % PIT % CLE % PHX % PVD % CLT % BUF % STL % BNA % IND % Source: U.S. DOT O&D Report YE3Q15 retrieved via Diio Mi on March 16, 2016 excludes International Carriers Fare Data. DOT-OST Exhibit B6-REP-101 1

19 JetBlue s Latin & Caribbean network in FLL is heavily focused on VFR travel, not Leisure MEX CUN SJO MBJ NAS CTG PLS BQN SJU PAP PUJ PSE KIN SDQ POS BGI Primarily VFR BGI BOG BQN KIN LIM MDE Primarily Leisure CTG CUN MBJ NAS PLS POS MDE BOG UIO MEX PAP PSE PUJ SDQ SJO LIM SJU UIO Source: U.S. DOT Schedules YE Oct 2016 retrieved via Diio Mi on March 16, 2016 DOT-OST Exhibit B6-REP-101 2

20 JetBlue is the most committed carrier to Latin & Caribbean VFR traffic in Orlando Annual Seats JetBlue Delta Spirit Southwest Primarily Leisure 149,600 7, ,819 AUA 52,481 CUN 62,400 7,320 MBJ 49,850 52,338 NAS 37,350 Primarily VFR 656,580 65,503 53, ,265 BOG 58,500 BQN 75,350 BSB 1 7,056 GRU 1 58,447 MEX 59,700 PSE 68,200 SDQ 37,000 SJO 63,150 SJU 294,680 53, ,265 Total 806,180 72,823 53, ,084 1 Outside JetBlue s fleet capabilities. Source: U.S. DOT Schedules YE Oct 2016 retrieved via Diio Mi on March 16, 2016 DOT-OST Exhibit B6-REP-101 3

21 JetBlue s domestic Orlando capacity is concentrated where the Cuban American traffic needs it Destination State Cuban-American Population JetBlue Seats Delta Seats Southwest Seats Florida 1,213,438 50,064 California 88, ,290 52,777 New Jersey 83, ,050 58,058 New York 70,803 1,126, , ,566 Texas 46,541 46, ,293 Georgia 25,048 1,160, ,745 Illinois 22, ,974 Nevada 21, ,952 North Carolina 18, , ,975 Pennsylvania 17,930 1, ,589 Virginia 15,229 54,700 91,391 Massachusetts 11, ,750 91,382 1,001 Arizona 10,692 66,668 Maryland 10,366 53, ,429 Louisiana 10, ,614 Michigan 9, ,512 71,288 Connecticut 9, , ,061 Kentucky 9,323 97,063 58,460 Tennessee 7,773 4, ,158 Ohio 7,523 5, ,926 Washington 6,744 43,273 Colorado 6, ,336 Missouri 4,979 2, ,603 New Mexico 4,298 10,131 Alabama 4, ,281 Indiana 4,042 22, ,133 Wisconsin 3,696 2, ,298 Minnesota 3, , Nebraska 2,152 12,155 Utah 1,963 54, ,123 District of Columbia 1, ,900 91,377 Rhode Island 1, , ,681 New Hampshire 1, ,027 Maine Source: U.S. DOT Schedules YE Oct 2016 retrieved via Diio Mi on March 16, 2016 DOT-OST Exhibit B6-REP-101 4

22 JetBlue has demonstrated success with a proven business model reliant upon local traffic and low costs 100% 91% NYC Share of Local Traffic 80% 75% 57% 54% 53% 50% JetBlue JetBlue Delta United American EWR JFK JFK EWR JFK JetBlue s business model is aligned with our proposed Cuba frequencies, and is well-suited for the Department s goal of maximizing consumer benefit Source: U.S. DOT Airline Performance Report YE3Q15 retrieved via Diio Mi on March 16, 2016 DOT-OST Exhibit B6-REP-101 5

23 JetBlue is the most dedicated Caribbean carrier in NYC JFK/EWR Caribbean ASMs TTM ending Oct 16 Destination JetBlue JFK American JFK Delta JFK United EWR SDQ 499,087, ,330, ,014,506 STI 555,500, ,864,340 87,809,127 PUJ 211,017,660 20,388, ,278, ,136,255 AUA 204,345, ,275, ,406,768 MBJ 157,580,640 93,235, ,539,330 SXM 111,198,150 24,367, ,665,979 44,749,376 BGI 258,296,864 13,050,016 NAS 126,818,160 59,011,368 67,926,792 SJO 3,085, ,851,922 PTY 210,293,600 LIR 91,651,500 44,413,200 73,128,258 PAP 121,840,000 87,261,808 POS 147,447,600 39,763,904 KIN 186,054,440 ANU 41,152,500 81,278,400 55,317,575 PLS 85,932,850 32,976,324 50,747,784 BDA 26,936,700 73,395,840 33,485,328 32,192,954 POP 87,314,400 51,826,320 UVF 114,656, ,840 21,058,820 GCM 71,701, ,760 7,100,910 GND 60,393,600 15,148,728 GUA 11,093,892 41,971,664 SAL 31,455,606 LRM 24,304,800 BON 20,777,606 SKB 11,894,976 5,537,000 SAP 12,104,400 AZS 11,629,800 BZE 6,157,052 Total ASMs 3,194,861, ,587,280 1,301,616,953 1,736,867,529 Source: U.S. DOT Schedules YE Oct 2016 retrieved via Diio Mi on March 16, 2016 DOT-OST Exhibit B6-REP-101 6

24 Southwest forecast methodology is flawed and should not be used by the Department when comparing applicants and prioritizing requests Examples of potential flaws: Southwest didn't take into consideration the fact that demand from the proxies (U.S.- Puerto Rico and U.S.-Dominican Republic) are based on unrestricted travel capabilities from Puerto Rico and Dominican Republic residents, whereas the U.S.- Cuba market will be significantly limited on one side due to the difficulties in obtaining U.S. visas on behalf of Cuban citizens, and on the other side by the restricted categories allowed to U.S. travelers Southwest used Canada-VRA traffic volume for FLL-CMW and FLL-VRA leisure markets, without discounting demand for the fact that Canada travel to Cuba is 100% unrestricted, unlike the limited categories allowed for U.S. travel (which for example do not allow tourism) Southwest used proxy markets that are extremely well established, mature, with decades of scheduled service, and a robust infrastructure on the ground Southwest applied a 4.5% growth rate (citing FAA Aerospace forecast growth for Latin America ), which is hard to believe in today s economic environment and current outlook in the U.S. as well as the most recent estimates in Cuba (1-2% range) These factors suggest that demand for Cuba travel is being overestimated. The result of Southwest s methodology suggest that virtually the entire Cuban American population will travel to Cuba once per year, something unseen in any other market today Southwest Docket OST Appendix 1 DOT-OST Exhibit B6-REP-101 7

25 Support Letters Associated Independent Colleges and Universities of Massachusetts Associated Industries of Massachusetts Governor Charles D. Baker Borough of Queens Boston Convention & Visitors Bureau Brooklyn Nets Broward County Aviation Department Representative Michael E. Capuano Representative Katherine Clark Colonnade Hotel Coalition of New England Companies for Trade (CONECT) Conventures The DREAM Project Educational Travel Alliance Friends of Caritas Cubana Inc. NYC Deputy Mayor Alicia K. Glen Greater Boston Chamber of Commerce Greater Fort Lauderdale Alliance Greater Fort Lauderdale Convention & Visitors Bureau DOT-OST Exhibit B6-REP-101 8

26 Support Letters Greater Hollywood Chamber of Commerce Greater Orlando Aviation Authority Hispanic Chamber of Commerce Mayor Theresa Jacobs Representative David W. Jolly Representative William R. Keating Representative Joseph P. Kennedy III Long Island City Partnership Representative Stephen F. Lynch Senator Edward J. Markey Massachusetts Biotechnology Council Massachusetts Clean Energy Center Massachusetts Competitive Partnership Massachusetts Life Sciences Center Massachusetts Medical Device Industry Council MassEcon Massport Representative James P. McGovern Representative Seth Moulton DOT-OST Exhibit B6-REP-101 9

27 Support Letters The Museum of Discovery and Science Mayor Stephanie A. Miner Representative Richard E. Neal 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 Tampa International Airport Together We Rise Representative Niki Tsongas Representative Nydia M. Velazquez Vision Orlando Volusia Hispanic Chamber DOT-OST Exhibit B6-REP

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