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

BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. SLOT ASSIGNMENT PHASE OF THE DEL TA -AEROMEXICO SLOT PROCEEDINGS Docket DOT -OST -2015-0070 CONSOLIDATED REPLY OF CONCESIONARIA VUELA COMPANiA DE AVIACIQN, S.A.P.I. DE C.V. D/B/A VOLARIS Communications with respect to this document should be sent to: February 6, 2017 Anita M. Mosner Jennifer M. Nowak Holland & Knight LLP 800 17th Street, NW, Suite 1100 Washington, DC 20006 (202) 419-2604 anita.mosner@hklaw.com Counsel for Concesionaria Vuela Compafiia de Aviaci6n, S.A.P.I. de C.V. d/b/a Volaris

BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. SLOT ASSIGNMENT PHASE OF THE DEL TA-AEROMEXICO SLOT PROCEEDINGS Docket DOT-OST-2015-0070 CONSOLIDATED REPLY OF CONCESIONARIA VUELA COMPANiA DE AVIACl6N, S.A.P.1. DE C.V. D/B/A VOLARIS I. INTRODUCTION On January 30, 2017, interested parties filed answers to the slot applications which were lodged on January 23 in this proceeding. Volaris submitted extensive comments on the competing applications in its Answer. Volaris will confine its comments here to: (1) correcting misstatements on the record about its own and competing proposals; and (2) offering its own recommendations for an equitable allocation of slots. The Department initiated this proceeding for a very specific purpose - to authorize US- Mexico City and JFK-Mexico services that can quickly impose competitive discipline upon the Delta-Aeromexico joint venture. The Department indicated that time was of the essence, requiring carriers to launch their new services during the course of this upcoming IATA traffic season. 1 Noting the specific purpose of the required divestiture, and understanding that Mexican carriers can impose competitive discipline upon Delta-Aeromexico as effectively as US carriers can, the Department made a specific decision not to limit its issuance of remedy slots to US carriers. 1 DOT Order 2017-1-6, Docket No. OST-2015-0071 (Jan. 6, 2017) ("DOT Instituting Order'') at 2.

Consolidated Reply of Volaris Page 2 While Volaris has indicated its comfort with the US carriers having their slot requests allocated in full (or close thereto), Volaris takes exception to the claims of "entitlement" or preference for US carriers that have been made by Southwest and Alaska. (JetBlue has broken from the others, arguing for parity in allocation.) Volaris believes that the allocation decision should not be based on the nationality of the airline receiving the slots, but on whether the recipient will make prompt and full use of the slots they receive, looking most closely at the overlap markets deemed to be at risk by the regulators. Despite the claims of the US carriers to the contrary, Volaris offers an attractive and viable competitive alternative to Delta-Aeromexico. When Volaris enters a market served by Aeromexico, fares tend to go down, even if it is able to offer a limited number of frequencies in competition with Aeromexico. As shown in Exhibit VO-R-1, Volaris' average fares in the Mexico City markets it serves have decreased over the last several years. Furthermore (and contradicting Alaska's claims), Volaris does carry both US-originating traffic and business traffic, as described in more detail herein. Volaris, a fast-growing airline, has received accolades both for its low fares and for the great value it offers to customers. While Volaris is not a household name in the US (yet), it has just been recognized by Air Transport World ("A TW") as "Value Airline" of the year, and sees itself as part of the global family of low-cost airlines. II. DISCUSSION Southwest flatly wrong. Southwest raises three fundamental complaints about Volaris' application, all of which are

Consolidated Reply of Volaris Page 3 Southwest first attacks Volaris' traffic forecasts, noting the circuity of some of the Volaris domestic routes connecting to Mexico City. 2 Southwest claims that with such circuity, Volaris' forecasts are unreliable. Apparently, Southwest glossed over the clear statement made in Volaris' Application that despite its display of available connections, its forecasts did not include any connecting passengers. 3 To amplify that point, Volaris explained at some length that it employs a point-to-point model, and its belief that the emphasis on connecting passengers was misplaced, given that Volaris already serves the same points in the US from Mexican regional airports that it proposes to serve from Mexico City. 4 Volaris reiterated this point in its Answer. 5 Volaris' forecasts are based on both its current performance on its US-Mexico routes, and the services from its regional Mexican gateways to the US cities it proposes to serve. Volaris' performance on those point-to-point routes has been both consistent and strong. Southwest also argues that Volaris does not need slots at MEX for service to the US because it can redeploy some of the slots being used for its domestic routes for that purpose. 6 This argument is completely false. While Volaris did cannibalize its own domestic network in order to launch JFK, MIA and IAH services as soon as possible, that was an extraordinary step that cannot be repeated without severely compromising its own domestic operations. As Southwest's own exhibits show, Volaris offers only a single daily frequency in several of its domestic markets, and offers multiple daily frequencies in a limited few. 2 Consolidated Answer of Southwest Airlines Co., Docket No. OST-2015-0070 (Jan. 30, 2017) ("Southwest Answer'') at 7-8. 3 Application of Concesionaria Vuela Compariia de Aviacion, SAP.I. de C.V. d/b/a Volaris, Docket No. OST-2015-0070 (Jan. 23, 2017) ("Volaris Application") at 4. 4 /d. 5 Answer of Concesionaria Vuela Compariia de Aviacion, SAP.I. de C.V. d/b/a Volaris, Docket No. OST- 2015-0070 (Jan. 30, 2017) ("Volaris Answer'') at 12. 6 Southwest Answer at 4.

Consolidated Reply of Volaris Page4 As shown in Southwest's Exhibit WN-A-4, Volaris serves 19 points in Mexico from Mexico City. Of these 19 routes, Volaris serves 14 of them less than twice per day, which means that these markets cannot be cut without eliminating them from Volaris' network. 7 MEX Market Slot Pairs 0700-2259 Domestic CUN CUL cuu GDL HMO HUX LAP MID MTV MXL MZT OAX PVR SJD TAP TGZ TIJ VSA ZIH Total 8 0.5 1 6 1 1 1 1 2.5 1 1 1 1.5 2 1 1.5 4 1 1 37 Source: Reproduced from Southwest Exhibit WN-A-4 Remarkably, Southwest even claims that Volaris can gain slots by up-gauging and reducing frequency in three of the markets it serves only twice per day, ignoring the fact that travelers make their choices in part on the basis of convenience of schedule. 8 Further, conscious of the scarcity of slots, Volaris already has placed all of its A321 aircraft into service on the routes Volaris deems to be most efficient. 9 Volaris is continuing to grow its fleet of A321s and will continue to incorporate those aircraft as it takes delivery. 10 However, Volaris' densest routes are 7 See Southwest Answer, Exhibit WN-A-4. 8 Southwest Answer, Exhibit WN-A-6. 9 Exhibit VO-R-2. 10 Exhibit VO-R-3.

Consolidated Reply of Volaris Page 5 highly successful and their high load factors demonstrate that up-gauging would not provide sufficient capacity. For example, Volaris operates CUN-MEX, the largest domestic market, with an 88% load factor, despite all but two of its departures being operated with A321 aircraft, and Volaris carries a large number of business travelers on MEX-GDL and MEX-TIJ, which each operate with an 83% load factor. Accordingly, with such load factors, reducing frequencies and up-gauging in these markets is not a viable option. Southwest offers high-frequency service in many of its key city-pairs, serving cities such as DCA-MDW six times per day, even though DCA is slot constrained, and cities such as PHX-LAS 10 times per day. Volaris is amongst the smallest domestic slot holders at MEX, and makes better use of its slots than all of its competitors. 11 Southwest's spurious claims should be rejected out of hand. Finally, Southwest argues that because Volaris and vivaaerobus together hold more MEX slots than the US applicants, they should not be awarded allocations over the US applicants. 12 Although Volaris has up-gauged its fleet and uses its Mexico City slots more efficiently than any other carrier, its slot holdings at MEX are dwarfed by Aeromexico, Aeromar and lnterjet. Further, while Volaris may have more slots than the US carriers in this particular proceeding, other US carriers hold a combined 39% of the slots at MEX used for transborder services compared with Volaris' 6%. MEX Slots Carrier AM UA AA 40 DL Y4 WN 86 vw Share 2016 36% 16% 15% 12% 9% 6% 3% 2% 1% 11 Volaris Application at 9-11. 12 Southwest Answer at 6-7.

Consolidated Reply of Volaris Page 6 Quite simply, there is no excess capacity to trim from Volaris' domestic MEX network to fund further transborder services, and its share of slots at the largest airport in its home country continues to be disproportionate to the holdings of US carriers in general. JetBlue It is interesting to juxtapose the "America first" answers of Alaska and Southwest with that of JetBlue, which states that slots should be evenly divided between US and Mexican carriers. Both JetBlue and Volaris played important roles in this case, explaining why their competitive challenges merited the application of divestiture remedies in this case. Volaris agrees with the position taken by JetBlue in this regard. Volaris does not object to JetBlue's slot allocation request. The only place where Volaris' views differ greatly from those of jetblue pertain to vivaaerobus, where Volaris takes issue with JetBlue's recommended slot allocation to the extent it proposes that any slots be awarded to vivaaerobus. 13 JetBlue correctly observed that vivaaerobus, having not even applied for new open skies authority before, hastily tacked an exemption and permit application to its slot request, without providing any supporting fitness information. 14 Volaris also agrees with JetBlue's characterization of vivaaerobus as being the weakest of the carriers in this proceeding. 15 Given JetBlue's (correct) observation about vivaaerobus' lack of commitment to the US-Mexico market, it is puzzling why JetBlue recommends any frequency allocation for vivaaerobus. 13 Answer of JetBlue Airways Corporation, Docket No. OST-2015-0070 (Jan. 30, 2017) ("JetBlue Answer''), Appendix at 1. 14 /d. 15 JetBlue Answer at 5.

Consolidated Reply of Volaris Page 7 vivaaerobus Volaris strongly disputes vivaaerobus' continued assertions that it is the only ultra-lost cost carrier (ULCC) participating in these proceedings. 16 This is simply not the case. As Volaris noted in its Answer, vivaaerobus is able to operate at a lower cost due to its lack of a presence in the US, where costs are much higher. 17 Volaris also disputes that vivaaerobus offers a unique service due to its relationship with Grupo-IAMSA, allowing it to connect to a network of bus service throughout Mexico. vivaaerobus is correct that the most common way to travel in Mexico is by bus, which is why - according to the figures of the Mexican General Administration of Ground Transportation - there are over 779 Mexican bus companies (small, medium and large) in operation 18 and many bus stations covering every state in Mexico. A plethora of bus services connect with airports around the country, and the airports of Cancun, Mexico City, Monterrey and Tijuana have bus stations onsite. 19 Accordingly, vivaaerobus' "network" provides no added benefit to its service; most passengers arriving in Mexico have easy access to a variety of bus services. Finally, vivaaerobus justifies its utter failure to provide any fitness information to support its request for a new exemption and foreign air carrier permit, asserting that "[t]here have been no material changes within the company that would affect [the Department's] prior fitness findings." 20 This is flatly false. lrelandia, vivaaerobus' 49% shareholder, actually disposed of its shares in vivaaerobus in late 2016,21 and the composition of vivaaerobus' board of directors 16 Answer of Aeroenlaces Nacionales, S.A. de C.V., Docket No. OST-2015-0070 (Jan. 30, 2017) ("vivaaerobus Answer'') at 4. 11 Volaris Answer at 8-9. 18 See http://www.sct.gob.mx/fileadmin/direccionesgrales/dgaf/est BASICA/EST BASICA 2015/Estadistica Basica del Autotransporte Federal 2015.pdf. at 40. 19 See https://www.transportamex.com/centrale-de-autobuses. 20 Application of vivaaerobus at 7. 21 See Exhibit VO-R-4.

Consolidated Reply of Volaris Page 8 changed as well. 22 This is a very material change in the carrier's ownership and management that alone should have dictated the submission of updated fitness information before new authority can be issued. 23 Indeed, with only minor changes to its ownership structure, Volaris was required to provide the Department with updated fitness information before receiving its expanded open skies authority. Principles of fairness and the Department's own regulations require that vivaaerobus should be obligated to do the same. Indeed, Volaris is heartened that it is not alone in observing the inferiority of vivaaerobus' service proposal, and poor track record in the market. Each of the US carriers has noted vivaaerobus' pronounced lack of commitment to the US-Mexico market in general and the US Mexico City market in particular. 24 Southwest observed: "nothing is stable about viva's transborder routes... 25 and "vivaaerobus' application... should receive the lowest priority of any carrier in this proceeding... " 26 Given that vivaaerobus serves only one US city on a year-round basis, and has recently down-gauged or withdrawn service to several of the US cities it proposes to serve, Volaris objects to any proposed allocation which would give vivaaerobus slots in phase 1, and contends that it should receive only limited frequencies in phase 2, given its poor record of launching and maintaining its transborder services. Although Volaris strongly disagrees with Alaska's contention that Volaris could redeploy the MEX slots its uses for domestic services for international service, it agrees with Alaska's contention that vivaaerobus could use its existing pool of MEX slots to fund its gamble to enter the US-MEX market. 27 As Volaris noted in its Answer, vivaaerobus has the worst record for using 22 fd. 23 The Department should reject vivaaerobus' "application for an exemption and permit in this docket, which contained no fitness information and was not served on any party. Volaris respectfully requests that the Department apply the same evidentiary standards to vivaaerobus as it did to Volaris. 24 Southwest Answer at 9; JetBlue Answer at 4, n. 8 and 5; Consolidated Answer of Alaska Airlines, Inc., Docket No. OST-2015-0070 (Jan. 30, 2017) ("Alaska Answer") at 16. 25 Answer of Southwest at 9. 25 Answer of JetBlue at 5. 21 Answer of Alaska at 16.

Consolidated Reply of Volaris Page 9 its slots at MEX of all Mexican carriers, and should be required to demonstrate its real commitment to serving MEX by funding the slots on its own. 28 Alaska In its comments, Alaska asserts that Volaris has "substantial" slot holdings at MEX. 29 That is not the case. As Mexico's second largest domestic carrier in terms of ASK and flown, Volaris holds only 6% of the total slots at MEX, which is hardly "substantial." Volaris is able to serve many of its domestic cities from Mexico City only once per day, and has no ability to fund any further international services at MEX without severely compromising its network. Volaris takes issue with Alaska's contention that because it does not distribute its product via GOS, its services are "inaccessible to many consumers," and not "a viable option for business travelers." 30 This is simply not the case. Given that Volaris' passenger numbers have grown year over year, 31 its reliance on on line distribution appears not to be a problem. 32 Further, while Volaris' model does not focus primarily on the business passenger, it does indeed attract high levels of cost-conscious business travelers on some of its routes. Volaris also offers incentives for business travelers, mainly from medium and small companies via its Vempresa discount club, through which it offers lower fares and premium ancillary service packages. Since implementing this program in 2014, more than 360 companies already have taken advantage of its benefits. Moreover, the Department expressly cited offering new business models as a positive decisional criterion in this case. 33 26 Volaris notes that it has done just this when it has been able to do. However, Volaris has the best record for use of slots at MEX than any other carrier, and uses its slots as efficiently as possible. 29 Alaska Answer at 3. 3o Alaska Answer at 4. 31 Volaris Answer at Exhibit VO-A-9. 32 Moreover, the Mexico market is heavily oriented toward VFR and leisure traffic. 33 DOT Instituting Order at 4.

Consolidated Reply of Volaris Page 10 Alaska's contention that Volaris' services do not impose competitive discipline on Delta- Aeromexico are similarly false. 34 Volaris offers low fares in the Mexico City-US markets it serves in competition with Delta-Aeromexico. 35 Average fares in these markets dropped considerably, and this has also been the case in Mexican regional markets. If the United States has experienced the "Southwest effect" with low fare competition, Mexico has seen the "Volaris" effect. Alaska also criticizes Volaris' phase 2 request to operate to OAK, claiming that Alaska's proposal to serve SFO is superior, and questioning Volaris' choice of OAK over SF0. 36 As noted in Volaris' Answer, Volaris' thrice-weekly OAK service is extremely successful, growing from an 81% load factor in 2015 to 86% in 2016. As noted in the support letter submitted by the Port of Oakland, Volaris is the busiest international carrier at OAK. 37 The Port of Oakland further notes that an estimated 450,000 Mexican nationals and Mexican-Americans reside in the airport's immediate catchment area (with another 200,000 residents in the adjacent North Bay area), compared to an estimated 185,000 residents of similar background in San Francisco and San Mateo Counties. 38 However, the majority of transborder service is operated from SFO, demonstrating the pressing need for additional service from OAK. 39 Like Alaska, Volaris would have preferred not to have a contested case. However, it was VivaAerobus' showing a belated interest in transborder service, and first-time interest in serving Mexico City at all, which disrupted Alaska's desired outcome. Volaris has been steadfast in its commitment to improving access at MEX for all carriers, and in supporting the new open skies agreement. Its request for five of 14 phase 1 slots was modest, as was its request for three phase 2 slots. 34 Alaska Answer at 15. 35 See Exhibit VO-R-1. 36 Alaska Answer at 13. 31 Exhibit VO-R-5 at 50. 38 Jd. 39 /d.

Consolidated Reply of Volaris Page 11 Alaska further contends that Volaris' request for a third LAX frequency is not warranted.40 Volaris disagrees. Volaris is the only low fare carrier serving the market, and enjoys high {and rising) load factors on the route. 41 Volaris' third frequency will be timed to compete directly with Delta-Aeromexico. As Volaris noted in its Answer, the Department could grant all but one of the phase 1 slot requests lodged by Volaris, JetBlue, Alaska and Southwest if it properly determines that vivaaerobus is not properly certified and abjectly unprepared to launch a plethora of new services to the US from Mexico City in phase 1, a determination that is both correct and inescapable. 42 Volaris' Service Proposal Would Create Significant Public Interest Benefits As described in its Application and Answer, the public interest would be best served by awarding Volaris the slots it requests. Volaris' strong service record and continuing growth in transborder markets support such a grant. As demonstrated in its Answer, Volaris' current and projected load factors in the very markets it proposes to serve indicate that the services proposed will be successful. Volaris will be able to use the requested slots more effectively than the other carriers in this proceeding, and is poised to start service immediately after the Department makes its decision. Despite unsupported assertions by Southwest that US passengers will not benefit from a grant of slot allocations to Mexican carriers because they "favor US carriers in transborder markets, "43 Volaris notes that 42% of its transborder passengers travel on US passports, indicating that US passengers indeed do and will choose Volaris' ultra-low cost transborder 40 Alaska Answer at 12-13. 41 Volaris Answer, Exhibit VO-A-8. 42 Volaris Answer at 10. 43 Southwest Answer at 3 and 11.

Consolidated Reply of Volaris Page 12 services. 44 The U.S. Department of Transportation is tasked with acting in the public interest, not with favoring a carrier based on its nationality rather than the benefits it brings to US travelers. Furthermore, Volaris has proposed to serve the cities with demonstrated need for its service. Volaris is the only carrier seeking MEX slots in order to serve the JFK-MEX route in Phase 1, the overlap market which was of strongest concern to US and Mexican antitrust regulators. The outpouring of interest in service to LAX demonstrates that Volaris' decision to seek additional frequencies in that market also was a sound one. Volaris has received strong direct support from several other of the cities it proposes to serve with the slots it hopes to receive. 45 Volaris is heartened to have received support from the cities of Denver, Oakland, San Jose, Chicago and Ontario in support of its application, as well as from the Washington Airports Task Force. The cities that Volaris serves already have lauded its current operations and welcome the additional service. Following are some of the key points made by these communities: The City & County of Denver indicates that the Volaris model has proven successful in the DEN-MEX market and passenger acceptance is high,46 noting that DEN is the only market with a proposed allocation in this proceeding without daily year-round service in the MEX market itself, or within a 60-mile drive. DEN is by far the largest market lacking daily nonstop service to MEX. 47 Volaris is best suited to provide this service given its success at DEN. When Volaris entered the DEN-Chihuahua market in July 2014, the number of passengers increased by 141% (YE Sep. 2015) (and by 568% compared with YE Sep. 2013), with average fares in the market decreasing by 36% (and by 57% compared with YE Sep. 2013). 48 Establishing year-round service in this "critical Latin market" 49 by a carrier with proven success at DEN is clearly in the public interest. 44 Exhibit VO-R-6. 45 Exhibit VO-R-5 contains copies of Answers and support letters from the Washington Area Task Force, the Chicago Department of Aviation, the City and County of Denver, Norman Y. Mineta San Jose International Airport, Ontario International Airport Authority and the Port of Oakland. 46 Answer of the City and County of Denver, Exhibit VO-R-5 at 7. 47 Id. 48 Id. at 22 and 24. Similarly, When Volaris entered the DEN-GDL market in 2014, the market experienced an increase of 79% in the number of passengers (YE Sept. 2015) (and 123% compared with YE Sept. 2013), and average fares decreased by 24% (34% compared with 2013). Id. at 22-23. 49 Id. at 7. The letter also notes that American Airlines carries nearly a quarter of DEN-MEX traffic without nonstop service. The traveling public would be better served, and likely stimulated, by year-round nonstop service. Id. at 12.

Consolidated Reply of Volaris Page 13 The Washington Airports Task Force (WATF) urges DOT to select Volaris' MEX IAD proposal, as it would introduce the only non-stop low-fare option in the market, acting as a "healthy stimulus" for the local Washington-Mexico City market, as well as the broader Washington-Mexico market. 50 WATF further notes that the Department should give priority to proposals in markets that lack low-fare service. Only four of the 16 airports with service proposals in this proceeding have no existing or announced low-cost service - and IAD is the largest of these. 51 The Chicago Department of Aviation notes that the Chicago-Mexico City local market, with the fourth largest Mexican origin population in the US, is growing more rapidly than any other major US-Mexico City O&D market proposed in this proceeding. 52 Over the past five years, the Chicago-Mexico City O&D market has grown by approximately 25%, while comparable local markets in Houston and Los Angeles have grown by only 18% and 11 %, respectively. 53 The Department agrees that Volaris' current 87% load factor, combined with the market's growth, indicates that the additional service will be successful. 54 Mineta San Jose International Airport notes that it has lacked nonstop service between SJC and MEX since 2007, despite the growth of the Silicon Valley market and its large Mexican American population. 55 Volaris has successfully operated SJC-GDL service since 2010 and the airport claims that it is an important element of its international air services, which could bring nonstop MEX service back to SJC's unique and growing population. 56 The Ontario International Airport Authority encourages DOT to grant Volaris' requested MEX-ONT allocation, citing to the large population it serves more conveniently than LAX57 and its service region accounts for over 40% of Mexico City-Southern California demand for MEX service. 58 The outpouring of support that Volaris has received from the airports and airport communities it proposes to serve should make clear that Volaris is a valued partner to each of these communities. Recommended Slot Allocation Volaris urges the Department to make the following allocation of slots: 50 Washington Airports Task Force Letter of Support, Exhibit VO-R-5 at 1. 51 Id. at 2. 52 Chicago Department of Aviation, Letter of Support, Exhibit VO-R-5 at 4-5. 53 /d. at 5. 54 Jd. 55 Letter of Support of Norman Y. Mineta San Jose International Airport, Exhibit VO-R-5 at 26. 56 Id. at 27. 57 Letter of Support of Ontario International Airport Authority, VO-R-5 at 33-49. 58 Id. at 48.

Consolidated Reply of Volaris Page 14 Phase 1: Carrier Southwest JetBlue Alaska Volaris lnterjet MEX Slots HOU (2) FLL (2), MCO (2) LAX (2), SFO, SAN JFK, SAT, IAD, ORD JFK Slots JFK-MEX JFK-MEX Phase 2: Carrier Southwest JetBlue Volaris vivaaerobus MEX Slots FLL,LAX LAX (2) LAX, DEN, OAK, SJC (.5), ONT (.5) IAH, LAS JFK Slots JFK-CUN Volaris believes that this allocation is fair and equitable, giving the US carriers their desired allocations in full, with Volaris shifting its desired LAX-MEX operation to phase 2 in order to accommodate the US carrier requests. In its Order to Show Cause in this case, the Department proposed "to administratively allocate the divested slots to eligible carriers based on demonstrated ability, interest, and commitment to launch viable service capable of providing the requisite competitive discipline to the transaction." 59 Applying those sound criteria, the Application of vivaaerobus should be 5a DOT Order 2016-11-12 at 24.

Consolidated Reply of Volaris Page 15 denied. vivaaerobus: (1) lacks any US authority from MEX, and has not properly applied for such authority; (2) has never served the US from Mexico City; and (3) has never served the vast majority of US stations it now proposes to serve. Granting scarce slots to a carrier that has never before seen it fit to serve the US-Mexico City market would not meet the Department's criteria of showing "commitment" to the market. Moreover, the carrier's lack of presence in the US markets it proposes to serve raises real questions about its ability to launch any service in time for this coming traffic season. VivaAerobus' clear pattern of precipitously exiting the markets it has chosen to serve would raise an unacceptable risk that these important slots will be squandered. The only city that vivaaerobus serves at all on a year-round basis is IAH. So long as its own slot Phase 1 and Phase 2 slot requests are met in full, Volaris would not object to the grant of a Phase 2 slot to vivaaerobus for IAH-MEX service. Similarly, the Department might consider granting vivaaerobus LAS-MEX authority for phase 2, since the carrier has managed to serve LAS from the US in the past (albeit on a less than year-round basis, and less than successfully). Given vivaaerobus' abysmal service record in the transborder market, vivaaerobus should be granted no extensions if it fails to launch these services promptly at the start of the Summer 2018 traffic season, and should face immediate withdrawal of the slots if it were to suspend service on either route. Volaris urges that the requested JFK phase 1 slots be granted to Volaris and lnterjet for their desired additional JFK-MEX services, and that Volaris receive a Phase 2 slot at JFK so that it may introduce JFK-CUN service. Volaris does not object to lnterjet's suggestion about the minor retiming of its phase 1 JFK-MEX slot request so that the needs of both lnterjet and Volaris can be met. 111. CONCLUSION Volaris is appreciative of the efforts made by the Department to secure a liberalized air transport agreement with Mexico. Mexico and the US are important trading partners, and air

Consolidated Reply of Volaris Page 16 travel is the glue that binds the overall relationship. Volaris is proud of the role it has played in supporting the expansion of the US-Mexico trade relationship, and for giving travelers on both sides of the border an important competitive alternative to more traditional network carriers. Volaris understands that both US and Mexican carriers require access to Mexico City, and has adjusted its initial request for MEX slots to meet the needs and concerns of other carriers. Accordingly, Volaris requests that the Department allocate to it four pairs of slots at MEX and one pair of slots at JFK for phase 1, and four additional pairs of MEX slots and a second JFK slot pair in phase 2, as well as any other or different relief that might be deemed necessary by the Department. Anita. Mosner Jennifer M. Nowak Counsel for Concesionaria Vuela Compariia de Aviaci6n, S.A.P.I. de C.V. d/b/a Volaris

Exhibits 1

VO-R-1 2

In all its transborder routes operated from MEX, Volaris has used its low fares to stimulate demand Volaris passengers ROUTE 2011 2012 2013 2014 2015 2016 Competitors DENMEX 4,102 17,711 27,652 27,268 30,991 AM, UA FLLMEX 4,691 44,289 42,610 B6 LASMEX 23,718 126,736 109,521 119,050 119,569 117,553 4O, AM LAXMEX 25,599 71,698 66,796 83,497 92,517 132,330 4O, AA, AM, UA MCOMEX 9,853 44,548 59,412 67,450 69,977 AM, B6 MEXORD 2,840 50,675 50,225 69,408 80,725 96,149 4O, AA, AM, UA Volaris' average fare (USD) ROUTE 2011 2012 2013 2014 2015 Oct YTD 2016 DENMEX $ 196 $ 206 $ 164 $ 163 $ 122 FLLMEX $ 142 $ 86 $ 47 LASMEX $ 211 $ 151 $ 157 $ 130 $ 106 $ 66 LAXMEX $ 154 $ 118 $ 130 $ 126 $ 113 $ 75 MCOMEX $ 151 $ 161 $ 138 $ 112 $ 62 MEXORD $ 224 $ 137 $ 126 $ 104 Note: Passengers from MEXORD include route MEXMDW; On-board passengers; Excluded MEXSFO since operations started in 2016 Source: Company data

VO-R-2 4

Volaris' historical and expected fleet (2010-2018E) 100 Volaris is phasing out its A319s and started bringing to its fleet A321s with higher density configuration 80 60 40 20 0 26 24 2010 2 34 10 24 2011 41 17 24 2012 44 24 20 2013 50 32 18 2014 56 36 18 2015 2 69 10 44 15 2016 75 12 51 12 2017E 82 16 61 5 2018E A321 A320 A319 5

VO-R-3 6

Volaris is already allocating its A321s in high density MEX routes A321 FLIGHTS 7

VO-R-4 8

The Department should require vivaaerobus to submit new fitness information in support of its licensing request Source: http://www.reuters.com/article/mexico-vivaaerobus-idusl1n1e325q

VO-R-5 10

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Page 6 of 49 ANSWER OF CITY & COUNTY OF DENVER, OPERATOR OF DENVER INTERNATIONAL AIRPORT, IN SUPPORT OF VOLARIS APPLICATION FOR AN ALLOCATION OF SLOTS. Joint Application of DELTA AIR LINES, INC. AEROVIAS DE MEXICO, S.A. DE C.V. Under 49 U.S.C. 41308 and 41309 for Approval of and Antitrust Immunity for Alliance Agreements Docket DOT-OST-2015-0070 Communications with respect to this document should be addressed to: Ms. Kim Day Chief Executive Officer Denver International Airport 8500 Pena Boulevard Denver, Colorado 80249 Kim.Day@flydenver.com January 30, 2017 1

Page 7 of 49 Pursuant to Order 2017-1-6 ( DOT Order ) instituting the slot assignment phase of the Delta- Aeromexico antitrust immunity proceeding, the City and County of Denver ( the Parties ), operator of Denver International Airport (DEN), files this Answer in support of the application of Concesionaria Vuela Compañía de Aviación, S.A.P.I. de C.V. d/b/a Volaris ( Volaris ) to provide daily, year-round nonstop service between DEN and Mexico City International Airport (MEX). Introduction Denver International Airport (DEN) supports Volaris application for a daily nonstop flight between DEN and MEX beginning in March 2018. Providing daily year-round service in this growing market will fulfill the Department s primary objective in this proceeding, namely maximizing competitive benefits. Growing the DEN-MEX market to daily year-round service will specifically meet a goal articulated by the Department: enhancing the quality of competition, such as by offering additional frequencies in major markets or introducing the benefits of new business models. 1 By awarding Volaris slots to be used for service between DEN and MEX, the Department has the opportunity to solve two longstanding issues for DEN and the surrounding area: the strengthening of low fare service into this critical Latin market, and the establishment of year-round daily service in a market that needs it. As the Department is well aware, less than daily service is difficult for passengers and communities, especially in a business market like Mexico City. Additionally, market stimulation and acceptance in the marketplace are difficult to maintain if a reliable daily service is not offered. By providing Volaris the opportunity to maintain daily nonstop service, the Department will also provide Denver and the broader Colorado community the type of access to Mexico City (and vice versa) that the flying public sorely needs. The fare structure used by Volaris will ensure continued and significant market stimulation and important gateway, carrier and price competition for DEN. It should be noted that DEN is the only airport to which an airline has proposed an allocation of MEX slots in this proceeding that does not already have daily year-round service in the MEX market itself or within a 60 mile drive. It is also by far the largest U.S. market that does not have daily nonstop service to MEX. The Department has a unique opportunity to rectify this problem and not simply further entrench the status quo. The number of requests for slots in this case is minimally higher than the number of slots available and the Department will only be called upon to deny a few requests. Against this backdrop, it is clear that awarding Volaris a set of slots for the establishment of year-round daily nonstop service between DEN and MEX affords the Department the opportunity to continue the long standing goal of strengthening inter carrier, inter gateway and inter regional competition while at the same time ensuring a multitude of pricing and service options. The Department s choice in this case is clear. 1 U.S. Department of Transportation, Order 2017-1-6, page 4. 2

Page 8 of 49 Current DEN-MEX Service DEN currently has three airlines providing service to Mexico City. Significantly, none of these carriers provides year-round daily nonstop service, an important criterion for successfully growing this market and allowing for gateway, carrier and price competition. The service patterns of the three carriers in the market are summarized below: 2 United Airlines has one weekly flight year-round (Saturday only), averaging 136 seats per flight. Aeromexico has daily or greater service during the peak December/January holiday season and approximately four times per week service from late January to early April, averaging 141 seats per flight; there is no Aeromexico service between May and November. Volaris has approximately twice per week service in the first half of December, daily service during the peak holiday season from mid-december to mid-january, a less than daily service pattern through April, 3 one flight per week in June through mid-july, daily service from mid-july to mid-august, and once per week in late August, with an average of 177 seats per flight. There is no Volaris service in May or between September and November. These DEN service patterns generally hold for future schedules filed in OAG through July 2017, though there may be slight variations in average seat counts and the dates when flight schedules change. As shown in Figures 1, 2 and 3 below, during the spring and fall seasons there is limited service and, in many cases, no nonstop competition on the DEN-MEX route. Even during the peak winter season Volaris is only able to provide limited frequencies compared to other carriers, with 41 percent fewer frequencies and 26 percent fewer seats than Aeromexico between December 2015 and March 2016. Despite the large capacity differences, Volaris only carried 12 percent fewer passengers (on a segment basis) between DEN and MEX during the 2015-16 peak winter period, as a result of the larger average aircraft size and stronger load factors (running approximately 13 points higher). The Volaris model has proven successful in the DEN-MEX market and passenger acceptance is high. In order to fully compete and provide the needed year-round service, however, Volaris is in need of the slots in question in this proceeding. 2 Figures based on DOT T-100 and OAG data for August 2015 through July 2016 3 In 2017, Volaris also has scheduled daily service from April 6-24. 3

Page 9 of 49 Figure 1: DEN-MEX Monthly Flights Each Way by Airline, August 2015 July 2016 4 4 DOT T-100 data 4

Page 10 of 49 Figure 2: DEN-MEX Monthly Seats Each Way by Airline, August 2015 July 2016 5 5 DOT T-100 data (average of DEN-MEX and MEX-DEN seat counts) 5

Page 11 of 49 Figure 3: DEN-MEX Monthly Passengers Each Way by Airline, August 2015 July 2016 6 6 DOT T-100 segment data (average of DEN-MEX and MEX-DEN passenger counts) 6

Page 12 of 49 Over the course of the year, and accounting for connecting traffic, Volaris is estimated to carry the most origin and destination (O&D) passengers between DEN and MEX, though there are four significant players in the market (including American Airlines, which does not offer nonstop service). With additional slots and year-round daily nonstop service, Volaris could offer a fully competitive operation greatly in need for the DEN market. It should be noted that American Airlines carries nearly a quarter of the market even though it provides no nonstop service; this is traffic that would be better served and likely significantly stimulated, if reliable year-round daily nonstop service were to be offered. The local market shares are summarized in Figure 4 below: Figure 4: DEN-MEX O&D Passenger Market Shares, Year Ending September 2016 7 As noted in the introduction to this Answer, DEN is unique in that it is the only airport to which an airline has proposed an allocation of MEX slots in this proceeding that does not already have daily year-round service in the MEX market itself or within a 60 mile drive; in addition, DEN is the largest U.S.-MEX local market without year-round daily nonstop service (including all markets, whether or not they are proposed for service as part of this proceeding). The tables below illustrate these points. Figure 5 summarizes the current MEX service status and market sizes of all U.S. airports that were proposed as gateways by at least one airline in this proceeding. Figure 6 lists the top 20 U.S.-MEX local markets that do not have year-round daily service. 7 IATA BSP via Diio Mi 7

Page 13 of 49 Proposed Gateway Figure 5: Service and Demand to MEX at U.S. Gateways Proposed in This Proceeding Local Passenger Market Size 8 Annual Nonstop Frequencies 9 Year-Round Daily Nonstop Service? Nearest Airport with Year-Round Daily Service 10 Distance to Airport with Year-Round Daily Service (mi) 11 Los Angeles, CA (LAX) 561,666 4,549 n/a n/a New York, NY (JFK) 435,601 2,723 n/a n/a Chicago-O Hare, IL (ORD) 397,813 2,381 n/a n/a Houston-Bush Intercontinental (IAH) 344,177 4,760 n/a n/a Las Vegas, NV (LAS) 280,447 1,532 n/a n/a Orlando, FL (MCO) 269,665 1,445 n/a n/a San Francisco, CA (SFO) 197,345 1,760 n/a n/a San Antonio, TX (SAT) 156,980 1,136 n/a n/a Washington-Dulles, VA (IAD) 98,382 664 n/a n/a Fort Lauderdale, FL (FLL) 88,010 471 n/a n/a Denver, CO (DEN) 85,474 258 X Salt Lake City, UT (SLC) 12 530 Oakland, CA (OAK) 31,989 96 X SFO 30 San Diego, CA (SAN) 31,644 12 13 X Tijuana, Mexico (TIJ) / LAX 25 / 125 Houston-Hobby, TX (HOU) 28,352 938 n/a n/a San Jose, CA (SJC) 16,816 0 X SFO 33 Ontario, CA (ONT) 10,414 0 14 X LAX 57 8 IATA BSP via Diio Mi for year ending November 2016 (market size figures are for both directions) 9 Total scheduled departures to MEX, based on August 2016 July 2017 OAG 10 Only shown for airports without year-round daily nonstop service 11 Driving distance per Google Maps 12 SLC-MEX service reduced to approximately six frequencies per week in September-November 2016, but considered daily for purposes of this chart. 13 Volaris flew less than daily SAN-MEX service until August 2016, but the service is not in subsequent schedules. 14 Aeromexico flew less than daily ONT-MEX service until April 2016, but the service is not in subsequent schedules. 8

Page 14 of 49 Figure 6: Largest U.S.-MEX Local Markets without Year-Round Daily Nonstop Service Rank U.S. Airport Local Passenger Annual Nonstop Nearest Airport with Year- Distance to Airport with Year- Market Size 15 Frequencies 16 Round Daily Service Round Daily Service (mi) 17 1 Denver, CO (DEN) 85,474 258 SLC 18 530 2 Orange County, CA (SNA) 60,679 157 19 LAX 42 3 Boston, MA (BOS) 60,364 290 JFK 215 4 Seattle, WA (SEA) 57,427 0 Vancouver, Canada (YVR) 153 5 Portland, OR (PDX) 44,774 0 YVR 312 6 Charlotte, NC (CLT) 37,310 290 Atlanta, GA (ATL) 246 7 Sacramento, CA (SMF) 36,782 72 20 SFO 102 8 Raleigh-Durham, NC (RDU) 36,283 0 IAD 281 9 Baltimore-Washington, MD (BWI) 34,240 0 IAD 59 10 Oakland, CA (OAK) 31,989 96 SFO 30 11 Philadelphia, PA (PHL) 31,953 0 EWR 92 12 Minneapolis-St. Paul, MN (MSP) 31,747 0 ORD 397 13 San Diego, CA (SAN) 31,644 12 21 TIJ / LAX 25 / 125 14 Nashville, TN (BNA) 23,487 0 ATL 252 15 New York-LaGuardia, NY (LGA) 22,464 0 JFK 10 16 Washington-Reagan, DC (DCA) 20,412 0 IAD 28 17 Tampa, FL (TPA) 19,417 0 MCO 95 18 Orlando-Sanford (SFB) 19,210 210 MCO 30 19 Austin, TX (AUS) 18,751 232 22 SAT 82 20 New Orleans, LA (MSY) 17,532 0 HOU 342 15 IATA BSP via Diio Mi for year ending November 2016 (market size figures are for both directions) 16 Total scheduled departures to MEX, based on August 2016 July 2017 OAG 17 Driving distance per Google Maps 18 SLC-MEX service reduced to approximately six frequencies per week in September-November 2016, but considered daily for purposes of this chart. 19 Southwest flew daily SNA-MEX service until January 2017, but the service is not in subsequent schedules. 20 Aeromexico flew seasonal, less than daily SMF-MEX service until January 2017, but the service is not in subsequent schedules. 21 Volaris flew less than daily SAN-MEX service until August 2016, but the service is not in subsequent schedules. 22 Aeromexico began less than daily AUS-MEX service in November 2016 (currently scheduled to become daily in March 2017). 9

Page 15 of 49 Figure 7: O&D Passengers Between DEN and Mexico (all destinations), 2010-2016 23 74% 23 IATA BSP via Diio Mi 10

Page 16 of 49 DEN-MEX Market Strength The overall market between Denver and Mexico has been growing rapidly, with 74 percent growth in the last five years, as shown in Figure 7 above. While Volaris has shown a commitment to DEN and has been growing rapidly in DEN, with over fivefold growth in the number of passengers carried in the last four years and now nonstop service to four Mexican destinations (MEX, Guadalajara, Monterrey, and Chihuahua), Volaris is still only the fifth-largest carrier of DEN-Mexico traffic, as detailed in Figure 8: Figure 8: Market Share by Airline in DEN-Mexico Market, Year Ending September 2016 24 The application for slots in order to provide year-round daily nonstop service in the DEN-MEX market demonstrates Volaris growing commitment. A successful application and inauguration of this service will prove that even further growth in the Mexico and Latin America market from DEN is warranted. There are strong business, cultural and family ties between Colorado and Mexico, with approximately 832,000 Colorado residents of Mexican descent as of 2015, or 15.8 percent of the state s population. 25 Based on previous studies, approximately 10 percent of Colorado residents of Mexican descent come from the greater Mexico City area (Distrito Federal, Estado de Mexico, or Morelos). 26 Approximately 580,000 individuals of Mexican descent reside in the Denver-Aurora Combined Statistical Area (CSA), or 24 IATA BSP via Diio Mi 25 U.S. Census Bureau, 2015 American Community Survey 26 Mexico Ministry of Foreign Affairs, State of Origin data (2011) 11

Page 17 of 49 roughly 17.7 percent of the total population of the CSA. This demographic has also been growing rapidly, as the 2015 figures for residents of Mexican descent represent 13 percent growth at the state level and 14 percent growth at the CSA level. Both of these growth rates are greater than the five-year growth rates for the population as a whole (8.0 percent for Colorado and 9.6 percent for the Denver-Aurora CSA). 27 Denver also has a sister city relationship with Cuernavaca, Mexico, dating from 1983. Cuernavaca is the capital and largest city in the Mexican state of Morelos with a population of approximately 365,000 people. 28 It is located approximately 56 miles from MEX. The Parties have identified nearly 20 Denver-area companies with subsidiaries in Mexico; 11 of these companies have subsidiaries in the Distrito Federal or Estado de Mexico. Examples include Arrow Electronics, the Gates Corporation, Hach Company and Level 3 Communications. In addition, it is worth noting that Mexico is Colorado s second largest export market, with nearly $1.1 billion worth of exports to Mexico in 2015. 29 Driven by these links, the DEN-MEX market has also shown strong growth in recent years, though not to the same extent as the overall DEN-Mexico market. This is likely due in part to the slot constraints at MEX and the lack of a reliable year-round daily nonstop service. The Parties are certain that the inauguration of year-round daily nonstop service in the DEN-MEX market will facilitate significant growth in the market closer to what has been seen in the DEN-Mexico market overall. That said, even with limited nonstop service opportunities, the market has shown 45 percent growth over the last five years, as displayed in Figure 9: 27 U.S. Census Bureau, 2010 and 2015 American Community Survey. 28 Denver Sister Cities International, http://denversistercities.org/cuernavaca/ 29 U.S. Department of Commerce International Trade Administration, Colorado Exports, Jobs and Foreign Investment, October 2016. 12

Page 18 of 49 Figure 9: O&D Passengers Between DEN and MEX, 2010-2016 30 45% Volaris DEN-MEX Flights 31 0 0 0 60 120 100 107 30 IATA BSP via Diio Mi 31 OAG scheduled annual flights in each direction for year ending September 13

Page 19 of 49 Volaris Stimulation / Competitive Impact Based on the history in DEN-MEX and other markets from DEN, it is clear that additional service from Volaris will create significant competitive benefits, stimulate the market further and introduce additional competitive discipline by providing more viable low fare carrier service in the market on a daily, year-round basis. The viability of low fares has been and remains an important goal of the Department and the benefits such service provides are strongly in the public interest. The growth in the DEN-MEX market shown in Figure 9 (above) coincides with the ramp-up of Volaris service in the market, as the table below the figure shows. (Volaris began service in December 2012.) The Volaris service has also coincided with a significant reduction in average fares in the market, with average fares falling over 11 percent in the first year of service. Fares have continued to fall as Volaris schedule has expanded, with a total reduction of 26 percent compared to pre-entry levels, as shown in Figure 10. We would expect this trend to continue if Volaris is granted sufficient slots at MEX to enable the carrier to offer daily year-round DEN-MEX service and thus create greater competitive discipline on a yearround basis. Figure 11 shows Volaris average fares in the DEN-MEX local market compared to other airlines average fares on a monthly basis over the last two years; the positive effect that Volaris presence in the market has on competition and airfares is significant and clear. 14

Page 20 of 49 Figure 10: Average One-Way Fares Between DEN and MEX, 2010-2016 32-26% Volaris DEN- MEX Flights 33 0 0 0 60 120 100 107 32 IATA BSP via Diio Mi (fares unadjusted for taxes or other charges) 33 OAG scheduled annual flights each direction for year ending September 15

Page 21 of 49 Figure 11: Average One-Way Fares in DEN-MEX Local Market by Month 34 34 IATA BSP via Diio Mi (fares unadjusted for taxes or other charges); Volaris fares are only shown in months when Volaris operated nonstop DEN-MEX service, although Volaris did carry small numbers of passengers (approximately three percent of total DEN-MEX traffic) in other months via connecting service. 16

Page 22 of 49 Volaris has also demonstrated the benefits it brings to a market in terms of demand stimulation and fare discipline in other markets from DEN. As shown in Figure 12, in the case of DEN-Guadalajara, a market which Volaris entered in July 2014, the number of passengers flying in the market increased by 79 percent in the year ending September 2015 compared to the year prior (and by 123 percent compared to the year ending September 2013), with average fares declining by 24 percent (and 34 percent compared to the year ending September 2013). 35 Similarly, in the DEN-Chihuahua market, which Volaris also entered in July 2014, the number of passengers increased by 141 percent in the year ending September 2015 compared to the previous year (and 568 percent compared to the year ending September 2013). Average fares in the market declined by 36 percent compared to the year ending September 2014 (and by 57 percent compared to the year ending September 2013). The statistics for this market are shown in Figure 13. The data are very clear and support the impact that new service provides in stimulating the market. Additionally, the impact on market fares when service is expanded by a low fare airline is also quite clear. 35 IATA BSP via Diio Mi 17

Page 23 of 49 Figure 12: Average Passenger Traffic and One-Way Fares Between DEN and Guadalajara, 2010-2016 36 36 IATA BSP via Diio Mi (fares unadjusted for taxes or other charges) 18

Page 24 of 49 Figure 13: Average Passenger Traffic and One-Way Fares Between DEN and Chihuahua, 2010-2016 37 37 IATA BSP via Diio Mi (fares unadjusted for taxes or other charges) 19

Page 25 of 49 Conclusion The Department has long held the position that inter carrier and inter gateway competition is important. The Department also has a standing goal of benefiting the market and public interest through pricing and service options and has understood the market benefits that low fare airlines bring. Finally, the Department has often stated its preference for daily nonstop service and has commented before on the benefits that reliable consistent nonstop service provides. Because of the good work of the Department over the past twenty years, it has had fewer and fewer proceedings through which to advance these goals. And rarely has the Department had an opportunity to advance so many of its goals through the allocation of one single set of slots. It is clear that allocating a set of slots to Volaris so it can provide year-round daily nonstop service in the DEN-MEX market advances these goals, given the performance of the DEN market to date and that DEN is the largest U.S.-MEX market without year-round daily nonstop service to MEX. While the Parties take no position on the other applications in this proceeding, the Parties urge the Department to ensure that the needs of Denver and the entire region are met by quickly allocating slots to Volaris for the first year-round daily nonstop DEN-MEX service. 20

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Page 28 of 49 BEFORE THE UNITED STATES DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Joint Application of DELTA AIR LINES, INC. And AEROVÍAS DE MEXICO, S.A. DE C.V. Docket DOT-OST 2015-0070 Under 49 U.S.C. 41308 and 41309 for Approval of and Antitrust Immunity for Alliance Agreements ANSWER OF THE ONTARIO INTERNATIONAL AIRPORT AUTHORITY, OWNER AND OPERATOR OF ONTARIO INTERNATIONAL AIRPORT, IN SUPPORT OF THE APPLICATION OF CONCESIONARIA VUELA COMPAÑÍA DE AVIACIÓN, S.A.P.I. DE C.V. D/B/A VOLARIS FOR AN ALLOCATION OF SLOTS All communications with respect to this document should be addressed to: Mr. Mark A. Thorpe Chief Development Officer Ontario International Airport Authority 1923 East Avion Street Ontario, California 91761 mthorpe@flyontario.com January 30, 2017 Page 1 of 3

Page 29 of 49 BEFORE THE UNITED STATES DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Joint Application of DELTA AIR LINES, INC. And AEROVÍAS DE MEXICO, S.A. DE C.V. Docket DOT-OST 2015-0070 Under 49 U.S.C. 41308 and 41309 for Approval of and Antitrust Immunity for Alliance Agreements ANSWER OF THE ONTARIO INTERNATIONAL AIRPORT AUTHORITY, OWNER AND OPERATOR OF ONTARIO INTERNATIONAL AIRPORT, IN SUPPORT OF THE APPLICATION OF CONCESIONARIA VUELA COMPAÑÍA DE AVIACIÓN, S.A.P.I. DE C.V. D/B/A VOLARIS FOR AN ALLOCATION OF SLOTS I. Introduction For the reasons set forth in the exhibits included with this pleading, the Ontario International Airport Authority ( OIAA ), the owner and operator of Ontario International Airport ( ONT ), strongly encourages the United States Department of Transportation ( the Department or USDOT ) to award six pairs of 2018 operational slots each week at Benito Juárez International Airport ( MEX ) in Mexico City, México, to Concesionaria Vuela Compañía de Aviación, S.A.P.I. ( Volaris ), for Volaris to operate three weekly round-trip services between ONT and its hub at MEX. II. Overview: Ontario International Airport Authority The OIAA is an independent airport authority owned jointly by the City of Ontario, California, and the County of San Bernardino, California. Under the direction of the Ontario International Airport Page 2 of 3

Page 30 of 49 Commission, the OIAA owns and operates ONT, least-constrained and operationally efficient international airport in Southern California (also often referred to as Greater Los Angeles ). The OIAA assumed ownership and operational control of ONT on November 1, 2016, after nearly four decades of being owned and controlled by the City of Los Angeles and its airport department, Los Angeles World Airports. ONT is a commercial airport located in the City of Ontario, California; situated approximately 35 miles east of downtown Los Angeles in the center of Southern California. It is a medium-hub, full-service airport with direct commercial jet service to 13 major cities in the U.S. and México, and connecting service to many domestic and international destinations. There are approximately 62 daily jet departures offered by 7 airlines. ONT the centerpiece of one of the fastest-growing transportation regions in the United States. ONT's service area includes a population of more than ten million people living in San Bernardino and Riverside Counties and portions of north Orange County and east Los Angeles County. During 2015, 4.2 million passengers used the airport and 509,809 tons of air freight were shipped. Page 3 of 3

Page 1 of 19 Direct Exhibits of Ontario International Airport 2015 Joint Application of Delta Air Lines and Aerovías de México for Approval of and Antitrust Immunity for Alliance Agreements Docket DOT-OS 2015-0070 January 30, 2017 0

Page 2 of 19 Series 100: Demographic Overview of the Ontario International Airport Service Region

More than 5 million people in Southern California live closer to ONT than any other airport Page 3 of 19 DOT Docket OST-2015-0070 Exhibit ONT-101 Note: Shaded Area Represents 2 Hour Drive Around ONT Closest to BUR Closest to ONT Closest to LAX Closest to LGB Closest to SNA Population Households Total Households Earning Over $50K Closest to ONT 5.2 Million 1.6 Million 864,000 Within 2 Hour2 hour Drive Drive 18.9 Million 6.1 Million 3.5 Million Closest to SAN Source: U.S. Census Bureau, 2014. 2

Page 4 of 19 More people reside within a reasonable commute of ONT than of LAX DOT Docket OST-2015-0070 Exhibit ONT-102 75-Minute Drive from ONT ONT 60-Minute Drive from LAX LAX ONT LAX ONT % 75 mins. 45 mins. of LAX Population (mil.) 14.4 11.8 122% Household Income (bil. $) $368.0 $319.6 115% Median Household Income $62,288 $62,941 99% = 500 persons Source: U.S. Bureau of the Census, 2014 American Community Survey; LAX penalized 15 minutes for airport congestion 3

ONT s Primary service region Comprised of Riverside and San Bernardino counties 2 of the 5 counties that make up Southern California, or Greater Los Angeles Page 5 of 19 DOT Docket OST-2015-0070 Exhibit ONT-103 ONT Primary Catchment Area Population (millions) 4.4 Households (millions) 1.3 Purchasing Power (billons) $82.9 Businesses 69,230 Employees (millions) 1.1 Annual Payroll (billions) $41.3 ONT Primary Service Region ONT Secondary Service Region LAX Service Region ONT LAX = 500 originating passenger trips Source: www.diio.net Service Region demographic mapping tool, December 2016 4

ONT s Secondary service region Comprised of parts of Los Angeles and Orange counties that are more proximate to ONT than to LAX, as well as parts of San Diego County Page 6 of 19 DOT Docket OST-2015-0070 Exhibit ONT-104 ONT Secondary Catchment Area Estimated Population (millions) 5.8 Population (millions) 5.6 Households (millions) 1.8 Purchasing Power (billons) $126.9 Businesses 130,579.0 Employees (millions) 1.9 Annual Payroll (billions) $83.0 ONT Primary Service Region ONT Secondary Service Region LAX Service Region ONT LAX = 500 originating passenger trips Source: www.diio.net Service Region demographic mapping tool, December 2016 5

Page 7 of 19 ONT s service region population is larger and more diverse than that of the LAX service region DOT Docket OST-2015-0070 Exhibit ONT-105 Ethinicity Population LAX Catchment ONT Primary ONT Secondary ONT Catchment White 10,984,646 45.9% 24.0% 30.1% 54.1% Hispanic 8,290,663 47.6% 23.5% 29.0% 52.4% Multi-ethnic 5,088,046 46.0% 24.1% 29.8% 54.0% Asian 2,532,207 44.5% 15.1% 40.5% 55.5% African American 1,442,394 56.6% 26.4% 17.0% 43.4% Native American 297,659 41.7% 29.4% 28.9% 58.3% Hawaiian 113,181 45.3% 25.1% 29.6% 54.7% Total 18,572,704 47.2% 22.8% 30.0% 52.8% Source: www.diio.net Service Region demographic mapping tool, December 2016. Figures do not add up to 100% of total. 6

Page 8 of 19 Population growth in ONT s primary service region exceeds State and national averages DOT Docket OST-2015-0070 Exhibit ONT-106 Historical Projected Average Annual Growth 1995 2000 2005 2010 2015 2022 1995-2015 2015-2020 United States 266,278 282,162 295,517 309,347 321,545 342,963 0.9% 0.9% California 31,697 33,988 35,828 37,336 39,156 41,935 1.1% 1.0% Riverside County 1,373 1,559 1,932 2,203 2,372 2,703 2.8% 1.9% San Bernardino County 1,577 1,718 1,944 2,042 2,143 2,381 1.5% 1.5% ONT Primary Service Region 2,950 3,277 3,876 4,244 4,515 5,084 2.2% 1.7% Los Angeles CSA 11,693 12,393 12,726 12,845 13,347 14,023 0.7% 0.7% Note: In thousands. Source: Woods & Poole Economics, Inc. The 2016 Complete Economic and Demographic Data Source 7

Page 9 of 19 Economic growth (GDP) in ONT s primary service region leads Southern California DOT Docket OST-2015-0070 Exhibit ONT-107 Historical Projected Average Annual Growth 1995 2000 2005 2010 2015 2022 1995-2015 2015-2020 United States $9,864,878 $12,300,919 $14,114,806 $14,618,135 $16,302,781 $19,094,025 2.5% 2.3% California $1,245,607 $1,656,439 $1,908,182 $1,932,641 $2,193,299 $2,573,688 2.9% 2.3% Riverside County $29,459 $40,538 $61,163 $58,038 $66,409 $83,128 4.1% 3.3% San Bernardino County $37,161 $47,098 $65,846 $64,473 $70,074 $84,998 3.2% 2.8% Ontario Primary Service Region $66,620 $87,637 $127,009 $122,511 $136,483 $168,126 3.7% 3.0% Los Angeles CSA $501,426 $605,772 $715,978 $713,654 $786,846 $917,892 2.3% 2.2% Note: In Millions of 2009 Dollars. Source: Woods & Poole Economics, Inc. The 2016 Complete Economic and Demographic Data Source 8

Employment in ONT s primary service area is double California s growth rate Page 10 of 19 DOT Docket OST-2015-0070 Exhibit ONT-108 Historical Projected Average Annual Growth 1995 2000 2005 2010 2015 2022 1995-2015 2015-2020 United States 147,916 165,371 172,557 173,035 188,866 209,148 1.2% 1.5% California 16,940 19,281 20,256 19,804 22,418 24,958 1.4% 1.5% Riverside County 510 649 836 814 966 1,146 3.3% 2.5% San Bernardino County 590 710 846 827 945 1,088 2.4% 2.0% Ontario Primary Service Region 1,100 1,360 1,682 1,641 1,912 2,235 2.8% 2.3% Los Angeles CSA 6,550 7,237 7,543 7,310 8,289 9,157 1.2% 1.4% Note: In thousands Source: Woods & Poole Economics, Inc. The 2016 Complete Economic and Demographic Data Source 9

Page 11 of 19 Series 200: ONT Infrastructure and Customer Experience

ONT enjoys the highest passenger satisfaction among California s large airports Page 12 of 19 DOT Docket OST-2015-0070 Exhibit ONT-201 J.D. Power Airport Ranking (Based on 1,000 Point Scale) 900 800 700 781 767 765 764 761 748 726 725 702 600 500 Note: Includes Large and Medium hub airports only. Source: J.D. Power 2016 North America Airport Satisfaction Survey. 11

Page 13 of 19 ONT s airfield is the only un-constrained runway complex in congested, restricted Southern California DOT Docket OST-2015-0070 Exhibit ONT-202 No slot restrictions No curfews (24/7 operation) No passenger limits/caps Two runways (10,200ft and 12,200ft) Operational in all weather conditions 12

Page 14 of 19 ONT s passenger facilities are designed for growth DOT Docket OST-2015-0070 Exhibit ONT-203 26 gates in two terminals; with 9 additional parking positions at Customs/Immigrations (FIS) facility Two existing terminals are designed to accommodate 10 million annual passengers Terminal gates are designed to accommodate narrow-body and wide-body aircraft 13

Page 15 of 19 U.S. Customs & Border Protection Federal Inspection Service (FIS) facility DOT Docket OST-2015-0070 Exhibit ONT-204 9 international parking positions FIS can process approximately 800 passengers an hour 14

Page 16 of 19 Series 300: ONT-Mexico City Market Opportunity

Page 17 of 19 L.A. Area Mexico traffic has grown 44% since Q1 2011, at an annual average growth rate above 7% DOT Docket OST-2015-0070 Exhibit ONT-301 Passengers Daily Each Way 12 Month Rolling Average 6,000 5,000 4,000 3,345 3,336 3,374 3,495 3,555 3,553 3,581 3,654 3,729 3,805 3,923 4,000 4,017 4,146 4,171 4,053 4,117 4,171 4,323 4,581 4,732 4,827 3,000 2,000 1,000 0 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 Sources: U.S. DOT T-100 Report for Foreign Flag carriers, U.S. O&D Survey for U.S. Flag carriers, for 12 months ending June 30, 2016. 16

Page 18 of 19 ONT s service region accounts for over 40% of Mexico City Southern California demand: 504 passenger trips per day DOT Docket OST-2015-0070 Exhibit ONT-302 299 Daily Outbound Passenger Trips 205 Daily Inbound Passenger Trips ONT Service Region LAX ONT Primary 12.2% ONT Secondary 28.5% LAX 59.3% = 10 persons Source: Adjusted ARC ticketing data for the 12 months ending June 30, 2016. 17