BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. In the Matter of 2016 U.S.-CUBA FREQUENCY ALLOCATION PROCEEDING Docket DOT-OST-2016-0021 ANSWER OF THE METROPOLITAN WASHINGTON AIRPORTS AUTHORITY IN SUPPORT OF NONSTOP WASHINGTON, D.C. HAVANA SERVICE Communications with respect to this document should be addressed to: John E. Potter President and CEO Philip Sunderland Vice President and General Counsel Michael Stewart Vice President, Airline Business Development Donald Fields, Head of Passenger Airline Business Development METROPOLITAN WASHINGTON AIRPORTS AUTHORITY One Aviation Circle Washington, D.C. 20001-6000 Philip.Sunderland@MWAA.com Mike.Stewart@MWAA.com Donald.Fields@MWAA.com Robert E. Cohn Patrick R. Rizzi Hogan Lovells US LLP 555 13 th Street, NW Washington, D.C. 20004 (202 637-4999/-5659 robert.cohn@hoganlovells.com patrick.rizzi@hoganlovells.com Counsel for Metropolitan Washington Airports Authority March 14, 2016
BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. In the Matter of 2016 U.S.-CUBA FREQUENCY ALLOCATION PROCEEDING Docket DOT-OST-2016-0021 March 14, 2016 ANSWER OF THE METROPOLITAN WASHINGTON AIRPORTS AUTHORITY IN SUPPORT OF NONSTOP WASHINGTON, D.C. HAVANA SERVICE This proceeding is historic. It provides frequencies for scheduled commercial air service between the United States and Cuba for the first time in more than half a century. Not surprisingly, given this lengthy hiatus in scheduled service and corresponding pent-up demand, U.S. airlines are seeking far more U.S.-Havana frequencies than are available. As the renewed governmental, cultural, educational, and agricultural ties between the United States and Cuba continue to develop under the Administration s new policy of engagement with Cuba, it is critical that there be nonstop scheduled air service by a U.S. airline between the capital of the United States and the capital of Cuba. To this end, the Metropolitan Washington Airports Authority ( MWAA fully supports the proposal of United Airlines ( United to offer once weekly scheduled service from Washington Dulles International Airport ( IAD to Havana, Cuba ( HAV. This nonstop Capital-to-Capital service should be among the Department s highest priorities in this proceeding, and it is certainly worthy of the single weekly roundtrip
Page 2 frequency requested by United from the pool of 140 weekly (20 daily available U.S. Havana frequencies. See DOT Order 2016-2-12. Nonstop Washington, D.C. Havana air service is critically important to the Nation s Capital, the diverse and vibrant Washington Region, 1 and the Nation itself. According to the Instituting Order, the Department s principal objective in this proceeding is to maximize public benefits by selecting those proposals that, among other criteria, will be most likely to offer and maintain the best service for the traveling and shipping public and the overall competitive environment. DOT Order 2016-2-12, at 2. Nonstop IAD HAV service fulfills this objective. Washington, D.C. Havana service should be selected for one weekly nonstop frequency, as United requests, for a number of important reasons, including the following: Washington, D.C. Havana will establish nonstop scheduled Capital-to-Capital service, a critical link as the two countries reestablish diplomatic and government-to-government ties after more than half a century. The Department has previously recognized the importance of nonstop Capital-to-Capital service (for example, between China and the U.S.. Washington, D.C. Havana will provide a vitally important nonstop air transportation bridge for the cultural, educational, and agricultural ties between the two capital city regions. The Washington Region and the Commonwealth of Virginia, where IAD is located, have significant ties to Cuba. o The Washington Region has more than 23,000 residents of Cuban American origin, the 7 th largest such population in the United States. 1 The Washington Region encompasses the Greater Washington, D.C. and Baltimore areas.
Page 3 o Virginia is the largest agricultural exporter to Cuba of any U.S. State. o Virginia Commonwealth University has an educational exchange agreement with the University of Havana. o The Virginia Port Authority has a Memorandum of Understanding ( MOU with the Cuban National Port Authority regarding commercial opportunities. o Virginia Governor McAuliffe and D.C. Mayor Bowser have been among the first political leaders to visit Cuba since the new U.S.-Cuba policy was announced by the Administration. Washington, D.C. Havana would be the only nonstop service to Havana from the Mid-Atlantic United States. United s IAD hub will offer extensive beyond connectivity to other U.S. destinations, thereby providing convenient one-stop service between Havana and dozens of other U.S. communities and competing with other U.S. gateways and hubs for connecting traffic. In light of these compelling benefits for the travelling and shipping public, the Department should award a weekly roundtrip frequency to United for nonstop service between Washington, D.C. and Havana. I. UNITED S PROPOSAL FOR NONSTOP CAPITAL-TO-CAPITAL SERVICE BETWEEN WASHINGTON, D.C. AND HAVANA WARRANTS ALLOCATION OF THE REQUESTED FREQUENCY. United has applied for one weekly roundtrip frequency to operate nonstop Washington, D.C. Havana service. One weekly roundtrip frequency amounts to less than 1% of the U.S. Havana frequencies available in this proceeding. As explained below, the governmental, cultural, and educational ties between these two capital cities, the 7 th largest population of residents in the United States with Cuban American origin, the numerous other important links between the Washington Region and Cuba, and
Page 4 United s extensive connectivity at IAD demonstrate that the Department should award a frequency for nonstop IAD HAV service. A. Nonstop Capital-to-Capital Service is Critically Important as the Two Countries Re-establish Ties. In December 2014, President Obama announced a shift in U.S. policy with respect to Cuba based on re-engagement. The new policy had several pillars: establishing diplomatic relations with Cuba; adjusting regulations to more effectively empower the Cuban people; facilitating an expansion of travel under general licenses for the 12 existing categories of travel to Cuba authorized by law; facilitating remittances to Cuba by U.S. persons; authorizing expanded commercial sales/exports from the United States of certain goods and services; authorizing American citizens to import additional goods from Cuba; facilitating authorized transactions between the United States and Cuba; initiating new efforts to increase Cubans access to communications and their ability to communicate freely; and updating the application of Cuba sanctions in third countries. 2 Since that announcement, the United States and Cuba have re-established diplomatic ties. The United States has re-opened an embassy in Havana, and Cuba has re-opened an embassy in Washington, D.C. 3 There have also been numerous inter-governmental exchanges and meetings, including: In March 2015, Deputy Assistant Secretary of State Sepulveda and the FCC Chairman traveled to Cuba for discussions with their 2 Fact Sheet: Charting a New Course on Cuba, available at https://www.whitehouse.gov/the-pressoffice/2014/12/17/fact-sheet-charting-new-course-cuba. 3 Cuba opens Washington embassy, urges end to embargo, Reuters, July 20, 2015. http://www.reuters.com/article/us-cuba-usa-iduskcn0pu07n20150720.
Page 5 counterparts about the development of telecommunications and internet connections between the two countries. In August 2015, Secretary of State Kerry traveled to Havana to formally re-designate the U.S. Interests Section to the U.S. Embassy there and to meet with Cuban government officials. In October 2015, Secretary of Commerce Pritzker and separately Homeland Security Deputy Secretary Mayorkas visited Cuba to meet with senior Cuban government officials. In November 2015, U.S. Secretary of Agriculture Vilsack traveled to Cuba with several members of Congress. In November 2015, the National Oceanic and Atmospheric Administration and the U.S. National Park Service signed a Memorandum of Understanding with Cuba s Ministry of Science, Technology, and Environment. In December 2015, U.S. and Cuban government officials met in Washington, D.C. to discuss counter-narcotics issues. In February 2016, Secretary of Transportation Foxx traveled to Cuba to sign the new civil aviation agreement between the U.S. and Cuba. In February 2016, U.S. and Cuban government officials met in Havana for technical talks on cybercrime. 4 And, later this month, President Obama is scheduled to travel to Cuba. These diplomatic and government-to-government meetings are fundamental to the Administration s policy of re-engagement and will continue as the United States and Cuba seek to discuss a host of subjects and issues affecting both countries and their citizens. U.S. Senators Warner and Kaine have noted the importance of United s proposed nonstop Capital-to-Capital service in the efforts of both countries to re-engage: With a significant presence of federal employees in Virginia, Washington 4 See, e.g., Press Releases at http://havana.usembassy.gov/press-releases.html.
Page 6 Dulles service is a clear way to strengthen the new diplomatic relationship between our nation's capital and Cuba.... Air travel service between Dulles and Havana would be a good diplomatic and business investment for the National Capital region and for both countries. Letter of Senators Warner and Kaine to Secretary Foxx, March 2, 2016 (United Application, Attachment 1. Nonstop Capital-to-Capital air service from Washington, D.C. to Havana will facilitate and enhance such meetings and the normalization of relations between the two countries. B. The Washington Region and Virginia Have Extensive Ties to Cuba. Importantly, the Washington Region is comprised of more than just government. The Commonwealth of Virginia and the Washington Region have an impressive array of commercial, trade, cultural, family, and NGO ties to Cuba and have been very active in re-engagement with Cuba. These ties further underscore the need for nonstop Capital-to-Capital service between the United States and Cuba. Notably, the Washington Region is home to 23,292 residents with Cuban American origin, the 7 th largest such population in the United States. 5 (Exhibit MWAA 100. This large and vibrant community alone merits at least a weekly nonstop service to Cuba s capital. Yet, the links between the Washington Region and Cuba are even more extensive, further strengthening the case for an award of the requested frequency for Capital-to-Capital service. Governor McAuliffe of Virginia became the fourth U.S. Governor to visit Cuba since the Obama Administration announced plans to normalize relations when he led 5 See U.S. Census Bureau, 2010-2014 American Community Survey 5-Year Estimate (Washington- Baltimore-Arlington Combined Statistical Area.
Page 7 a 30-member delegation consisting of large and small Virginia businesses, among others, to facilitate business development discussions. In supporting the proposal for nonstop Washington (Dulles Havana service, he explained: As Governor, I have made sure that Virginia has been a leader in the enhancement of relations with Cuba, and I have strongly supported the Administration's efforts toward liberalization. I led a trade mission consisting of Virginia government, education and business leaders to Cuba earlier this year. Last week, my Secretary of Commerce and Trade joined the Mayor of D.C., Maryland government officials and education and business leaders from the National Capital Region on a mission to Cuba. During these visits, we saw first-hand the opportunity to expand current agricultural exports, provide new agricultural exports, and open the doors to future collaboration into additional sectors that are key to our efforts to build a new Virginia Economy and assist in the development of Cuba. In order to sustain and advance this progress, it is critical that Virginia and the National Capital Region obtain nonstop air service to Havana. United's Dulles-Havana service would naturally provide an important link between capital cities and serve a promising and growing export, tourism and diplomatic market. Letter of Governor McAuliffe to Secretary Foxx, March 2, 2016 (United Application, Attachment 1. Indeed, Virginia is the top U.S. State for agricultural and forestry exports to Cuba, exporting nearly $42 million of such products comprised principally of soybeans and soybean residues in 2015. Virginia s exports accounted for 28% of Cuba s total agricultural imports from the United States. 6 The Port of Virginia ranked 1 st (in metric tons of 14 ports used in 2015 for exporting agricultural products from the United 6 Governor McAuliffe Announces Virginia is Top State for Agricultural Exports to Cuba, Press Release, February 12, 2016.
Page 8 States to Cuba. 7 Virginia Commonwealth University recently signed a Memorandum of Understanding with the University of Havana whereby the two universities will work together to develop cooperative programs in a variety of academic disciplines studied at both institutions. 8 And, the Virginia Port Authority entered into an MOU with the Cuban National Port Authority earlier this year in order to evaluate commercial opportunities between the Port of Virginia and Cuba s newly opened Port of Mariel Special Development Project, 9 making Virginia the first U.S. port operator to sign a cooperation agreement with its Cuban counterpart. 10 To this point, Senators Warner and Kaine of Virginia have concluded that nonstop Washington (Dulles Havana service would bolster the already robust trade relationship that Cuba has specifically with the Commonwealth of Virginia. Letter of Senators Warner and Kaine to Secretary Foxx, March 2, 2016 (United Application, Attachment 1. The Washington Region, including the District of Columbia, also has been in the vanguard of the U.S. re-engagement with Cuba. For example, the Greater Washington Hispanic Chamber of Commerce organized a regional exploratory mission to Cuba in February 2016, which included D.C. Mayor Bowser, Montgomery County (Maryland Executive Leggett, Virginia Secretary of Commerce and Trade Jones, D.C. Councilmembers Evans and Orange, and D.C. Public Schools Chancellor 7 See Letter from The Port of Virginia to Secretary Foxx (March 10, 2016 (filed in this docket. 8 Governor McAuliffe Announces Agreement on Educational Exchange between Virginia and Cuba, Press Release, January 4, 2016. 9 Governor McAuliffe Announces New Agreement to Foster Commercial Opportunities between Ports in Virginia and Cuba, Press Release, January 5, 2016. 10 See Letter from The Port of Virginia to Secretary Foxx (March 10, 2016 (filed in this docket.
Page 9 Henderson, as well as a few dozen other leaders from public and private entities in the Washington Region. 11 As Mayor, I have made sure that the District of Columbia has been a leader in the development of relations with Cuba, and I strongly support President Obama's efforts toward liberalization. In February 2016, I joined an exploratory mission with government and business leaders from Virginia, Maryland and the District of Columbia to lay the groundwork for commercial, education, medical, arts, tourism and cultural exchanges with Cuba. Specifically, my goals were to establish an official relationship with the Capital City Government of Havana; to gain a better understanding of, and take back lessons on successes in education, literacy, and healthcare; to determine mutually beneficial tourism opportunities; and to identify opportunities for District-based businesses to assist with Cuba's development when trade relations are normalized. 12 During this trip, Mayor Bowser, the D.C. Public Schools Chancellor, and representatives of American University and Howard University also visited the University of Havana. 13 In addition, the Mayor met with the Mayor of Havana as well as Cuban healthcare officials. 14 The Dulles Air Transportation Association, Visit Fairfax, the Tourism and Travel Industry of Fairfax County, the Virginia Chamber of Commerce, Discover Prince William and Manassas, Virginia, and Aviation Facilities Company reiterated the importance of nonstop Capital-to-Capital service for the private sector in separate letters of support: 11 Washington Regional Leaders to Join Hispanic Chamber on Exploratory Mission to Cuba, Press Release, February 17, 2016, available at http://www.gwhcc.org/news/2016/02/17/chamber-news/washington-regional-leadersto-join-hispanic-chamber-on-exploratory-mission-to-cuba/. 12 See Letter from Mayor Bowser to Secretary Foxx (March 14, 2016 (filed in this docket. 13 Mayor Bowser Visits University of Havana, Press Release, February 22, 2016. 14 Mayor Bowser Meets with Havana Mayor Romero, Press Release, February 22, 2016; Mayor Bowser Meets with Dr. Mariela Castro and Cuban Healthcare Leaders, Press Release, February 22, 2016.
Page 10 Virginia has been a leader in the development of relations with Cuba.... In order to sustain and advance this progress, it is critical that Virginia and our Nation s capital obtain nonstop air service to Havana. United s Washington Dulles Havana service would naturally provide an important link between capital cities and serve a promising and growing export and diplomatic market. 15 The Greater Washington Board of Trade has echoed these comments in supporting United s nonstop IAD-HAV service. 16 No other gateway in this proceeding can provide a Capital-to-Capital air bridge between the United States and Cuba and the unmatched qualitative benefits from such a link. Nonstop Capital-to-Capital service will enable greater levels of engagement and exchanges in the political, governmental, educational, agricultural, and commercial sectors, and will build on the re-engagement efforts and existing close ties between Virginia and the Washington Region, on the one hand, and Cuba, on the other hand. It certainly merits at least a single weekly frequency, as United requests, from the pool of 140 weekly (20 daily available U.S. Havana frequencies. C. United s Nonstop Service from its Hub at Washington Dulles will be the Only Nonstop Havana Service from the Mid-Atlantic and will Offer Dozens of Beyond-IAD Connections to other U.S. Destinations. Washington Dulles is one of the busiest airports in the United States. In 2015, IAD handled nearly 22 million passengers, of which approximately 7.2 million passengers were international traffic. See Reagan and Dulles Served More than 44 15 See Letters of Dulles Area Transportation Association (March 8, 2016, Visit Fairfax (March 8, 2016, Virginia Chamber of Commerce (March 8, 2016, Discover Prince William and Manassas, VA (March 9, 2016, and Aviation Facilities Co., Inc. (March 9, 2016, to Secretary Foxx (filed in this docket; see also Letter of Arlington (VA Chamber of Commerce to Secretary Foxx (March 9, 2016 (filed in this docket. 16 See Greater Washington Board of Trade Letter to Secretary Foxx (March 9, 2016.
Page 11 Million Passengers in 2015, Press Release, MWAA (February 17, 2016. It has nonstop/single-plane service to 51 foreign destinations, including 16 destinations in Latin America and the Caribbean (Exhibit MWAA 101. In short, Washington Dulles is a vibrant and thriving U.S. gateway with an established track record of supporting international air service, and nonstop service to Havana would expand these service offerings. In addition, nonstop Capital-to-Capital service as IAD-HAV would be is not new to IAD or MWAA. IAD has nonstop/single-plane service to 34 capital cities around the world, but not to Havana, and Havana has nonstop service to the capitals of 24 other countries, but not to Washington, D.C. (Exhibits MWAA 102, 103. Indeed, the Department previously recognized the importance of Capital-to-Capital air service, when it selected United for first-ever nonstop service between Washington, D.C. (IAD and Beijing, China. Furthermore, we tentatively find that United s Washington (Dulles-Beijing proposal has important advantages that should benefit the traveling public while also enhancing sustainability of the service. First among these factors is the clear community of interest between the two gateway cities. The availability of nonstop services between the Washington, D.C. metro area and Beijing should improve the convenience of travel for government, academic, and industry representatives of both countries and enhance the opportunities for more frequent face to face contact. DOT Order 2007-1-4, at 17 (the 2007 China Case. Such governmental, educational, and industry exchanges are particularly important when, as in this case involving Cuba, the two countries are seeking to re-engage after more than a half-century hiatus.
Page 12 Importantly, nonstop IAD HAV service provides significant additional benefits, beyond just the compelling benefits of Capital-to-Capital service and a link between two cities with substantial communities of interest. First, it would be the only nonstop service to Havana from a gateway in the Mid- Atlantic United States. The overwhelming majority of Havana proposals involve gateways in Florida, with a few additional proposals from elsewhere in the Southeast, the Northeast, and the West. But, the IAD-HAV service would be the only nonstop from the Mid-Atlantic to Cuba s capital. This is an important factor in terms of inter-gateway competition and balancing regional access to limited-entry markets, as the Department emphasized in the 2007 China Case. See DOT Order 2007-1-4, at 17 ( Washington would be the first Mid-Atlantic gateway to China. Second, United operates a large hub at IAD, with an average of 200 United/United Express daily flights, including an average of 8 daily nonstop flights to 13 destinations in Latin America and the Caribbean (including islands in close proximity to Cuba, such as Grand Cayman and Jamaica. See Application of United Airlines, at 11, and Exhibits UA-104, UA-109. United s hub operations at IAD would offer passengers using United s IAD-HAV service a wide range of seamless, convenient, online connections to more than 40 destinations throughout the United States, including, for example, San Francisco, San Diego, Seattle, Pittsburgh, Cleveland, Norfolk, Richmond, Columbus, Hartford, and Syracuse, among many others. See Application of United Airlines, at 12, and Exhibits UA-142 to UA-145 (combined summer and winter schedules. More broadly, there is nonstop domestic service from IAD to 75 markets throughout the United States. (Exhibit MWAA 104.
Page 13 This connectivity would ensure that the benefits of a frequency award for Washington, D.C. Havana service flow to many U.S. communities beyond the Dulles gateway, another factor that favored United in the 2007 China Case. See DOT Order 2007-1- 4, at 17 (noting the behind traffic that United will be able to flow over Washington was an important advantage. II. CONCLUSION United s proposal for nonstop Washington, D.C. Havana service would provide the only scheduled Capital-to-Capital air service between our Nation s Capital and Cuba s capital. Such an air transportation link is critically important as the two governments seek to re-engage and normalize relations after more than half a century. Moreover, the Washington Region and Virginia have significant cultural, family, commercial, and public sector ties with Cuba, and they have been at the forefront in the Administration s effort to re-engage with Cuba. Furthermore, a frequency award in this proceeding for IAD-HAV service would not just benefit the Washington Region. It would provide the only nonstop scheduled service to Havana from the Mid-Atlantic U.S., and it would offer substantial connectivity to approximately 40 beyond-iad destinations in the United States with seamless, convenient connections at United s IAD hub. Accordingly, MWAA urges the Department to award the requested weekly roundtrip frequency for nonstop Washington, D.C. Havana service to United. Respectfully submitted, Robert E. Cohn Patrick R. Rizzi
CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing Answer of the Metropolitan Washington Airports Authority has been served this March 14, 2016, upon each of the following addressees: robert.wirick@aa.com chris.walker@delta.com howard.kass@aa.com esahr@eckertseamans.com abigail.donovan@aa.com dderco@eckertseamans.com sllunsford@fedex.com robert.land@jetblue.com nssparks@fedex.com anita.mosner@hklaw.com gbleopard@fedex.co; jennifer.nowak@hklaw.com bob.kneisley@wnco.cm; englets@state.gov leslie.abbott@wnco.com; john.s.duncan@faa.gov jyoung@yklaw.com; dkirstein@yklaw.com Alex.krulic@delta.com foont@foontlaw.com sami.teittinen@silverairways.com bryan.winters@silverairways.com john@mietuslaw.com jmaddux@ggh-airlaw.com dheffernan@cozen.com rwelford@cozen.com thomas.ting@suncountry.com thomas.bolling@united.com abby.bried@united.com james.conneely@united.com dan.weiss@united.com steve.morrissey@united.com mwarren@crowell.com gmurphy@crowell.com sseiden@crowell.com Patrick Rizzi
Washington to Havana Capital to Capital The Washington Region Has the 7 th Largest Population of Residents with Cuban American Origin Residents with Cuban American Origin 1,200,000 1,000,000 800,000 600,000 400,000 1,061,180 Docket DOT-OST-2016-0021 MWAA 100 200,000 156,514 120,826 63,288 56,821 44,787 23,292 23,018 22,936 22,839 22,115 16,736 15,382 13,413 0 Combined Statistical Area* * Combined Statistical Areas ( CSA (when available. Uses Washington-Baltimore-Arlington CSA. Sarasota and Lakeland combined with Tampa, and Palm Bay/Melbourne combined with Orlando. Source: U.S. Census Bureau, 2010-2014 American Community Survey 5-Year Estimate.
Washington to Havana Capital to Capital Washington Dulles Has Nonstop Service to 16 Latin America/Caribbean Markets Docket DOT-OST-2016-0021 MWAA 101 Source: Innovata Airline Schedules, via Diio MI online portal, CY 2016
Washington to Havana Capital to Capital Washington Dulles Has Nonstop/Single-Plane Service to 34 International Capital Cities Docket DOT-OST-2016-0021 MWAA 102 Source: Innovata Airline Schedules, via Diio MI online portal, CY 2016
Washington to Havana Capital to Capital Docket DOT-OST-2016-0021 MWAA 103 Havana Has Nonstop Service to 24 International Capital Cities But Lacks Service to the U.S. Capital Washington D.C. Source: Innovata Airline Schedules, via Diio MI online portal, CY 2016
Washington to Havana Capital to Capital Docket DOT-OST-2016-0021 MWAA 104 Washington Dulles Has Nonstop Domestic Service to 75 Markets Source: Innovata Airline Schedules, via Diio MI online portal, May 2016