United Airlines/Mesa Airlines Seek Additional Houston-Havana Routes

Excerpts From United Airlines/Mesa Airlines Filing With United States Department of Transportation

“In light of recent reports that Frontier and Spirit plan to suspend indefinitely their Havana services and in response to the recent applications submitted by JetBlue, Delta, American and Southwest for additional frequencies to provide service to Havana from Fort Lauderdale, Boston and Miami, United and Mesa d/b/a United Express (the “Joint Applicants”) affirmatively apply for six weekly U.S.-Havana frequencies to enable United to expand its Saturday-only Houston- Havana service to daily service and for Mesa to obtain underlying exemption authority to operate this service as a United Express carrier. To that end, Mesa applies pursuant to 49 U.S.C. § 40109 and Subpart C of the Department’s Rules of Practice for an exemption from 49 U.S.C. § 41101 authorizing Mesa to provide scheduled foreign air transportation of persons, property and mail between Houston and Havana. The Joint Applicants ask that the requested exemption authority for Mesa become effective as soon as possible and that the authority be effective for a period of at least two years, subject to the Department’s standard conditions.

United and Mesa answer the applications of JetBlue, Delta, American and Southwest and state as follows in support of their joint application:

Reallocating six weekly Havana frequencies to United will allow United and its customers to continue to benefit from the successful early results of its Saturday Houston-Havana service. United now plans to offer consumers convenient daily nonstop flights between United’s world class hub at Houston George Bush Intercontinental Airport and Havana’s José Martí International Airport to the benefit of passengers traveling in the local Houston-Havana market as well as passengers traveling between points served behind United’s Houston hub network and Havana. The Miami Herald has reported and Official Airline Guide (“OAG”) published schedules indicate that Frontier intends to suspend its Miami-Havana service on June 4, 2017. Likewise, media reports published on April 17, 2017 indicate that Spirit will cease Havana service by the end of May 2017. The Department should not allow these valuable frequencies – which the United States Government worked so diligently to secure – to become dormant. As the Department is aware, frequencies are subject to the condition that they will become dormant and revert automatically to the Department if they are not used for a period of 90 days. See Order 2016-8-38 at 14.

United can make expeditious and more efficient use of these valuable frequencies to establish daily service on the successful Houston-Havana route and assures the Department that it stands ready to use these six frequencies on a year-round basis.  United proposes to begin daily service between Houston and Havana on October 28, 2017 commensurate with the launch of the IATA winter 2017-18 season. United will use either Boeing B737 aircraft from its existing fleet or Embraer E175 aircraft from Mesa’s existing fleet, as conditions warrant.

In order to fully implement the proposed arrangement and maximize United’s flexibility to provide Houston-Havana services, Mesa requires and hereby applies for underlying exemption authority to provide scheduled service on the Houston-Havana route. Mesa is a Nevada corporation with its principal office at 410 North 44th Street, Suite 700, Phoenix, AZ, 85008, and a citizen of the United States within the meaning of 49 U.S.C. § 40102(a)(15). Mesa holds various certificates of public convenience and necessity and exemptions authorizing it to engage in scheduled air transportation of persons, property and mail, and Mesa is clearly fit, willing and able to provide the proposed services. See, e.g., Order 2008-4-26 (Open-Skies Certificate) and Notice of Action Taken dated August 16, 2016 in Docket DOT-OST-2016-0147 (U.S.-Mexico exemption). Its proposed service between Houston and Havana is not materially different in terms of aircraft size or stage length from its previously authorized interstate and foreign air services. Mesa requests that the Department take official notice, pursuant to Rule 24 of the Department’s Rules of Practice, of all other data on file with the Department necessary to establish its fitness.

The authority sought herein is fully consistent with the Memorandum of Understanding of February 16, 2016 between the United States and the Republic of Cuba (“MOU”). The MOU permits carriers of the two countries to operate scheduled services between any point or points in the United States and any point or points in Cuba, subject to a frequency limitation of 20 daily frequencies to Havana.  See MOU, Section 1 and Annex I.  Indeed, the Department has issued similar exemption authority and frequencies to other U.S. carriers and there now appear to be, or soon will be, U.S.-Havana frequencies available. In addition, the MOU permits cooperative marketing arrangements such as the “United Express” services proposed here. See MOU, Section 7. The proposed services are not projected to utilize more than 10 million gallons of fuel annually and, in any event, Mesa does not envision having any difficulties in acquiring fuel for these services.

As United indicated in its March 2, 2016 application and subsequent filings in this docket, its Houston-Havana flights serve the nation’s fourth largest metropolitan area out of United’s hub gateway to Latin America while also reaching the eighth largest Cuban American population in the U.S. See Exhibit UA-R102. It is worth noting that Houston is one of only two cities west of the Mississippi River that were awarded U.S.-Havana routes. See Order 2016-7-4 (“Show Cause Order”) at 6. United’s Havana service from Houston continues to develop and shows strong enough demand to support an expansion from Saturday only to daily service using appropriately sized capacity that Mesa’s Embraer E175 aircraft offer. Today, United’s Saturday flight connects 20 U.S. points on a roundtrip basis with Havana and reaches almost 200,000 Cuban Americans throughout the country. Exhibits UA-R106 and UA-R107. With the planned change to daily service, United would connect 27 points in the western and central United States.

Recognizing the merits of United’s service proposal, the Department determined that United’s Houston-Havana flights would be “consistent with the Department’s stated goals and the public interest” insofar as Houston George Bush Intercontinental Airport “is a major hub with connections to cities across the central and western United States” with “significant local traffic potential.” Show Cause Order at 8-9. With the lion’s share of these scarce and valuable frequencies already earmarked for Florida and recent cessations of service from Florida indicating there may be more capacity than demand in that market, the Department should capitalize on this opportunity to promote carrier competition, gateway diversity and consumer choice and convenience by reallocating six frequencies to United. In addition, this Joint Answer and Application is well supported by the Houston Airport System.  See Attachment 1.

Should the Department decide that a route proceeding is necessary or appropriate to reallocate the Frontier and Spirit frequencies, United reserves the right to actively participate in any such proceeding, to demonstrate the comparative and compelling benefits of United’s service proposal and to contest the merits and claimed benefits of any other carrier application.

WHEREFORE, United urges the Department to reallocate six frequencies to United to be used for daily service between Houston and Havana, grant Mesa’s application for underlying exemption authority to provide scheduled service on this route and grant such other relief as the Department may deem appropriate.”

Complete Text Of Filing In PDF Format