[Federal Register Volume 65, Number 233 (Monday, December 4, 2000)]
[Notices]
[Pages 75765-75771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30793]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Docket No. FAA-2000-8278]


High Density Airports; Notice of Lottery of Slot Exemptions at 
LaGuardia Airport

AGENCY: Federal Aviation Administration.

ACTION: Notice of lottery for takeoff and landing times at LaGuardia 
Airport.

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SUMMARY: This notice announces a Federal Aviation Administration (FAA) 
lottery to reallocate exemption slots at LaGuardia Airport as 
authorized under the Wendell H. Ford Aviation Investment and Reform Act 
of the 21st Century. The FAA finds that this action is necessary to 
address the level of delays that are currently experienced as a result 
of the significant increase in operations authorized by that 
legislation, and to prevent an increase in delays from additional 
flights scheduled to begin in the near future.

DATES: The lottery will be held on December 4, 2000.

ADDRESSES: The lottery will take place in the FAA Auditorium, 3rd 
floor, Federal Aviation Administration, 800 Independence Avenue, SW., 
Washington, DC 20591 at 12:30 p.m.

FOR FURTHER INFORMATION CONTACT: David L. Bennett, Office of Airport 
Safety and Standards, Federal Aviation Administration, 800 Independence 
Avenue, SW., Washington, DC 20591; telephone number 202-267-3053.

SUPPLEMENTARY INFORMATION:

Background

    The FAA has broad authority under Title 49 of the United States 
Code (U.S.C.), Subtitle VII, to regulate and control the use of the 
navigable airspace of the United States. Under 49 U.S.C. 40103, the 
agency is authorized to develop plans for and to formulate policy with 
respect to the use of navigable airspace and to assign by rule, 
regulation, or order the use of navigable airspace under such terms, 
conditions, and limitations as may be deemed necessary in order to 
ensure the safety of aircraft and the efficient utilization of the 
navigable airspace. Also, under section 40103, the agency is further 
authorized and directed to prescribe air traffic rules and regulations 
governing the efficient utilization of the navigable airspace.
    The High Density Traffic Airports Rule, or ``High Density Rule,'' 
14 CFR part 93, subpart K, was promulgated in 1968 to reduce delays at 
five congested airports: John F. Kennedy International Airport, 
LaGuardia Airport, O'Hare International Airport, Ronald Reagan National 
Airport and Newark International Airport (33 FR 17896; December 3, 
1968). The regulation limits the number of instrument flight rule (IFR) 
operations at each airport, by hour or half hour, during certain hours 
of the day. It provides for the allocation to carriers of operational 
authority, in the form of a ``slot'' for each IFR landing takeoff 
during a specific 30- or 60-minute period. The restrictions were lifted 
at Newark in the early 1970s.

[[Page 75766]]

``AIR-21''

    On April 5, 2000, the ``Wendell H. Ford Aviation Investment and 
Reform Act for the 21st Century'' (``AIR-21'') was enacted. Section 231 
of AIR-21 significantly amended 49 U.S.C. Sec. 41714 and included new 
provisions codified at 49 U.S.C. Secs. 41716, 41717, and 41718. These 
provisions enabled air carriers meeting specified criteria to obtain 
new slot exemptions at New York's LaGuardia Airport (LaGuardia) and 
John F. Kennedy International Airport (JFK), Chicago's O'Hare 
International Airport (O'Hare) and Washington DC's Ronald Reagan 
Washington National Airport (National). As a result of this 
legislation, the Department of Transportation (Department) issued eight 
orders establishing procedures for the processing of various 
applications for exemptions authorized by the statute.
    Specifically, Order 2000-4-11 implements 49 U.S.C. 41716(a), which 
provides in pertinent part that an exemption must be granted to any 
airline using Stage 3 aircraft with less than 71 seats that proposes to 
provide nonstop service between LaGuardia and an airport that was 
designated as a small hub or nonhub airport in 1997, under certain 
conditions. The exemption must be granted if: (1) the airline was not 
providing such nonstop service between the small hub or nonhub airport 
and LaGuardia Airport during the week of November 1, 1999; or (2) the 
proposed service between the small hub or nonhub and LaGuardia, exceeds 
the number of flights provided between such airports during the week of 
November 1, 1999; or (3) if the air transportation pursuant to the 
exemption would be provided with a regional jet as replacement of 
turboprop service that was being provided during the week of November 
1, 1999.
    According to AIR-21 and the Department's Orders, air carriers 
meeting the statutory tests delineated above automatically receive 
blanket approval for slot exemptions, provided that they certify in 
accordance with 14 CFR 302.4(b) that they meet each and every one of 
the statutory criteria. The certification must state the communities 
and airport to be served, that the airport was designated a small hub 
or nonhub airport as of 1997, that the aircraft used to provide the 
service have fewer than 71 seats, that the aircraft are Stage 3 
compliant, and the planned effective dates. Carriers must also certify 
that the proposed service represents new service, additional 
frequencies, or regional jet service that has been upgraded from 
turboprop service when compared to service for the week of November 1, 
1999. In addition, carriers must state the number of slot exemptions 
and the times needed to provide the service.
    Order 2000-4-10 implements the provisions of 49 U.S.C. 41716(b), 
which states in pertinent part, that exemptions must be granted to any 
new entrant or limited incumbent airline using Stage 3 aircraft that 
proposes ``* * * to provide air transportation to or from LaGuardia or 
John F. Kennedy International Airport if the number of slot exemptions 
granted under this subsection to such air carrier with respect to such 
airport when added to the slots and slot exemptions held by such air 
carrier with respect to such airport does not exceed 20.'' Applications 
submitted under this provision must identify the airports to be served 
and the time requested.
    Section 231 of AIR-21, 49 U.S.C. 41715(b)(1) expressly provides 
that the provisions for slot exemptions are not to affect the FAA's 
authority for safety and the movement of air traffic. The reallocation 
of exemption times by the lottery procedures described in this Notice 
is based on the FAA's statutory authority and does not rescind the 
exemptions issued by the Department under Orders 2000-4-10 and 2000-4-
11. As provided in those orders, carriers that have filed the exemption 
certifications also need to obtain an allocation of slot exemption 
times from the FAA. The limiting and reallocation of these exemption 
slots is in recognition that it is not possible to add an unlimited 
number of new operations at LaGuardia Airport, especially during peak 
hours, even if those operations would otherwise qualify for exemptions 
under AIR-21.
    Lastly, section 93.225 of Title 14 of the Code of Federal 
Regulations sets forth the process for slot lotteries under the High 
Density Rule. The process described in the regulations is similar to 
the process described herein and allows for special conditions to be 
included when circumstances warrant special consideration.

Actions of the Port Authority of New York and New Jersey

    In response to a significant increase in exemption operations under 
AIR-21 beginning in late summer (from 53 operations in August 2000 to 
192 operations at the end of September), the Port Authority of New York 
and New Jersey (Port Authority) issued a letter on August 2 to all 
carriers filing for AIR-21 exemptions requiring 45 days advance notice 
of new operations at the airport under AIR-21. On August 21, the Port 
Authority issued a second letter to carriers planning to initiate 
service under AIR-21 exemptions requesting that the carriers schedule 
their flights outside of the most congested hours in order to mitigate 
the delays generated by additional flights. On September 19, the Port 
Authority announced a temporary moratorium on new flights. In that 
letter, the Port Authority stated its intent to replace this moratorium 
as soon as possible with a measure that will prevent an unlimited 
increase in operations at LaGuardia, and at the same time fairly 
accommodate Federal interests in competition and in service to small 
hub or nonhub airports as provided in AIR-21. To that end, the Port 
Authority has proposed to the FAA the imposition of a limit on the 
number of AIR-21 exemption flights at LaGuardia, and the allocation of 
those flights to eligible carriers through a lottery procedure to 
address, in the short-term, the current situation at the airport.
    The following factors describe the current operating conditions 
experienced at LaGuardia:
     There were more than 9,000 flight delays at LaGuardia in 
September 2000, up from 3,108 in September 1999. In September 2000, 25% 
of the flight delays in the U.S. were at LaGuardia. In September 1999, 
the figure was 12%.
     Average delays for many afternoon flights at LaGuardia in 
September 2000 exceeded 48 minutes. The average delay for all flights 
that month was 43 minutes.
     LaGuardia has recently experienced as many as 600 delayed 
flights on a day when there is good weather and no other significant 
problems in the air traffic control system.
     Some flights at LaGuardia have experienced average ground 
delay time that exceeds scheduled flight time.
     Air carriers routinely cancel scheduled flights, 
especially in afternoon and evening hours, due to aircraft positioning 
and other operational issues related to excessive delays.
    Since AIR-21 was enacted on April 5, 2000:
     Carriers have filed exemption requests for more than 600 
new flights a day at LaGuardia.
     As of November 1, over 300 new flights are operating under 
AIR-21 exemptions.
     Carriers have published schedules for 28 new flights in 
December and 23 more new flights in January 2001.
     In April 2000, the number of scheduled operations at 
LaGuardia was 1064. As of November 1, that number was 1344.
     If the flights published for December and January began 
operation,

[[Page 75767]]

there would be approximately 1395 scheduled operations each day at the 
airport, an increase of 30% in less than a year at an airport that was 
already one of the top two delay airports in the U.S.

Notice of Intent To Conduct a Lottery

    On November 9, 2000, the FAA issued a Notice of Intent to Conduct a 
Lottery seeking comment on the agency's proposed slot lottery at 
LaGuardia (65 FR 69126; November 15, 2000). The agency proposed that as 
of January 1, 2001, scheduled operations would be limited to 75 per 
hour to limit daily and hourly demand on airport facilities and the air 
traffic control system. The FAA believes that this number of flights 
can be accommodated in good weather conditions and at the same time, 
will provide access for AIR-21 exemption flights. (This number does not 
include extra sections of scheduled air carrier flights or the 6 
reservations per hour for ``Other'' nonscheduled operations, including 
general aviation, charters and military flights.) As a result, the 
number of AIR-21 slot exemptions at LaGuardia would be limited to 
approximately 150 a day between the hours of 7:00 a.m. and 9:59 p.m. 
(the actual hourly total is 159). Also on January 1, 2001, the FAA 
would reissue AIR-21 exemption slots and operating times to eligible 
carriers in accordance with the results of a lottery. The FAA further 
proposed that carriers eligible for participation in the lottery would 
be those carriers that have applications on file with the Department, 
fulfilled the certification requirements articulated in OST Orders 
2000-4-10 and 2000-4-11, received an FAA allocation as of the date of 
the notice, and would have commenced operations by January 1, 2001. 
Lastly, the agency proposed that independently owned carriers that had 
obtained AIR-21 certification in their own name could participate in 
the lottery separately, regardless of whether the service is under that 
carrier's name or under a code-share arrangement.

Discussion of Comments

    After a seven-day comment period, which closed on November 20, the 
agency received 36 comments. Comments were submitted from 15 airlines, 
six airport authorities, two associations representing airports and 
small air carriers, private individuals and representatives from the 
City of Knoxville, Tennessee (Chamber of Commerce, Convention and 
Visitors Bureau, and Mayor's Office) and representatives from the State 
of Maine (Governor King, City of Portland, Department of Economic and 
Community Development). In addition, comments were received from 
Senators Brownback, Roberts, Grassley, Harkin, Kohl and Feingold and 
Congressmen Barrett and Kleczka.
    The comments discussed nine main issues: (1) Treatment of commuter 
affiliates; (2) elimination or reduction of service to small 
communities; (3) new entrant/ limited incumbent preference; (4) carrier 
eligibility for the lottery; (5) suspension of the use-or-lose 
requirement; (6) suspension of the extra section provision; (7) 
implementation date of the reallocation; (8) alternative allocation 
methods; and (9) trading of slot exemption times.

Treatment of Commuter Affiliates

    The FAA proposed that independently owned carriers that had 
obtained AIR-21 certification in their own name could participate in 
the lottery separately, regardless of code-share arrangements with 
other operators at LaGuardia Airport. The basis for this proposal was a 
strict reading of the statutory language in AIR-21, which specifically 
provides that:

    For purposes of this section and section 41716, 41717, and 
41718, an air carrier that operates under the same designator code, 
or has or entered into a codeshare agreement, with any other air 
carrier shall not qualify for a new slot or slot exemption as a new 
entrant or limited incumbent air carrier at an airport if the total 
number of slots and slot exemptions held by the 2 carriers at the 
airport exceeds 20 slots and slot exemptions. (49 U.S.C. 41714(k)).

    The majority of comments on this issue opposed the FAA's proposal 
that the above provision only applies to new entrant/limited 
incumbents. The majority of commenters argue that by adopting the above 
interpretation, the code-share affiliates of the major incumbent 
carriers are being treated as individual carriers for the purpose of 
participating in the slot lottery, regardless of the fact that many of 
these carriers carry the same airline designator code. Consequently, 
the number of carriers eligible to participate in the lottery for slot 
exemptions to small hub and nonhub airports is inflated to 8 carriers 
versus 4 carriers-if affiliated carriers are aggregated.
    This leaves less exemption slots available for new entrants during 
the lottery, particularly during the most desirable times and results 
in an inequitable and disproportionate weight toward incumbent carriers 
with multiple contracted codeshare affiliates. These commenters contend 
that this approach would enhance the dominance of the airlines that 
already dominate LaGuardia and are better able to complement their AIR-
21 operations with HDR slots, which is precisely contrary to the intent 
of AIR-21.
    Both the Senate version (S. 82) and the House version (H.R. 1000) 
of AIR-21 contained language that aggregated commuter affiliates for 
purposes of applying for slot exemptions as new entrants or limited 
incumbents. The conference substitute stated that,

    For purposes of determining whether an airline qualifies as a 
new entrant or limited incumbent for receiving slots exemptions, DOT 
shall count the slots and slot exemptions of both that airline and 
any other that it has a code-share agreement at that airport. 
Conference Report on AIR-21, H. Rep. 106-513, 106th Cong., 2d Sess. 
(March 8, 2000), p. 174.

    Additionally, in the Senate debate, Senator McCain, chairman of the 
Senate Commerce Committee stated with respect to this provision that 
``It means the Secretary should consider commuter affiliates as new 
entrant or limited incumbents for purposes of applying for slot 
exemptions and interim access to O'Hare. A major airline should not be 
allowed to game the system and add to its hundreds of daily slots 
through its commuter affiliates and codeshare partners'' (106th Cong., 
1st Sess. Vol. 145, No. 134, S12096, October 6, 1999).
    It is argued by the commenters, including all members of Congress 
that commented on this notice, that it was only necessary for Congress 
to address the commuter affiliates only with respect to new entrants 
and limited incumbents because those are the only circumstances in 
which AIR-21 exemptions would be limited by the status of the carrier. 
The statutory provisions governing slot exemptions for small or nonhub 
airports provide for automatic access upon meeting the stated criteria 
without regard to the status of the carrier. Consequently, it was not 
necessary for Congress to address the affiliated carrier issue with 
respect to these slot exemptions and the statute is silent.
    The FAA does not dispute the above arguments. However, in ensuring 
that the proposed lottery meets the intent of AIR-21 to the greatest 
extent possible, the agency has to consider the effect of amending its 
interpretation of this provision and applying the commuter affiliate 
provision to both new entrants/limited incumbents and carriers 
providing service to small and nonhub airports. As stated in the 
notice, in capping the number of slot exemptions, the agency is 
striving to strike a balance between new entrants/limited incumbents 
and carriers providing service to small and nonhub airports that 
provides a fair and equitable distribution between the two categories

[[Page 75768]]

of operations, consistent with the intent of AIR-21.
    The FAA agrees with the comments that it was logical for Congress 
not to treat commuter affiliates as a single entity for purposes of 
obtaining slot exemptions for carriers providing service to small and 
nonhub airports. Since the statute does not provide for a cap on these 
exemptions nor any allocation framework, it is unnecessary to include 
the language specifically applicable to new entrants and limited 
incumbent carriers. However, given the circumstances today that warrant 
a limit of some sort on the total number of operations at the airport 
and the clear Congressional intent in cases where such limits applied, 
the FAA finds that it is reasonable to apply the commuter affiliate 
principle to the carriers providing service to small and nonhub 
airports. First, since AIR-21 is silent on this issue, in looking at 
the legislative history, the reading suggested by the commenters is 
consistent with the intent of the statute. Second, in adapting the use 
of the definition for the purpose of the lottery of FAA-issued 
operating rights, the FAA is dealing with a situation not contemplated 
by the drafters of AIR-21. The agency's procedure is for the allocation 
of limited operating rights, and attempts to comport with the intent of 
AIR-21 to the maximum extent possible. Accordingly, the list of 
eligible carriers set forth in this notice reflect an aggregation of 
commuter affiliates with their codeshare partners, i.e. all carriers 
sharing a common designator code will be considered a single carrier 
for the purpose of selecting exemption slots in the lottery.

Elimination or Reduction in Service to Small and Nonhub Airport

    Comments were received from the Knoxville Airport Authority, 
Convention and Visitor Bureau, Mayor, the Charleston County Aviation 
Authority, Birmingham Area Chamber of Commerce, Lee County Port 
Authority, City of Portland, Maine, the Governor of Maine, State of 
Maine Department of Economic and Community Development, Piedmont Triad 
Airport Authority, Lebanon Municipal Authority, and the 
Charlottesville-Albemarle Airport Authority who object to the proposed 
lottery if it would result in any reduction or elimination of service 
to their communities. They urge the FAA to protect the needs of their 
individual communities and other communities that AIR-21 was intended 
to benefit. Colgan Air contends that it provides the only LaGuardia 
service to the markets it serves. Without the AIR-21 exemption slots, 
Colgan states that its service to these small hub and nonhub markets 
will disappear. Similarly, Delta Air Lines comments that Congress 
encouraged airlines to institute new regional jet service between 
LaGuardia and underserved cities to redress the lack of air service 
from these communities to the New York market. As a result, Delta has 
already instituted nonstop LaGuardia service with regional jets to 14 
small hub and nonhub markets (46 daily nonstop roundtrip flights). 
According to Delta, the proposed lottery would likely force Delta to 
cancel all but a few of these flights and impose hardships on these 
communities who are now using this new service. Delta also argues that 
the FAA does not properly balance regional jet service versus new 
entrant service, of which the regional jet service will endure most of 
the reduction in number of slot exemptions in the lottery.
    The FAA realizes that an approximate 44 percent reduction in the 
number of exemption slots available during peak hours is going to 
result in reduced service. The agency's foremost concern with this 
lottery, after establishing the limit on the number of operations, is 
how to make the resulting allocation as fair as possible among the 
competing entities and consistent with the purposes of AIR-21. As 
stated previously, the FAA believes that since the agency is imposing a 
cap on slot exemptions, it is appropriate to aggregate commuter 
affiliates with their codeshare partners. While this may reduce the 
number of slot exemptions available to the carriers providing service 
to small hub and nonhub airports, these carriers, by virtue of their 
codeshare arrangements have alternative sources of slots available to 
adjust their level of service. It is also noted that this action does 
not reduce the number of HDR slots or preclude the option to provide 
the small community service to other New York City area airports. 
Several of the incumbent carriers providing service under AIR-21 slot 
exemptions are the largest individual slot holders at the airport and 
previously served some of the same communities using HDR slots. These 
carriers may choose to continue providing service with a combination of 
AIR-21 exemption slots and HDR slots within the carriers' base. This 
notice will not require a carrier to continue or discontinue service to 
any eligible community. These decisions will be make by the individual 
carrier. In sum, the FAA is aware that some communities will not 
receive service to LaGuardia Airport they may have expected under the 
provision of AIR-21, even if a carrier is willing to provide the 
service. LaGuardia Airport simply does not have the capacity for the 
unlimited addition of new flights.

New Entrants/Limited Incumbents

    America West Airlines, Legend Airlines, Spirit Airlines, Shuttle 
America and the Air Carrier Association of America (ACAA) all raise 
issues concerning the impact of the lottery on new entrants/limited 
incumbents. These entities argue that the number of exemption slots 
operated by new entrants/limited incumbents pales in comparison to the 
number of exemption slots operated by carriers providing service to 
small hub and nonhub airports. These commenters believe that the 
proposed lottery is not structured so as to provide new entrants/
limited incumbents with meaningful opportunities to promote 
competition, as intended by AIR-21. Several of the commenters requested 
that the FAA allocate additional slots to limited incumbents and new 
entrants to provide for expansion of their schedules in the next year, 
even if the slots would not be used immediately.
    The FAA believes that the application of the commuter affiliate 
principle to carriers providing service to small and nonhub airports 
helps balance the two interests. However, the FAA also believes that 
while the lottery is intended to equitably address the needs of all 
carriers under the cap, it is necessary to ensure the competitive 
viability of new entrants, and still providing small hub and nonhub 
access granted under the statute. Consequently, the FAA finds that the 
lottery procedures described herein give equal weight to both 
categories of carriers for slot exemptions.

Carrier Eligibility

    Sun Country states that it meets the definition of a ``new 
entrant,'' but is not eligible to participate in the lottery because it 
did not apply for exemptions at the Department and receive allocations 
from the FAA by November 9. (Sun Country did file its application with 
the Department on November 17, 2000). Sun Country further argues that 
at the time that the deadline was published, it made it impossible for 
any new entrant to participate that had not yet filed with the 
Department. Shuttle America comments that it should be permitted to 
participate in all three initial rounds of the lottery because it is a 
new entrant and because it is providing service to a new and nonhub 
market, therefore uniquely qualifying

[[Page 75769]]

for inclusion in the first three rounds of the lottery under both 
categories of operations.
    Due to the current operating environment at LaGuardia as described 
in the previous notice, the FAA finds that immediate action is 
necessary to prevent worsening of an already intolerable situation. As 
previously stated, the reallocation based on this lottery is an interim 
step and will only be in effect for the short-term, i.e. until 
September 15, 2001. After that date, the FAA and the Department of 
Transportation fully expect to have a long-term mechanism in place to 
better address congestion at the airport, developed with the 
participation of all interested parties. Because of the temporary 
nature of the allocation, and the fact that many of the carriers 
already operating AIR-21 exemption service will need to reduce their 
operations, the FAA did not open the lottery to carriers that had taken 
no steps to initiate AIR-21 flights at LaGuardia as of the date the 
notice was issued. It is incumbent that the FAA reduce the operations 
at the airport to an acceptable number. The FAA's immediate goal is to 
bring the current level of operations to a level that more 
appropriately recognizes airport capacity and to do so by addressing 
the operations that are already in place. If the FAA were to permit Sun 
Country to participate in the lottery, that decision would require 
further reduction of service that is already being operated by other 
carriers. We note that other carriers, some of whose current operations 
are being reduced, also have plans (and in some cases, have already 
received slot times by the FAA) to increase service after January 1, 
2001, and prior to September 15, 2001, but are unable to do so. We note 
that Sun Country has previously filed for exemptions and initiated AIR-
21 flights at JFK International Airport and O'Hare International 
Airport and is clearly benefiting from AIR-21 even if it is unable to 
begin LaGuardia service immediately. Also, as previously stated, the 
allocation of exemption slots by this lottery is for the short-term 
only and this action is not a permanent bar to Sun Country or other 
operators from commencing future AIR-21 operations.
    The FAA does not agree that Shuttle America should be able to 
participate in all rounds of the lottery as both a new entrant/limited 
incumbent and a carrier providing small hub and nonhub service. The FAA 
has listed Shuttle America as a new entrant (to which Shuttle America 
did not comment on) and eligible to select four slots in the first 
round, but ineligible for participation in the second and third rounds 
for carriers obtaining AIR-21 authority on the basis of providing small 
hub and nonhub service.
    The FAA also makes four corrections to the November 9 notice 
regarding the number of slot exemptions available during the lottery 
for Midway, Legend, American Eagle and Delta Connection. In the 
previous notice, the FAA incorrectly stated that Midway was eligible 
for 9 operations, Legend for 7 operations, American Eagle for 26 
operations and Delta Connection for 81. The corrected numbers are 15, 
8, 34 and 88 respectively. However, this notice clarifies that only 
slots between the hours of 0700-2159 are included.

Alternative Allocation Methods

    A number of commenters proposed various alternative methods of 
allocation or variations of the lottery procedures proposed. These 
methods and variations include increasing the number of slots that new 
entrants may select in the first round; withdrawal and reallocation of 
10 percent of all HDR slots; allocation of available slots among 
eligible carriers in proportion to the number of AIR-21 flights already 
implemented as of a certain date; allowing lottery slots to be traded 
freely as long as relevant city and aircraft requirements are met; 
allowing carriers to have a limited number of delay-free arrivals and 
to pick commercially viable times; rolling back the cut-off date for 
operations eligible for lottery to those operations operating on August 
31, 2000; and use a rolling 3-hour limitation (do not exceed 225 
operations in any three consecutive hours).
    The FAA has reviewed each alternative and variation submitted and 
finds that the results of the lottery, if any of these suggestions were 
adopted, would favor one carrier or category of carriers over the 
others. It would also detract from the purposes of this lottery, which 
are to cap operations at an acceptable level for the short-term, and at 
the same time realize the benefits of AIR-21 to the extent possible at 
that level of operations. For example, if the number of slots were 
increased for new entrants in the first round, that would adversely 
affect the number of slots available for carriers providing service to 
small and nonhub airports, which has already been significantly 
reduced. Also, if the FAA were to change the cutoff date to August 31, 
2000, this would disproportionately benefit incumbent carriers, which 
in some cases started the AIR-21 service only a few days before that 
deadline. If the FAA were to adopt a prorated method of allocation, 
then new entrants, whose presence at the airport is largely or 
exclusively due to slot exemptions, would be disfavored.
    Lastly, adoption of a 3 hour rolling limit would allow for further 
peaking of operations at certain times, which is inconsistent with an 
hourly cap. Consequently, the FAA believes that the lottery procedures 
proposed provide an approach that distributes the benefits and burdens 
of the allocation among carriers, and strikes a balance between the two 
distinct purposes of AIR-21: competition by new entrant and small 
incumbent carriers and service to small hub and nonhub airports by 
regional jets and other small aircraft. The FAA adopts herein the 
lottery procedures proposed, and as amended by this notice.

Suspension of the Use-or-Lose Requirement

    Several commenters requested that the FAA temporarily suspend the 
minimum slot usage requirement for all operators at LaGuardia.
    On November 13, 2000, the FAA issued a Statement of Policy, which 
set forth a temporary policy concerning the minimum slot usage 
requirement at LaGuardia (65 FR 69601; November 17, 2000). According to 
the policy statement, carriers are permitted to temporarily return 
slots or slot exemptions to the FAA in advance due to schedule planning 
or other decision by the carriers without fear of jeopardizing the 
permanent loss of the slot or slot exemptions. Additionally, this 
policy provided that the FAA will treat as used a slot or slot 
exemption if the flight was scheduled but canceled for operational 
reasons and the slot would not otherwise have been subject to 
withdrawal.
    The FAA intends to issue a separate notice that clarifies the 
November 13 policy statement in view of the lottery and the 
reallocation of the AIR-21 exemption slots.

Suspension of Extra Sections

    Several commenters stated that the extra section provision of the 
High Density Rule is either being abused and should be suspended or is 
contributing to the overall delay situation at the airport and that the 
FAA should suspend this provision.
    The FAA is not suspending the use of extra sections at this time. 
However, based on the comments received, the agency will review extra 
section operations under current regulations and intends to monitor 
these operations in the future to determine whether further rulemaking 
or enforcement action is warranted.

[[Page 75770]]

Implementation Date

    The FAA received comments regarding the proposed reallocation date 
of January 1, 2001. Several carriers stated that this date would be too 
soon after the lottery, in that it would not be possible to change 
published schedules, or that the date fell in the middle of the holiday 
travel time. In addition, several carriers cited operational problems 
with the proposed date since airlines already have posted crew bids for 
January before the lottery process is completed. Midway Airlines 
specifically stated that ``If the lottery is not held until early 
December, which appears likely, then carriers will not have the time 
necessary to review and adjust fleet allocations and positionings in 
order to meet the deadlines for distributing bid packages to their 
crews on December 10.''
    Based on these comments, the FAA agrees that the January 1 date is 
not practicable to reallocate exemption slots and have carriers adjust 
schedules based on that reallocation without significant disruption. 
The carriers recommended implementation date of January 31, 2001, which 
will provide carriers with approximately seven weeks after the lottery 
to adjust schedules. This date addresses the situation at the airport 
in the most expeditious timeframe reasonable recognizing that airlines 
must take actions to reschedule flights, comport with their union 
contracts and accommodate passengers on alternative routings if 
necessary.

Trading of Slot Exemptions

    Several commenters raised the issue of allowing the transfer of the 
slot exemption times among carriers consistent with industry practices 
and FAA regulations governing the transfer of slots.
    Under the provisions of 49 U.S.C. 41714(j), carriers may not sell, 
trade, transfer, or convey the operating authorities granted by the 
Department's exemptions. Under certain conditions, the Department has 
allowed the temporary transfer of slot exemption times under its pre 
AIR-21 authority and AIR-21 when slot timings were limited. These 
conditions include that the transfer is for operational reasons, of a 
temporary nature, and on a one-for-one basis at the same airport. In 
addition, the carrier with the exemption must certify to the FAA that 
no other consideration is involved, which is consistent with the 
provisions of AIR-21.

Re-allocation of Slot Exemptions at LaGuardia Airport by Lottery

    As stated in the November 9 notice, the FAA will proceed with the 
development of new department policy on measures available at LaGuardia 
for management of congestion, with participation by all interested 
parties. However in the short term, the FAA finds that it is 
appropriate to limit the number of AIR-21 exemption operations at 
LaGuardia and allocate those operations by lottery to eligible carriers 
described herein. The agency reiterates that the limit will not be 
permanent and will remain in effect until September 15, 2001, when a 
permanent demand management policy for the airport, developed with the 
participation of all interested parties, can be implemented.
    Reallocation of AIR-21 exemption flights at LaGuardia in accordance 
with the following conditions is in furtherance of the spirit and 
intent of AIR-21, and is consistent with the FAA's responsibility for 
the efficient use of the navigable airspace, which is articulated in 49 
U.S.C. Sec. 40103(b).
    Effective January 31, 2001, the number of scheduled operations at 
LaGuardia will be limited to approximately 75 per hour. Consequently, 
the number of AIR-21 slot exemptions at LaGuardia is limited to 
approximately 159 per day between the hours of 7:00 a.m. and 9:59 p.m. 
Also effective January 31, 2001, all AIR-21 slot exemptions will be 
allocated in this lottery, and all carriers currently operating under 
AIR-21 exemption authority will be required to conform their schedules 
accordingly.
    The number of AIR-21 slot exemptions that will be available during 
the lottery and consistent with an hourly total of approximately 75 
scheduled operations is as follows (allocations will be made by 30 
minute time periods):

------------------------------------------------------------------------
                                                              Number of
                       Hourly period                          exemptions
------------------------------------------------------------------------
0700.......................................................           16
0800.......................................................           11
0900.......................................................            9
1000.......................................................            8
1100.......................................................            8
1200.......................................................           13
1300.......................................................           14
1400.......................................................            8
1500.......................................................           12
1600.......................................................            7
1700.......................................................            2
1800.......................................................            7
1900.......................................................            7
2000.......................................................            6
2100.......................................................           31
------------------------------------------------------------------------

    The following criteria, as proposed in the previous notice, are 
used to determine carrier participation. A carrier must have: (1) An 
application on file with the Department; (2) fulfilled the 
certification requirements articulated in OST Orders 2000-4-10 and 
2000-4-11 as of November 9, the date of the notice; (3) received an 
allocation of slot times from the FAA; and (4) commenced operations by 
January 1, 2001.
    Carriers that meet this criteria under Order 2000-4-10 and eligible 
for a lottery of times between the hours of 0700-2159 are: Air Tran (11 
operations), American Trans Air (6 operations), Legend (7 operations), 
Midway (15 operations), Midwest Express (8 operations), Spirit Airlines 
(12 operations), Shuttle America (14 operations), Southeast Airlines (4 
operations) and Vanguard (2 operations).
    Carriers that meet this criteria under Order 2000-4-11 for service 
for small hub and nonhub airports and would be eligible for a lottery 
of slot times between the hours of 0700-2159 are: American Eagle (32 
operations), Continental Express (31 operations) Delta Connection (88 
operations) and US Airways Express (82 operations).
    Definitions for the terms ``carrier,'' ``new entrant,'' and 
``limited incumbent'' for purposes of participation in the lottery, are 
proposed as set forth in 14 CFR 93.213, and amended by Sec. 231 of AIR-
21. The FAA has applied the ``commuter affiliate'' provision in 49 
U.S.C. 41714(k) to carriers eligible for the slot lottery, both new 
entrants/limited incumbents and carriers serving small hub and nonhub 
airports, and is reflected in the previously mentioned list of carriers 
eligible to participate in the slot lottery.
    The FAA advises all carriers that it will not allocate slot times 
for any request for slot exemption times between the hours of 0700-2159 
received by the FAA Slot Administration Office prior to September 15, 
2001, for operation after that date.
    The slot exemption lottery will be conducted in accordance with the 
following procedures:
    a. Carriers will participate in a random drawing for selection 
order. Carriers will select in that order in each round. At the 
lottery, each operator must make its selection within 5 minutes after 
being called or it shall lose its turn.
    b. No carrier may select more exemption times than it was allocated 
by the FAA to operate between 0700-2159 on January 1, 2001.
    c. In the first round, only new entrants and limited incumbent 
carriers may participate. Each new entrant and limited incumbent 
carrier may select up to 4 slot exemption times, 2 arrivals and

[[Page 75771]]

2 departures. No more than one slot exemption time may be selected in 
any hour. In this round each carrier may select one slot exemption time 
in each hour without regard to whether a slot is available in that 
hour.
    d. In the second and third rounds, only carriers providing service 
to small hub and nonhub airports may participate. Each carrier may 
select up to 2 slot exemption times, one arrival and one departure in 
each round. No carrier may select more than 4 exemption slot times in 
rounds 2 and 3.
    e. Beginning with the fourth round, all eligible carriers may 
participate. Each carrier may select up to 2 of the remaining slot 
exemption times, one arrival and one departure, in each round, until a 
total of 159 slot exemption times have been selected.
    f. If the last remaining slot exemption times available do not 
permit a reasonable arrival-departure turnaround, the FAA will take 
requests for limited trades among AIR-21 operators, or may make an 
adjustment to one of the times to assure that all slot exemption time 
pairs selected, combined with other slots and slot exemptions available 
to the operator, provide for a viable operation by the selecting 
carrier. In addition, the FAA may approve the transfer of slot 
exemption times between carriers only on a temporary one-for-one basis 
for the purpose of conducting the operation in a different time period. 
Carriers must certify to the FAA that no other consideration is 
involved in the transfer.
    g. The Chief Counsel will be the final decisionmaker concerning 
eligibility of carriers to participate in the lottery.
    h. The slot exemptions reallocated by lottery will remain in effect 
until September 15, 2001.
    i. Carriers that participate and select exemption slots during the 
lottery must re-certify to the Department of Transportation in 
accordance with the procedures articulated in OST Orders 2000-4-10 and 
2000-4-11, and provide the Department and the FAA with the markets to 
be served, the number of exemption slots, the frequency, and the time 
of operation, which is consistent with AIR-21 prohibition on the sale 
or lease of exemption slots.

    Issued on November 29, 2000 in Washington, DC.
James W. Whitlow,
Deputy Chief Counsel.
[FR Doc. 00-30793 Filed 11-29-00; 4:18 pm]
BILLING CODE 4910-13-U