Pillsbury Winthrop Shaw Pittman LLP

1200 Seventeenth Street, NW | Washington, DC 20036 | tel 202.663.8000 | fax 202.663.8007

Kenneth P. Quinn
tel 202.663.8898
kenneth.quinn@pillsburylaw.com

June 19, 2015

Via Email
Warren M.S. Ernst
Dallas City Attorney
Dallas City Hall
1500 Marilla Street
Room 7DN
Dallas, Texas 75209-6622
Re:
Dallas Love Field Accommodation Process Exhaustion of PreComplaint Resolution Pursuant to 14 C.F.R. Part 16 (Part 16)
Dear Mr. Ernst:
On behalf of Delta Air Lines, Inc. (Delta), pursuant to 14 C.F.R. 16.21 and in light
of the decision of the City of Dallas (City) to file its Complaint for Declaratory
Judgment (the Complaint),1 we are confirming exhaustion of our good-faith efforts
to resolve Deltas longstanding request for accommodation at Dallas Love Field
(DAL or Airport) and notifying the City that we will be seeking legal recourse.
Since the City has failed to follow its own procedures and commitments to
accommodate Delta at the Airport, and its grant assurances set forth by the U.S.
Department of Transportation (the Department or DOT) in two letters from its
General Counsel,2 we now view the City in breach of its federal obligations, including
to prevent unjust discrimination and the grant of an exclusive right at the Airport.
The crisis and chaos the City described in the Complaint are of its own making.
The City in effect is now abdicating its airport sponsor responsibilities at this

City of Dallas v. Delta Air Lines, Inc., No. 15-02069 (June 17, 2015).
Letter from K. Thomson, DOT, to W. Ernst, City of Dallas (Dec. 17, 2014) (Attachment A); Letter
from K. Thomson, DOT, to P. Haskel, City of Dallas (June 15, 2015) (Attachment B).

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federally-funded airport, which has the highest single-airline concentration in the

country and a unique statutory cap on gates,3 despite making repeated commitments
to accommodate new entrants. In filing its Complaint, the City is attempting to
invoke the limited resources of the federal court to make ab initio decisions that the
airport sponsor, consistent with federal requirements and guidance, should have made
long ago. Having twice sought and obtained DOT application of that law to these
facts, which is entitled to judicial deference,4 the City has chosen to defy this
direction by not making a decision and attempting to pass the buck to the court.
Even as the City sat on Deltas request for accommodation for almost a year, on
January 28, 2015, the City approved a sublease of two DAL gates, which were being
abandoned by United, without any effort to recapture the gates and convert them to
common-use gates. The result of the Citys stewardship over the Airports gates is
that Southwest now controls 18 of the 20 gates at the Airport, and operates over 97%
of all of its flights, with the City refusing to act on its federal obligations while
Southwest threatens Delta with eviction. Yet, the Citys own consultants analyses
and Deltas unrebutted analyses demonstrate that ample gate space exists to
accommodate Deltas requests, as of the time it made the requests. In doing so, the
City appears to be engaging directly in anticompetitive, collusive conduct to the
detriment of the traveling public and in direct violation of its statutory and grant
assurances at this federally-funded airport.
Unless the City accommodates Delta by invoking its authority to force
accommodation under section 4.06F of the Amended and Restated Lease of Terminal
Building Premises (Use Agreement), and to prevent operational disruption and
impose changes necessary to preserve and enhance competition upon threat of
enforcement action5 under sections 14.01 and 14.02 of the Use Agreement, Delta will
file a Part 16 complaint against the City for violations of its federal obligations.
Prior to filing, however, allow us to clarify a few matters that the City omitted or
mischaracterized in its Complaint. First, as explained in detail in our prior

Wright Amendment Reform Act of 2006, Pub. L. No. 109-352, 120 Stat. 2011, 2013, 5 (Oct. 13,
2006) (lowering DALs gates from 32 to 20).

Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984); Air Transport Assn of
America, Inc. v. Dept of Transp., 613 F.3d 206, 213-14 (D.C. Cir. 2010).
5
The City has explicitly recognized that DOT has threatened enforcement action. Complaint at 11
n.5 (For example, the Second DOT letter threatens the Citys eligibility for grants that are
administered by FAA.).

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communications with the City, Delta first requested accommodation of its five daily
flights almost a year ago,6 not in September 2014 as suggested in the Complaint.
Delta has continued its service to the airport through temporary measures since its
prior sublease from American Airlines expired in October 2014.7
Second, the City in its Complaint omitted any reference to squaring the demands of
Southwest for extension of the United license on the two gates now subleased to
Southwest, with the Citys own policy on restricting subleases to direct costs plus
15%. As the City is fully aware, Southwest has now demanded that Delta vacate the
premises after July 6, 2015, unless Delta is willing to pay Southwest $30.0 million for
the privilege of continuing to use half a gate at DAL for Deltas existing five daily
flights. Delta rejected Southwests demands because they are unreasonable and
inconsistent with federal law.
The DOT made clear in its December 17, 2015 letter to the City (DOT Letter)8 that
Southwest cannot eject Delta from the airport by ramping up its schedule after the fact

See e.g. Email from M. Anastas, Delta Air Lines to M. Duebner, City of Dallas (Jun. 11, 2014);
Email from M. Anastas, Delta Air Lines to C. Meza, City of Dallas (Jun. 12, 2014); Letter from M.
Anastas, Delta Air Lines to J. Vlek, United Airlines (Jun. 13, 2014); Letter from M. Anastas, Delta
Air Lines to M. Duebner, City of Dallas (Jul. 16, 2014); Email from M. Anastas, Delta Air Lines to
M. Duebner, City of Dallas (Jul. 16, 2014); Letter from H. Shannon, Delta Air Lines to M. Duebner,
City of Dallas (Sep. 18, 2014); Letter from K. Quinn, Pillsbury to M. Duebner, City of Dallas (Oct.
2, 2014); Email from H. Shannon, Delta Air Lines to B. Montgomery, Southwest Airlines (Oct. 22,
2014); Letter from K. Quinn, Pillsbury to W. Ernst, City of Dallas (Nov. 17, 2014); Letter from K.
Quinn, Pillsbury to W. Ernst, City of Dallas (Dec. 6, 2014); Letter from K. Quinn, Pillsbury to W.
Ernst, City of Dallas (Dec. 11, 2014); Letter from K. Quinn, Pillsbury to R. Kneisley, Southwest
Airlines and T. Bolling, United Airlines (Dec. 18, 2014); Letter from K. Quinn, Pillsbury to R.
Kneisley, Southwest Airlines and T. Bolling, United Airlines (Jan. 2, 2015); Letter from K. Quinn,
Pillsbury to R. Kneisley, Southwest Airlines and T. Bolling, United Airlines (Jan. 5, 2015); Letter
from K. Quinn, Pillsbury to R. Kneisley, Southwest Airlines (Feb. 23, 2015); Letter from K. Quinn,
Pillsbury to R. Kneisley, Southwest Airlines, J. Varley, Virgin America Airlines, and T. Sieber,
Seaport Airlines (Feb 23, 2015); Letter from K. Quinn, Pillsbury to W. Ernst, City of Dallas (Feb.
23, 2015); Letter from K. Quinn, Pillsbury to M. Duebner, City of Dallas (Feb. 23, 2015).
7
See Gate Use License Agreement by and between United Airlines Inc. and Delta Air Lines, Inc.
made as of January 6, 2015; First Amendment to Facilities Use License Agreement by and between
United Airlines, Inc. and Delta Air Lines, Inc. entered into January 6, 2015.
8
Although the Complaint now suggests that the DOT letter as well as the subsequent one sent by DOT
on June 15, 2015 were not properly promulgated and alternatively are not final agency actions, Delta
reminds the City that as a condition to its consent to the sublease between United and Delta, the City
agreed to treat the DOT Letter as promulgating final and binding directives. The City cannot
have it both ways.

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Warren M.S. Ernst

June 19, 2015
Page 4

and then claiming there is no more room at the inn.9 Nor can it make exorbitant
demands as a condition of accommodation or sublease. The terms of accommodation
and sublease must reflect reasonable rates, which DOT has clarified mean the direct
leasing costs for the pro-rata share of subleased facilities, plus a reasonable
allowance for administration.10 The City itself has capped reasonable administrative
fees at 15 percent.11
Third, the Citys Complaint omits any acknowledgment that Congress repeatedly has
emphasized that nothing in the legislation repealing the Wright Amendment was
intended to relieve the City of its obligations to provide access to Love Field on
reasonable terms, and without unjust discrimination. The Wright Amendment
Reform Act of 2006 explicitly states that it should not be construed to limit the
authority of the [FAA] . . . to enforce requirements of law and grant assurances . . .
that impose obligations on Love Field to make its facilities available on a reasonable
and non-discriminatory basis to air carriers seeking to use such facilities, or to
withhold grants or deny applications to applicants violating such obligations with
respect to Love Field.12
Fourth, the Citys Complaint does not apprise the Court about its repeated
representations in its statutorily-mandated airport Competition Plan submissions, that
the City: (i) is committed to ensuring that any carrier seeking to provide service to
Love Field receives reasonable access to needed facilities,13 (ii) intends to
accommodate requests for access by applying the gate sharing provisions contained in
[Section 4.06F of] the current lease; 14 and (iii) will accommodate Delta based on

DOT Letter at 2 (attached as Exhibit A).

Id. at 3.
11
See 2009 DAL Competition Plan Update, Letter from Daniel Weber to Rodney Clark, FAA, at 7
(June 3, 2009) (The Citys current policy of limiting carriers to a 15 percent administrative fee is
still in force.).
12
Wright Amendment Reform Act of 2006, Pub. L. No. 109-352 5(e), 120 Stat. 2011, 2013 (Oct. 13,
2006).
13
DAL 2005 Competition Plan Update, Letter from Kenneth H. Gwyn to Catherine Lang, FAA, 4
(Feb. 28, 2005).
14
DAL 2009 Competition Plan Update, Letter from Daniel Weber to Rodney Clark, FAA, at 5 (June 3,
2009).
10

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the gate sharing provision of the preferential use lease.15 Depending on the Citys
next steps, it appears that these representations may prove to be false.
Fifth, the City neglected to add that in the middle of this self-made crises over gate
availability that it exercised its discretion to approve a sublease from United to
Southwest to further Southwests iron grip on DAL gates. Despite the DOT Letter
emphasizing the importance of accommodating new entrants on reasonable terms, the
City consented to a sublease of two additional gates to Southwest in January 2015 to
permit at least 20 additional Southwest daily flights, even as it sat on Deltas request
to continue its existing five daily flights. The Citys Complaint fails to note that it
had no legal obligation to consent to this transfer without making its consent
conditional on a commitment to accommodate Delta in compliance with the DOT
directive. Nor does the Complaint note that Deltas schedule could have easily been
accommodated on these two gates alone, which the Citys own analyses
demonstrated.
It is now almost a year since Deltas original request for accommodation, and just 15
days prior to expiration of Deltas temporary licenses with United on July 6, 2015
one of the busiest travel times of the year. Yet, Delta still is waiting for the promised
accommodation. Thousands of passengers will be inconvenienced if Deltas service at
Love Field is disrupted on July 7.
Under these circumstances, we expect the City to stand by its prior assurances that it
will support Deltas existing flights, absent a court decision to the contrary. In
addition, we unfortunately agree with the City16 that unless the City forces
accommodation immediately or issues another order similar in kind to the interim
order it issued on December 24, 2014 (continuing Deltas sublease on the same terms
until resolution), emergency injunctive relief will be needed to avoid chaos and
passenger disruption, to preserve the status quo of Deltas limited five daily flights,

15

Id. (emphasis added).

City of Dallas v. Delta Air Lines, Inc., No. 15-02069 (June 17, 2015) at 104 (The City is not likely
to need to take a position in that dispute other than to urge that a preliminary injunction will be
necessary to preserve the status quo and prevent chaos at Love Field in the public interest during the
busy summer travel season.). Id at 105 (As July 6, 2015, approaches, if Southwest and Delta have
still not reached voluntary agreement, even if only a temporary further gate use extension, and the
Court has not issued a preliminary injunction, the City likely will seek a temporary restraining order to
preserve the status quo in order to prevent chaos at Love Field when Deltas current gate use
arrangement with Southwest expires on that date.).
16

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until such time as the rights and obligations of all affected parties are determined in
the proper legal forum.
Sincerely,

Kenneth P. Quinn
Partner
cc:

Peter Haskel, City of Dallas

The Honorable Kathryn Thomson, General Counsel, USDOT
Todd Homan, USDOT
Paul Geier, USDOT
Cindy Baraban, USDOT
Peter Kirsch, Kirsch Kaplan
Roy Goldberg, Steptoe Johnson
Richard B. Hirst, Delta Air Lines, Inc.
Thomas Newton Bolling, United Airlines, Inc.
Timothy Sieber, SeaPort Airlines, Inc.
John Varley, Virgin America Airlines
Mark Shaw, Southwest Airlines Co.
Howard Kass, American Airlines, Inc.

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U.S. Department of
Transportation

GENERAL COUNSEL

1200 New Jersey A venue, SE

Washington, DC 20590

Office of the Secretary

of Tran sportation

December 17, 2014

SENT VIA ELECTRONIC MAIL

Mr. Warren M.S. Ernst
Dallas City Hall
1500 Marilla Street
Room 7DN
Dallas, Texas 75201-6622
(214) 670-3519
warren.ernst@dallascityhall.com

Dear Mr. Ernst,

This letter references our telephone conversations on December 8 and 11 , 2014,
regarding Delta Air Lines, Inc. ' s request for long-term accommodation of its five daily
departures at Dallas Love Field (DAL) and the policy ofthe City of Dallas regarding
reasonable air carrier access.
We appreciate your understanding of the City' s legal obligations under Federal
law to reasonably accommodate all air carriers seeking to provide service at the airport,
including the Competition Plan statute (49 U.S.C. 47107(k)) and the obligations of the
grant assurances accepted in connection with Airport Improvement Program grants to
take all reasonable efforts to accommodate air carriers seeking to serve DAL. We are
pleased that you are taking an active role in assisting requesting carriers in obtaining gate
space at your airport such as by formalizing the process in your use and lease agreements
to monitor gate utilization and availability and by contacting the signatory carriers at the
airport to encourage voluntary accommodation.
In connection with the Secretary of Transportation' s responsibility to ensure the
successful implementation of competition plans under 49 U.S.C. 47107(k), you have
asked us for our views regarding competition plan requirements for addressing
accommodation requests at DAL, including the length of accommodation for
accommodated carriers and other related issues. We are providing this guidance in light
of the unique circumstance at DAL, including the constrained nature of the airport and
other restrictions of the Five Party Agreement and Wright Amendment Reform Act of

2006 (Pub. L. No. 109-352). We are also enclosing a compendium of airport

competition plan requirements and actions various airports have taken to facilitate entry
and enhance competitive access. The compendium table focuses on airports that have
developed pro-competitive tools to accommodate requesting carriers in conformity with
the competition plan requirements. Our 1999 task study entitled Airport Business
Practices and Their Impact on Airline Competition may also be helpful to you and is
available online at http://ntl.bts.gov/lib/1 700011 71 0011 7129/PB2000 I 0830l.pdf.
As we discussed, ensuring that Federally-assisted airports make reasonable
accommodations for requesting carriers, whether new entrants or other carriers seeking
expansion, and maximize the utilization of their existing resources, especially at gateconstrained airports like DAL, are important objectives for the Department of
Transportation (DOT). We recognize your efforts to develop a baseline chart for
determining gate availability, as well as your efforts to enforce Section 4.06(F) of the Use
and Lease Agreement requiring the signatory carriers to provide monthly gate utilization
reports. Knowing when and where gate space is available at any given time is critical to
the City's ability to provide timely and responsive assistance to requesting carriers. 1
Maintaining an accurate, up-to-date gate utilization report will be critical for the City's
ongoing obligation to ensure reasonable access for accommodated and requesting
carriers. Our competition plan policy requires airport proprietors to assist requesting
carriers seeking access, and we expect that, if a requesting carrier is unable to arrange a
voluntary accommodation with a signatory carrier, the City will accommodate the
requesting carrier to the extent possible given the current gate usage, without impacting
current or already-announced, for-sale services by the signatory carriers.
With respect to the length of the accommodation, for the accommodation to be
meaningful at DAL, it is our position that, once accommodated, the accommodated
carrier is entitled to an ongoing similar pattern of service as long as the carrier continues
to operate the accommodated flights. Importantly, the accommodated carrier should not
be pushed out by incumbent carriers at a later date. It is the City's responsibility to
continue the accommodation and ensure that space is available so that the requesting
carrier is able to maintain its pattern of service on an ongoing basis, based on the
available space on the snapshot date of the original accommodation request, even after
the expiration or termination of any agreement between the accommodated carrier and
.
.
2
signatory camers.

We have also discussed that accommodation requests should be resolved on a first-come, first-served
basis. In the future, if the verified gate utilization report at DAL shows there is less space available than
has been requested, the City must offer the space that is available to the requesting carrier. Moreover, due
to the gate constraints at DAL under Federal law and the Five Party Agreement, if future reports show that
no space is available at DAL, and the requesting carriers, signatory carriers, and the City have fully applied
all of the accommodation procedures provided in the Use and Lease Agreement, the City may deny the
request for accommodation. The City would then be required to submit a competitive access report under
49 U .S.C. 471 07(s) to explain the reasons for the denial of access.
2
If the accommodated carrier seeks to change its pattern of service, such as increasing service or requesting
times that are not within a reasonable window of the times at which it was originally accommodated, such
requested changes would constitute a new request for accommodation.

The City must also ensure that the accommodation is at reasonable rates. 3 Our
competition plan policy provides that subleasing rates covering the signatory carrier's
direct leasing costs for the pro-rata share of subleased facilities, plus a reasonable
allowance for administration, are reasonable. Many airport proprietors impose a ceiling
on such an allowance and our policy is that, in any event, the allowance may not exceed
25%. Our competition plan policy also requires that airports oversee these administrative
fees. Keeping these concepts in mind, it is within the City's discretion to assess the
reasonableness of voluntary accommodation requests.
We hope this is helpful to you. We will continue to monitor this process and ask
that you provide us periodic reports on the status of the accommodation of requesting
carriers at DAL. If you have any questions, please feel free to call me.
Sincerely yours,

i~ b.

1~.,_.

_,~

Kathryn B. Thomson

See 49 U.S.C. 471 07(a)(l ); FAA Grant Assurance 22, available at

http://www.faa .gov/airports/aip/grant_assurances/media!airport-sponsor-assurances-aip.pdf.