United States v. Alaska Air Group, Inc., et al.; Proposed Final Judgment and Competitive Impact Statement, 89979-89991 [2016-29883]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 81, Number 239 (Tuesday, December 13, 2016)]
[Notices]
[Pages 89979-89991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29883]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Alaska Air Group, Inc., et al.; Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia in United 
States of America v. Alaska Air Group, Inc., et al., Civil Action No. 
1:16-cv-02377. On December 6, 2016, the United States filed a Complaint 
alleging that Alaska Air Group's proposed acquisition of Virgin America 
Inc. would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The 
proposed Final Judgment, filed at the same time as the Complaint, 
requires Alaska to reduce the scope of its codeshare agreement with 
American Airlines and obtain Antitrust Division approval before selling 
certain assets.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's Web site at https://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of the copying fee set by Department 
of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's Web site, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be directed to Kathleen S. 
O'Neill, Chief, Transportation, Energy, and Agriculture Section, 
Antitrust Division, Department of Justice, 450 Fifth Street NW., Suite 
8000, Washington, DC 20530 (telephone: 202-307-2931).

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the District of Columbia

    United States of America, Department of Justice, Antitrust 
Division, 450 Fifth Street NW., Suite 8000, Washington, DC 20530, 
Plaintiff, v. Alaska Air Group, Inc., 19300 International Boulevard, 
Seattle, WA 98188, and Virgin America Inc., 555 Airport Boulevard, 
Burlingame, CA 94010, Defendants.

Case No.: 1:16-cv-02377.
Judge: Reggie B. Walton.
Filed: 12/06/2016.

Complaint

    The United States of America (``Plaintiff''), acting under the 
direction of the Attorney General of the United States, brings this 
civil antitrust action to enjoin the proposed merger of Defendants 
Alaska Air Group, Inc. (``Alaska'') and Virgin America Inc. 
(``Virgin''), and to obtain equitable and other relief as appropriate. 
The United States alleges as follows:

I. Introduction

    1. The airline industry in the United States is dominated by four 
large airlines--American Airlines, Delta Air Lines, United Airlines, 
and Southwest Airlines--that collectively account for over 80% of 
domestic air travel each year. In this highly-concentrated industry, 
the smaller airlines play a critical competitive role. In order to 
compete with the four largest airlines, these smaller airlines often 
must offer consumers lower fares, additional flight options, and 
innovative services. The proposed merger of Alaska and Virgin would 
bring together two of these smaller airlines--the sixth- and ninth-
largest U.S. carriers, respectively--to create the fifth-largest U.S. 
airline.
    2. Alaska and Virgin both provide award-winning service and tend to 
offer lower prices than the larger airlines, but they differ in at 
least one critical respect. Unlike Virgin, Alaska has closely aligned 
itself with American, the largest U.S. airline, through a commercial 
relationship known as a codeshare agreement, which allows each airline 
to market tickets for certain flights on the other's network. The 
codeshare agreement began in 1999 as a limited arrangement that 
permitted Alaska to market American's flights on a small number of 
routes Alaska did not serve on its own. Over the years, the two 
airlines have significantly expanded their relationship in size and 
scope through a series of amendments to the codeshare agreement. The 
most recent of these amendments was executed in April 2016--around the 
same time Alaska agreed to purchase Virgin.
    3. Although the codeshare agreement effectively extends Alaska's 
geographic reach--potentially strengthening Alaska's ability to compete 
against other carriers like Delta and United--it also creates an 
incentive for Alaska to cooperate rather than compete with its larger 
partner, American. Specifically, Alaska may choose not to launch new 
service on routes served by American, or it may opt to compete less 
aggressively on the routes that both carriers serve, to avoid upsetting 
American and jeopardizing the partnership. Alaska may also decide to 
rely on the codeshare relationship in lieu of entering routes already 
served by American because doing so allows it to offer its customers 
the benefits of an expanded network without undertaking the risk and 
expense of offering its own competing service. As a result of these 
incentives, Alaska and American often behave more like partners than 
competitors.
    4. Alaska's acquisition of Virgin would significantly increase 
Alaska's network overlaps with American, and would thus dramatically 
increase the circumstances where the incentives created by the 
codeshare threaten to soften head-to-head competition. Roughly two-
thirds of Virgin's network overlaps with American's network, and Virgin 
has aggressively competed with American on many of these overlap routes 
in ways that have forced American to respond with lower fares and 
better service.
    5. The proposed acquisition would diminish Virgin's competitive 
impact on the Virgin-American overlap routes by subjecting Virgin's 
network to the incentives that arise from Alaska's codeshare agreement 
with American. Virgin holds critical assets, including gates and 
takeoff and landing rights (known as ``slots''), at key airports within 
American's network. American divested some of these assets to Virgin as 
part of the settlement of the United

[[Page 89980]]

States's antitrust challenge to American's 2013 merger with US Airways. 
Once Alaska controls the Virgin assets, it likely will redeploy them in 
ways that accommodate rather than challenge American in order to 
preserve its codeshare agreement. To avoid competing head-to-head with 
its codeshare partner, Alaska will likely reduce service, decrease 
service quality, and/or raise prices on the Virgin-American overlap 
routes--or exit them entirely. Alaska will also be less likely to enter 
new routes in competition with American than Virgin is today. These 
harms will be heightened if Alaska continues to deepen its cooperation 
with American, which would have the effect of tying the nation's first- 
and fifth-largest airlines even more closely together.
    6. Alaska's internal planning documents demonstrate how the 
incentives created by the codeshare agreement would likely reduce 
competition on the routes where American and Virgin compete today. In 
analyzing the proposed merger, Alaska executives reported to the 
company's board of directors that certain Virgin operations ``would not 
have [the] support of the American partnership.'' Accordingly, early 
during the consideration process, Alaska executives developed a plan 
that called for changes ``that we think would need to be made'' to 
Virgin's service following the merger. The plan contemplated reducing 
or eliminating service on many of the routes where Virgin and American 
offer competing service today, including some of the most traveled 
routes in the country.
    7. For these and the reasons discussed below, the proposed merger 
between Alaska and Virgin likely would lessen competition substantially 
in numerous U.S. markets for scheduled air passenger service in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18, and should be 
permanently enjoined.

II. Jurisdiction, Interstate Commerce, and Venue

    8. The United States brings this action pursuant to Section 15 of 
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain 
Alaska and Virgin from violating Section 7 of the Clayton Act, 15 
U.S.C. 18. This Court has subject matter jurisdiction over this action 
under Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 
1337(a), and 1345.
    9. Defendants are engaged in, and their activities substantially 
affect, interstate commerce, and commerce throughout the United States. 
Alaska and Virgin each annually transport millions of passengers across 
state lines throughout this country, generating billions of dollars in 
revenue.
    10. Venue is proper under Section 12 of the Clayton Act, 15 U.S.C. 
22, and 28 U.S.C. 1391(b) and (c). This Court also has personal 
jurisdiction over each Defendant. Both Defendants are found and 
transact business, and have consented to venue and personal 
jurisdiction, in this District.

III. The Defendants and the Transaction

    11. Defendant Alaska Air Group, Inc. is a Delaware corporation 
headquartered in Seattle, Washington. Last year, Alaska flew over 31 
million passengers to approximately 112 locations worldwide, taking in 
more than $5.5 billion in revenue.
    12. Alaska operates hubs in Seattle, Washington; Portland, Oregon; 
and Anchorage, Alaska, and has the largest share of traffic at each of 
these hubs. Alaska has maintained its status as the market share leader 
throughout the Pacific Northwest, which has helped Alaska achieve 
higher profit margins than most other domestic airlines for the past 
several years.
    13. Defendant Virgin America Inc. is a Delaware corporation 
headquartered in Burlingame, California. Last year, Virgin America flew 
over 7 million passengers to approximately 24 locations worldwide, 
taking in more than $1.5 billion in revenue. Virgin America is one of 
several entities bearing the ``Virgin'' name pursuant to a licensing 
agreement with the Virgin Group, which owns approximately 18% of Virgin 
America's outstanding voting common stock.
    14. Virgin America was founded in 2004. Unlike Alaska, Virgin does 
not have a hub-and-spoke network. Although Virgin has ``focus 
cities''--Los Angeles, San Francisco, and Dallas--from which it 
provides service to many destinations, Virgin does not use these focus 
cities as points for transferring large volumes of connecting traffic. 
Instead, the bulk of Virgin's passengers fly on nonstop flights in 
markets where Virgin is typically not the dominant carrier.
    15. On April 1, 2016, Alaska and Virgin agreed to merge for $2.6 
billion in cash and the assumption of $1.4 billion in liabilities.

IV. Competition Between American, Alaska, and Virgin Today

A. The Formation and Expansion of the Codeshare Relationship Between 
American and Alaska

    16. Although codeshare agreements can take various forms, they 
generally allow for flights operated by one airline to be marketed and 
sold by another airline under the marketing airline's own brand. A 
codeshare agreement can extend an airline's network by enabling 
passengers to seamlessly book a connecting itinerary consisting of 
flights operated by different airlines. For example, a passenger 
seeking to fly from Walla Walla, Washington to Charlotte, North 
Carolina could purchase tickets for the entire trip through Alaska, 
using an Alaska flight from Walla Walla to Seattle that connects to an 
American flight from Seattle to Charlotte. This arrangement allows 
Alaska to rely on the codeshare agreement with American to offer 
service to Charlotte, instead of having to launch its own competing 
service between Seattle and Charlotte in order to serve the customer.
    17. The codesharing partnership between Alaska and American began 
in 1999. The initial scope of the agreement was very limited: It 
allowed Alaska to market American's flights on only 88 routes where 
Alaska did not otherwise provide service, and did not permit American 
to market any Alaska flights. Since 1999, however, Alaska and American 
have repeatedly expanded their codeshare arrangement, enabling American 
to also market certain Alaska flights and increasing the number of 
flights each partner may sell on behalf of the other.
    18. American and Alaska most recently expanded the codeshare 
agreement in April 2016, around the same time that Alaska was 
concluding its agreement to acquire Virgin. In agreeing to the 
amendment, Alaska chose to continue to expand its partnership with 
American even though it planned to grow its own network by acquiring 
Virgin. This April 2016 expansion further increased the number of 
routes included in the agreement, allowing Alaska to market American 
flights on over 250 routes, and American to market Alaska flights on 
about 80 routes.
    19. The April 2016 expansion of the codeshare agreement also 
enabled American and Alaska to sell one another's flights on certain 
overlap routes where both companies offer competing nonstop service. 
Under this new arrangement, instead of strictly competing against one 
another to sell tickets between, for example, Seattle and Los Angeles, 
American and Alaska began selling each other's tickets for these routes 
as well. This type of codesharing on nonstop overlap routes, by 
definition, does not expand either airline's network. Instead, it 
provides them the opportunity to closely coordinate their service 
offerings on a

[[Page 89981]]

route where they would otherwise be competing at arm's length for 
business. Such close contact between competing airlines on routes they 
both serve can diminish competition and facilitate collusion.

B. The Codeshare Relationship Incentivizes Alaska To Cooperate Rather 
Than Compete With American

    20. Today, Alaska is stronger than American in the Pacific 
Northwest, where American is comparatively weak, whereas American is 
stronger than Alaska throughout the rest of the United States. Through 
the codeshare agreement, Alaska offers its customers flights to more 
destinations, which helps Alaska retain the loyalty of frequent fliers 
who prefer to use one airline but want the ability to travel to 
domestic cities that Alaska does not serve independently. American 
derives similar benefits from the codeshare agreement--loyal American 
customers are provided greater ability to travel throughout the Pacific 
Northwest using Alaska's network.
    21. Although the codeshare agreement provides both carriers 
commercial benefits by linking the Alaska and American networks, the 
agreement also makes Alaska dependent on American in a way that 
discourages competition between the two airlines. Specifically, 
American has significant leverage over Alaska because Alaska derives 
considerable value from using the American network to provide service 
throughout many areas of the United States it does not otherwise serve, 
while American relies on Alaska to provide access to far fewer 
destinations. To avoid undermining this lucrative partnership, Alaska 
may forego launching new service on routes served by American, or it 
may opt to compete less aggressively on the routes they both serve.
    22. In addition, Alaska may choose to rely on the codeshare 
agreement in lieu of entering some routes already served by American 
because doing so allows it to offer its customers the benefits of an 
expanded network without undertaking the risk and expense of commencing 
its own competing service. By relying on an American flight to provide 
its customers service, Alaska can boast a more extensive network 
without actually launching service in competition with American. In 
essence, by choosing to rely on the codeshare agreement, Alaska is 
forgoing entry that would likely provide lower prices and more flight 
options to consumers.
    23. The incentives created by the codeshare agreement are 
illustrated by the five-year growth plan that Alaska prepared prior to 
agreeing to acquire Virgin. The plan envisioned further cooperation 
between Alaska and American, calling for Alaska to ``strengthen the 
[American] partnership by trying to grow LA in a way that is 
complimentary [sic] to AA rather than competitive.'' But competitors 
are supposed to compete with, not complement, each other. Alaska would 
likely continue this strategy of avoiding growth that challenges 
American if it were to complete the merger. When Alaska was weighing 
whether to acquire Virgin, for example, a senior Alaska executive 
recognized that ``LAX . . . expansion may be counterproductive to our 
relationship with AA.''

C. Unhindered by a Codeshare Relationship, Virgin Competes Aggressively 
With American

    24. In contrast to Alaska, Virgin has served as one of American's 
fiercest competitors. Virgin competes directly with American on twenty 
nonstop routes, which constitute approximately two-thirds of Virgin's 
entire network. In total, passengers spend about $8 billion per year to 
travel on these routes.
    25. Virgin and American vigorously compete on so many nonstop 
routes in part because Virgin controls critical assets in cities where 
American maintains a hub. These assets include gates and/or takeoff and 
landing rights at airports such as Los Angeles International Airport, 
Washington Reagan National Airport, and Dallas Love Field. Virgin's 
presence at these important airports provides a critical alternative 
for consumers and helps keep American's prices lower than they 
otherwise would be.
    26. Virgin's ownership of these assets and aggressive competition 
with American is no coincidence--consumers were promised the benefits 
of expanded Virgin service to counteract the anticompetitive effects 
threatened by the 2013 merger between American and US Airways. To 
resolve the United States's challenge to that merger, American agreed 
to divest a host of critical assets to low-cost competitors, including 
Virgin, at key U.S. airports. As contemplated by the settlement, Virgin 
has used the assets to compete directly with American. For instance, 
Virgin has utilized the two airport gates it acquired at Dallas Love 
Field to launch aggressive new service against American, forcing 
American to respond with lower prices. Virgin has estimated that its 
entry at Love Field caused American to lower certain fares on flights 
out of Dallas by more than 50%.

V. The Relevant Markets

    27. Scheduled air passenger service enables consumers to travel 
quickly and efficiently between various cities in the United States. 
Air travel offers passengers significant time savings and convenience 
over other forms of travel. For example, a flight from Washington, DC 
to Detroit takes just over an hour of flight time. Driving between the 
two cities takes at least eight hours. A train between the two cities 
takes more than fifteen hours.
    28. Due to time savings and convenience afforded by scheduled air 
passenger service, few passengers would substitute other modes of 
transportation (car, bus, or train) for scheduled air passenger service 
in response to a small but significant industry-wide fare increase. 
Another way to say this, as described in the Department of Justice and 
Federal Trade Commission's Horizontal Merger Guidelines (2010), and 
endorsed by courts in this Circuit, is that a hypothetical monopolist 
of all scheduled air passenger service likely would increase its prices 
by at least a small but significant and non-transitory amount. 
Scheduled air passenger service, therefore, constitutes a line of 
commerce and a relevant product market within the meaning of Section 7 
of the Clayton Act.
    29. Moreover, most passengers book flights with their origins and 
destinations predetermined. Few passengers who wish to fly from one 
city to another would switch to flights between other cities in 
response to a small but significant and non-transitory fare increase. A 
hypothetical monopolist of all scheduled air passenger service on any 
particular route between two destinations likely would be able to 
profitably increase its prices by at least a small but significant and 
non-transitory amount. Accordingly, scheduled air passenger service 
between each origin and destination pair constitutes a line of commerce 
and section of the country under Section 7 of the Clayton Act.
    30. Scheduled air passenger service on those twenty routes on which 
Virgin and American compete today, and the routes on which they would 
have likely competed in the future, are relevant markets within the 
meaning of Section 7 of the Clayton Act.

VI. The Transaction's Likely Anticompetitive Effects

A. The Merger Is Likely To Lessen Competition on the Routes Where 
Virgin and American Compete Today

    31. Alaska's acquisition of Virgin's network will extend the 
incentives

[[Page 89982]]

created by the codeshare agreement to the extensive overlaps between 
Virgin and American, and will therefore reduce the vigorous competition 
that Virgin is presently providing against American on some of the 
nation's largest nonstop routes. Specifically, the merger is likely to 
substantially lessen competition on each of the twenty nonstop routes 
on which Virgin and American currently compete because Alaska will have 
an incentive to avoid aggressive head-to-head competition in order to 
preserve its codeshare relationship with American. Once Alaska has 
control of Virgin, it is likely to reduce capacity, decrease service 
quality, and/or raise prices on these routes. In some cases, Alaska may 
completely stop serving the routes with its own flights, instead simply 
marketing American's flights between the destinations, thereby 
eliminating a meaningful competitive choice for millions of consumers.
    32. Alaska itself has recognized that its acquisition of Virgin's 
assets will likely reduce competition on the Virgin-American overlap 
routes. As part of Alaska's early analysis of a possible acquisition of 
Virgin, Alaska executives developed a plan for post-merger changes to 
Virgin's service that specifically called for reducing--and in some 
instances completely eliminating--service on many of the routes where 
Virgin and American compete today, including routes that are among the 
most heavily traveled in the country. If carried out, these service 
reductions would not only cost consumers tens of millions of dollars 
each year, they would deprive consumers of some of the competitive 
benefits enabled by the American-US Airways merger settlement.

B. The Merged Firm Will Be Less Likely To Enter Into New Competition 
With American Than Virgin Would Be Standing Alone

    33. Alaska's acquisition of Virgin will also lessen competition 
because Alaska is likely to enter fewer new routes in competition with 
American post-merger than Virgin would if Virgin remained a standalone 
airline. Alaska may avoid entering a route in competition with American 
for two reasons related to the codeshare: (1) It will fear endangering 
its lucrative relationship with American, and (2) it can already offer 
tickets on the route through the codeshare agreement. Virgin has no 
such inhibitions. In fact, Virgin's standalone growth plan called for 
the airline to enter several nonstop routes currently served by 
American but not Alaska. Alaska presently relies on its codeshare 
relationship with American to serve some of these routes, as well as 
others that may have been served by an independent Virgin in the 
future. Post-merger, Virgin's independent decision-making will be lost, 
and Alaska may avoid entering these types of routes. As a result, 
consumers will be deprived of the benefits of the future competition 
that Virgin would have provided.

VII. Absence of Countervailing Factors

    34. New entry, or expansion by existing competitors, is unlikely to 
prevent or remedy the merger's likely anticompetitive effects. New 
entrants into a particular market face significant barriers to success, 
including difficulty in obtaining access to slots and gate facilities; 
the effects of corporate discount programs offered by dominant 
incumbents; loyalty to existing frequent flyer programs; an unknown 
brand; and the risk of aggressive responses to new entry by the 
dominant incumbent carrier. In addition, entry is highly unlikely on 
routes where the origin or destination airport is another airline's 
hub, because the new entrant would face substantial challenges 
attracting sufficient local passengers to support service.
    35. Defendants cannot demonstrate acquisition-specific and 
cognizable efficiencies that would offset the proposed acquisition's 
likely anticompetitive effects.

VIII. Violation Alleged

    36. The United States hereby incorporates the allegations of 
paragraphs 1 through 35 above as if set forth fully herein.
    37. The effect of the proposed merger, if approved, likely will be 
to lessen competition substantially, or tend to create a monopoly, in 
interstate trade and commerce in the numerous U.S. markets for 
scheduled air passenger service identified above, in violation of 
Section 7 of the Clayton Act, 15 U.S.C. 18.
    38. Unless enjoined, the proposed merger likely would have the 
following effects in the relevant markets, among others:
    (a) Actual and potential competition in the relevant markets would 
be eliminated, including competition between Virgin and American;
    (b) ticket prices and other fees would be higher than they 
otherwise would;
    (c) industry capacity would be lower than it otherwise would; and
    (d) service quality would be lessened.

IX. Request for Relief

    39. Plaintiff requests:
    (a) That Alaska's proposed merger with Virgin be adjudged to 
violate Section 7 of the Clayton Act, 15 U.S.C. 18;
    (b) that Defendants be permanently enjoined from and restrained 
from carrying out the planned merger of Alaska and Virgin or any other 
transaction that would combine the two companies;
    (c) that Plaintiff be awarded its costs of this action; and
    (d) that Plaintiff be awarded such other relief as the Court may 
deem just and proper.

Dated: December 6, 2016

Respectfully submitted,

FOR PLAINTIFF UNITED STATES:

_____/s/_____
RENATA B. HESSE (D.C. Bar #466107)
Acting Assistant Attorney General

_____/s/_____
JUAN A. ARTEAGA
Deputy Assistant Attorney General

_____/s/_____
JONATHAN SALLET
Deputy Assistant Attorney General

_____/s/_____
PATRICIA A. BRINK
Director of Civil Enforcement

_____/s/_____
KATHLEEN S. O'NEILL
Chief
Transportation, Energy & Agriculture Section

_____/s/_____
ROBERT A. LEPORE
Assistant Chief
Transportation, Energy & Agriculture Section

_____/s/_____
KATHERINE CELESTE *
Attorney
Antitrust Division
U.S. Department of Justice
450 Fifth Street N.W., Suite 8000
Washington, DC 20530
Telephone: (202) 532-4713
Facsimile: (202) 307-2784
Email: Katherine.Celeste@usdoj.gov

MICHELE B. CANO
J. RICHARD DOIDGE
BRIAN E. HANNA
RACHELLE R. KETCHUM
AMANDA D. KLOVERS
CHRISTOPHER M. WILSON
Attorneys for the United States

* Attorney of Record

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Alaska Air Group, Inc. 
and Virgin America Inc., Defendants.

Case No.: 1:16-cv-02377.
Judge: Reggie B. Walton.
Filed: 12/06/2016.

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant to 
Section

[[Page 89983]]

2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On April 4, 2016, Alaska Air Group, Inc. (``Alaska''), the sixth-
largest domestic airline, agreed to acquire Virgin America, Inc. 
(``Virgin''), the ninth-largest domestic airline, for $2.6 billion in 
cash and the assumption of $1.4 billion in liabilities.
    The airline industry in the United States is dominated by four 
large airlines--American Airlines, Delta Air Lines, United Airlines, 
and Southwest Airlines--that collectively account for over 80% of 
domestic air travel each year. In this highly-concentrated industry, 
the smaller airlines play a critical competitive role. In order to 
compete with the four largest airlines, these smaller airlines often 
must offer consumers lower fares, additional flight options, and 
innovative services.
    Although Alaska would become only the fifth-largest domestic 
airline as a result of the proposed merger, its extensive codeshare 
agreement with the largest domestic airline, American, threatens to 
blunt important competition supplied by Virgin today. A codeshare 
agreement is a commercial relationship that allows each airline to 
market tickets for certain flights on the other's network. Although the 
codeshare agreement effectively extends Alaska's geographic reach--
potentially strengthening Alaska's ability to compete against other 
carriers like Delta and United--it also creates an incentive for Alaska 
to cooperate rather than compete with American.
    Alaska's acquisition of Virgin would significantly increase 
Alaska's network overlaps with American, and would thus dramatically 
increase the circumstances where the incentives created by the 
codeshare threaten to soften head-to-head competition. Roughly two-
thirds of Virgin's network overlaps with American's network, and Virgin 
has aggressively competed with American on many of these overlap routes 
in ways that have forced American to respond with lower fares and 
better service. Unless the codeshare is substantially modified, the 
proposed merger would diminish the important competition Virgin has 
provided on these routes.
    On December 6, 2016, the United States filed a civil antitrust 
Complaint seeking to enjoin the proposed acquisition. The Complaint 
alleges that Defendants' proposed merger would likely lessen 
competition substantially for scheduled air passenger service in 
numerous markets throughout the United States in violation of Section 7 
of the Clayton Act, 15 U.S.C. 18. Specifically, the Complaint alleges 
that following the merger, Alaska, as a result of its extensive 
codesharing relationship with American, would likely exit or compete 
less aggressively on routes where Virgin and American compete today, 
and would be less likely to enter new routes in competition with 
American in the future than Virgin would be standing alone.
    At the same time the Complaint was filed, the United States filed a 
Stipulation and Order and proposed Final Judgment, which are designed 
to eliminate the likely anticompetitive effects of the acquisition. 
Under the proposed Final Judgment, which is explained more fully below, 
Alaska would be obligated to substantially reduce the scope of its 
codeshare agreement with American in order to enhance Alaska's 
incentive to compete with American after the merger.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Transaction

    Defendant Alaska Air Group, Inc. is a Delaware corporation 
headquartered in Seattle, Washington. Last year, Alaska flew over 31 
million passengers to approximately 112 locations worldwide, taking in 
more than $5.5 billion in revenue. Alaska operates hubs in Seattle, 
Washington; Portland, Oregon; and Anchorage, Alaska, and has the 
largest share of traffic at each of these hubs.
    Defendant Virgin America Inc. is a Delaware corporation 
headquartered in Burlingame, California. Last year, Virgin America flew 
over 7 million passengers to approximately 24 locations worldwide, 
taking in more than $1.5 billion in revenue. Virgin America is one of 
several entities bearing the ``Virgin'' name pursuant to a licensing 
agreement with the Virgin Group, which owns approximately 18% of Virgin 
America's outstanding voting common stock.
    Virgin America was founded in 2004. Unlike Alaska, Virgin does not 
have a hub-and-spoke network. Although Virgin has ``focus cities''--Los 
Angeles, San Francisco, and Dallas--from which it provides service to 
many destinations, Virgin does not use these focus cities as points for 
transferring large volumes of connecting traffic. Instead, the bulk of 
Virgin's passengers fly on nonstop flights in markets where Virgin is 
typically not the dominant carrier.
    On April 1, 2016, Alaska and Virgin agreed to merge for $2.6 
billion in cash and the assumption of $1.4 billion in liabilities.

B. Alaska's Codeshare Agreement With American

    Although codeshare agreements can take various forms, they 
generally allow for flights operated by one airline to be marketed and 
sold by another airline under the marketing airline's own brand. A 
codeshare agreement can extend an airline's network by enabling 
passengers to seamlessly book a connecting itinerary consisting of 
flights operated by different airlines. For example, a passenger 
seeking to fly from Walla Walla, Washington to Charlotte, North 
Carolina could purchase tickets for the entire trip through Alaska, 
using an Alaska flight from Walla Walla to Seattle that connects to an 
American flight from Seattle to Charlotte. This arrangement allows 
Alaska to rely on the codeshare agreement with American to offer 
service to Charlotte, instead of having to launch its own competing 
service between Seattle and Charlotte in order to serve the customer.
    The codesharing partnership between Alaska and American began in 
1999. The initial scope of the parties' codeshare agreement was very 
limited: it allowed Alaska to market American's flights on only 88 
routes where Alaska did not otherwise provide service, and did not 
permit American to market any Alaska flights. Since 1999, however, 
Alaska and American have repeatedly expanded their codeshare 
arrangement, enabling American to also market certain Alaska flights 
and steadily increasing the number of flights each partner may sell on 
behalf of the other. American and Alaska most recently expanded the 
codeshare agreement in April 2016. As a result of the most recent 
expansion, Alaska is able to market American flights on over 250 
routes, and American is able to market Alaska flights on about 80 
routes. The April 2016 expansion also enabled American and Alaska to 
sell one another's flights on certain overlap routes where both 
companies offer competing nonstop service.

[[Page 89984]]

C. Virgin's Aggressive Competition With American

    Virgin has served as one of American's fiercest competitors. Virgin 
competes directly with American on twenty nonstop routes, which 
constitute approximately two-thirds of Virgin's entire network. These 
twenty routes represent about $8 billion in commerce annually.
    Virgin and American vigorously compete on numerous nonstop routes 
in part because Virgin controls critical assets in cities where 
American maintains a hub. These assets include gates and/or takeoff and 
landing rights at airports including Washington Reagan National 
Airport, Dallas Love Field, and Los Angeles International Airport. 
Virgin's presence in these markets provides a critical alternative for 
consumers and helps keep American's prices lower than they otherwise 
would be.
    Virgin's ownership of many of these assets and aggressive 
competition with American is no coincidence--consumers were promised 
the benefits of expanded Virgin service to counteract the 
anticompetitive effects threatened by the 2013 merger between American 
and US Airways. To resolve the United States's challenge to that 
merger, American agreed to divest a host of critical assets at key 
airports where the two firms had a significant presence to low-cost 
competitors, including Virgin. See Final Judgment, United States v. US 
Airways Group, Inc., Case No. 1:13-cv-01236 (CKK) (Dkt. No. 170) 
(D.D.C. Apr. 25, 2014). As contemplated by the settlement, Virgin has 
used the assets to compete directly with American. For instance, Virgin 
has utilized the two airport gates it acquired at Dallas Love Field to 
launch aggressive new service against American, forcing American to 
respond with lower prices. Virgin has estimated that its entry at Love 
Field caused American to lower certain fares on flights out of Dallas 
by more than 50%.

D. The Transaction's Likely Anticompetitive Effects

1. Relevant Markets
    As alleged in the Complaint, scheduled air passenger service 
enables consumers to travel quickly and efficiently between various 
cities in the United States. Air travel offers passengers significant 
time savings and convenience over other forms of travel. For example, a 
flight from Washington, DC to Detroit takes just over an hour of flight 
time. Driving between the two cities takes at least eight hours. A 
train between the two cities takes more than fifteen hours.
    Due to time savings and convenience afforded by scheduled air 
passenger service, few passengers would substitute other modes of 
transportation (car, bus, or train) for scheduled air passenger service 
in response to a small but significant industry-wide fare increase. 
Another way to say this, as described in the Department of Justice and 
Federal Trade Commission's Horizontal Merger Guidelines (2010), and 
endorsed by courts in this Circuit, is that a hypothetical monopolist 
of all scheduled air passenger service could profitably increase its 
prices by at least a small but significant and non-transitory amount. 
The Complaint alleges, therefore, that scheduled air passenger service 
constitutes a line of commerce and a relevant product market within the 
meaning of Section 7 of the Clayton Act.
    Moreover, most passengers book flights with their origins and 
destinations predetermined. Few passengers who wish to fly from one 
city to another would switch to flights between other cities in 
response to a small but significant and non-transitory fare increase. A 
hypothetical monopolist of all scheduled air passenger service on any 
particular route between two destinations likely would be able to 
profitably increase its prices by at least a small but significant and 
non-transitory amount. Accordingly, scheduled air passenger service 
between each origin and destination pair constitutes a line of commerce 
and section of the country under Section 7 of the Clayton Act.
    The Complaint alleges that scheduled air passenger service on those 
twenty routes on which Virgin and American compete today, and the 
routes on which they would have likely competed in the future, are 
relevant markets within the meaning of Section 7 of the Clayton Act.
2. Competitive Effects
    The codeshare agreement between Alaska and American creates an 
incentive for Alaska to cooperate rather than compete with American. 
Alaska's acquisition of Virgin's network would extend this incentive to 
the extensive overlaps between Virgin and American, and will therefore 
likely reduce the vigorous competition that Virgin is presently 
providing against American. Specifically, the Complaint alleges that 
the merger is likely to substantially lessen competition on each of the 
twenty nonstop routes on which Virgin and American currently compete 
because Alaska will have an incentive to avoid aggressive head-to-head 
competition in order to preserve its codeshare relationship with 
American. Once Alaska has control of Virgin, it is likely to reduce 
capacity, decrease service quality, and/or raise prices on these 
routes. In some cases, Alaska may completely stop serving the routes 
with its own flights, and instead simply market American's flights 
between the destinations, thereby eliminating an independent and 
meaningful competitive choice for millions of consumers. The Complaint 
further alleges that Alaska's acquisition of Virgin will likely lessen 
competition because Alaska is likely to enter fewer new routes in 
competition with American than Virgin would if Virgin remained a 
standalone airline.
3. Entry and Expansion
    As alleged in the Complaint, new entry, or expansion by existing 
competitors, is unlikely to prevent or remedy the merger's likely 
anticompetitive effects. New entrants into a particular market face 
significant barriers to success, including difficulty in obtaining 
access to slots and gate facilities; the effects of corporate discount 
programs offered by dominant incumbents; loyalty to existing frequent 
flyer programs; an unknown brand; and the risk of aggressive responses 
to new entry by the dominant incumbent carrier. In addition, entry is 
highly unlikely on routes where the origin or destination airport is 
another airline's hub, because the new entrant would face substantial 
challenges attracting sufficient local passengers to support service.

III. Explanation of the Proposed Final Judgment

    As alleged in the Complaint, Alaska's acquisition of Virgin 
threatens to substantially lessen competition on the routes where 
Virgin and American compete today, and would likely compete in the 
future, because Alaska's existing codeshare agreement with American 
creates significant incentives for Alaska to reduce--or eliminate--its 
competition with American on these routes.
    The codeshare agreement incentivizes Alaska to avoid competition 
with American in two ways. First, the overall scale of the codeshare 
agreement and Alaska's dependence on it creates an incentive for Alaska 
to compete less aggressively with American in order to avoid upsetting 
American and jeopardizing the codeshare partnership. Second, the 
opportunity to market American's flights on particular routes creates 
an incentive for Alaska to rely on the codeshare to provide service to

[[Page 89985]]

its customers rather than undertaking the risk and expense of 
initiating its own service. Alaska's acquisition of Virgin would 
significantly increase Alaska's network overlaps with American, and 
would thus dramatically increase the circumstances where these 
incentives threaten to soften head-to-head competition.
    As explained in more detail below, the relief set forth in the 
``Prohibited Conduct'' section of the proposed Final Judgment would 
substantially reduce each of these incentives. First, through 
prohibitions on codesharing in a variety of circumstances, it would 
substantially reduce the overall size and scope of the codeshare 
partnership between Alaska and American, which, in turn, would decrease 
Alaska's reliance on the codeshare and enhance Alaska's incentive to 
compete on those routes where Virgin and American compete today. 
Second, it would prohibit Alaska from substituting to codeshare service 
on routes that Virgin already serves or would otherwise be likely to 
serve.
    At the same time, because the codeshare between Alaska and American 
may benefit consumers in some circumstances by enabling Alaska and 
American to offer their customers service that neither airline would 
provide on its own, the proposed Final Judgment does not categorically 
prohibit all codesharing. Instead, the proposed Final Judgment focuses 
on reducing codesharing where it is likely to blunt Alaska's incentives 
to compete with American after the merger.
    In addition, the proposed Final Judgment provides protections for 
the assets that Virgin acquired from American as part of the settlement 
of the lawsuit challenging the merger of American and US Airways to 
ensure the continued use of these assets in competition with American. 
Finally, the proposed Final Judgment includes notification, monitoring, 
and enforcement provisions so that Defendants comply with all of their 
obligations.

A. By Prohibiting Codesharing in Certain Circumstances, the Proposed 
Final Judgment Incentivizes the Merged Firm To Compete Aggressively

    To reduce Alaska's dependence on the codeshare agreement with 
American, Section IV.A of the proposed Final Judgment requires Alaska 
to cease codesharing in four different scenarios no later than sixty 
days after the closing of the transaction. Together, the restrictions 
on codesharing will reduce by approximately 50% the volume of Alaska 
passengers flying on American flights.
    First, Section IV.A.1 of the proposed Final Judgment prohibits 
Alaska and American from codesharing on routes where Virgin and 
American both offer competing nonstop service today, irrespective of 
network changes that either carrier makes in the future. By eliminating 
Alaska's ability to replace Virgin's service with codeshare flights on 
American, this provision will ensure that if Alaska wishes to offer its 
customers service on these routes, it will need to continue to compete 
head-to-head with American as Virgin does today.
    Second, Section IV.A.2 of the proposed Final Judgment further 
reduces the overall scope of the codeshare relationship by prohibiting 
codesharing on all routes on which Alaska and American both offer 
competing nonstop service. Prohibiting codesharing on the Virgin/
American overlap routes alone is insufficient to prevent harm from the 
merger because Alaska would retain the broader incentive to avoid 
endangering the partnership and could still choose to reduce or 
eliminate service on the routes where Virgin and American compete 
today. To adequately address this broader incentive, the proposed Final 
Judgment also prohibits codesharing on Alaska/American overlap routes 
because, as previously recognized by both the U.S. Department of 
Transportation and the Department of Justice, such codesharing can 
diminish competition and facilitate collusion by, for example, creating 
opportunities for the airlines to communicate about fares and closely 
coordinate their service offerings. Such codesharing is also especially 
unlikely to benefit consumers because it does not extend the reach of 
either carrier's network.
    Third, in order to ensure that Alaska uses the Virgin assets to 
grow in ways that continue to enhance competition following the merger, 
the proposed Final Judgment prohibits Alaska from marketing American 
flights on routes that it is most likely to serve itself and prohibits 
Alaska from permitting American to market Alaska flights on routes that 
American is most likely to serve itself. Airlines are most likely to 
enter routes that emanate from one of their hubs or focus cities, and 
thus, Section IV.A.3 of the proposed Final Judgment prevents both 
Alaska and American from marketing each other's flights on routes that 
touch their respective hubs or focus cities, defined as ``Key Alaska 
Airports'' and ``Key American Airports'' in Definitions II.L and II.M 
of the proposed Final Judgment, respectively.
    Finally, Los Angeles International Airport (``LAX''), which is not 
included as a ``Key Alaska Airport'' or ``Key American Airport,'' is a 
special case because both carriers will have significant operations at 
this airport post-merger. If Section IV.A.3 applied to LAX, it would 
eliminate all codesharing at this airport, including potentially 
beneficial codesharing on routes the two airlines would be unlikely to 
serve independently. Section IV.A.4 of the proposed Final Judgment 
therefore prohibits either carrier from codesharing on routes between 
LAX and either an American or Alaska hub or focus city, as the airlines 
are more likely to serve these routes on a standalone basis, but allows 
for codesharing on routes between LAX and other cities.

B. The Proposed Final Judgment Provides Additional Protections for 
Assets American Divested to Virgin as Part of the American-US Airways 
Merger Settlement

    As alleged in the Complaint, Virgin aggressively competes with 
American on several routes using assets that American divested to 
Virgin to settle the United States's challenge to American's 2013 
merger with US Airways. These assets, which include gates and takeoff 
and landing rights (known as ``slots''), are located at constrained 
airports in several of American's strongholds. Although the proposed 
Final Judgment strongly incentivizes Alaska to continue competing with 
American on routes that Virgin serves today through limitations on 
codesharing, Alaska may decide for independent reasons that these 
assets do not fit into its business or network plans and seek to sell 
or lease them to another carrier. Section IV.B of the proposed Final 
Judgment prohibits Alaska from allowing American to acquire or use the 
assets, which would circumvent the purpose of the American/US Airways 
settlement. In addition, Section IV.B of the proposed Final Judgment 
requires Alaska to obtain the United States's approval of a buyer or 
lessee if the combined company chooses to sell or lease these assets to 
a carrier other than American. This provision allows the United States 
to ensure that American does not have undue influence over the 
disposition of these assets. Section IV.C of the proposed Final 
Judgment permits Alaska to allow another airline to use the assets in 
limited circumstances that are routine, short-term, or necessary for 
operational or safety reasons and thus highly unlikely to harm 
competition--for example, when an airport orders Alaska to permit 
another airline to use an asset to prevent a potentially dangerous 
situation. Section IV.C also

[[Page 89986]]

permits Alaska to make one-for-one trades of slots or gates at the same 
airport, which is also highly unlikely to harm competition.

C. The Proposed Final Judgment Includes Robust Notification, 
Monitoring, and Enforcement Provisions

    The proposed Final Judgment includes several provisions designed to 
allow the United States to assess the implementation and effectiveness 
of the proposed Final Judgment and ensure Alaska's compliance with its 
requirements. To this end, Section V.A requires Defendants to inform 
pertinent personnel of the Defendants' obligations under the proposed 
Final Judgment. Section V.B requires Defendants to comply with Section 
IV.A.2 no later than sixty days after Alaska or American enters a new 
route that creates a new competitive overlap. Section V.D of the 
proposed Final Judgment imposes annual reporting requirements regarding 
the scope of the codeshare relationship, including the identity of the 
routes subject to the codeshare, the number of passengers that have 
purchased tickets pursuant to the codeshare, and the amount of revenue 
Alaska has received from the codeshare. Section V.E also requires 
Alaska to notify the United States in advance if Alaska seeks to modify 
its contractual relationship with American as a means of providing the 
United States an opportunity to take action if the modification would 
threaten competition. In addition, Section VII of the proposed Final 
Judgment expressly reserves the right of the United States to take 
enforcement action to enjoin the codeshare agreement should changes in 
the competitive landscape or the networks or incentives of these 
airlines warrant such action.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of the judgment. The comments and 
the response of the United States will be filed with the Court. In 
addition, comments will be posted on the U.S. Department of Justice, 
Antitrust Division's internet Web site and, under certain 
circumstances, published in the Federal Register.
    Written comments should be submitted to: Kathleen O'Neill, Chief, 
Transportation, Energy & Agriculture Section, Antitrust Division, 
United States Department of Justice, 450 Fifth Street NW., Suite 8000, 
Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and that the parties may apply to the 
Court for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Defendants. The 
United States could have sought preliminary and permanent injunctions 
against Alaska's acquisition of Virgin. The United States is satisfied, 
however, that the remedies described in the proposed Final Judgment 
will effectively address the transaction's likely anticompetitive 
effects and preserve competition for the provision of scheduled air 
passenger service in the relevant markets identified by the United 
States. Thus, the proposed Final Judgment would achieve all or 
substantially all of the relief the United States would have obtained 
through litigation, but avoids the time, expense, and uncertainty of a 
full trial on the merits of the Complaint.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty-day comment 
period, after which the court shall determine whether entry of the 
proposed Final Judgment is ``in the public interest.'' 15 U.S.C. 
16(e)(1). In making that determination, the court, in accordance with 
the statute as amended in 2004, is required to consider:

    (A) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

Id. at Sec.  16(e)(1)(A) & (B). In considering these statutory factors, 
the court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act); United States v. US Airways 
Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (noting that the 
court's ``inquiry is limited'' because the government has ``broad 
discretion'' to determine the adequacy of the relief secured through a 
settlement); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 
Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. 
Aug. 11, 2009) (noting that the court's review of a consent judgment is 
limited and only inquires ``into whether the government's determination 
that the proposed

[[Page 89987]]

remedies will cure the antitrust violations alleged in the complaint 
was reasonable, and whether the mechanism to enforce the final judgment 
are clear and manageable'').\1\
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for courts to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, a court conducting inquiry under the APPA may 
consider, among other things, the relationship between the remedy 
secured and the specific allegations set forth in the government's 
complaint, whether the decree is sufficiently clear, whether 
enforcement mechanisms are sufficient, and whether the decree may 
positively harm third parties. See Microsoft, 56 F.3d at 1458-62. With 
respect to the adequacy of the relief secured by the decree, a court 
may not ``engage in an unrestricted evaluation of what relief would 
best serve the public.'' United States v. BNS, Inc., 858 F.2d 456, 462 
(9th Cir. 1988) (quoting United States v. Bechtel Corp., 648 F.2d 660, 
666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62; United 
States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 
2009 U.S. Dist. LEXIS 84787, at *3. Courts have held that:

    [t]he balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In 
determining whether a proposed settlement is in the public interest, a 
court ``must accord deference to the government's predictions about the 
efficacy of its remedies, and may not require that the remedies 
perfectly match the alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d 
at 17; see also US Airways, 8 F. Supp. 3d at 75 (noting that a court 
should not reject the proposed remedies because it believes others are 
preferable); Microsoft, 56 F.3d at 1461 (noting the need for courts to 
be ``deferential to the government's predictions as to the effect of 
the proposed remedies''); United States v. Archer-Daniels-Midland Co., 
272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant 
due respect to the government's prediction as to the effect of proposed 
remedies, its perception of the market structure, and its views of the 
nature of the case).
---------------------------------------------------------------------------

    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest' '').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also US 
Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements (citing Microsoft, 56 F.3d at 1461)); United States v. 
Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving 
the consent decree even though the court would have imposed a greater 
remedy). To meet this standard, the United States ``need only provide a 
factual basis for concluding that the settlements are reasonably 
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 
2d at 17.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also US Airways, 
38 F. Supp 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (concluding 
that ``the `public interest' is not to be measured by comparing the 
violations alleged in the complaint against those the court believes 
could have, or even should have, been alleged''). Because the ``court's 
authority to review the decree depends entirely on the government's 
exercising its prosecutorial discretion by bringing a case in the first 
place,'' it follows that ``the court is only authorized to review the 
decree itself,'' and not to ``effectively redraft the complaint'' to 
inquire into other matters that the United States did not pursue. 
Microsoft, 56 F.3d at 1459-60. As this Court confirmed in SBC 
Communications, courts ``cannot look beyond the complaint in making the 
public interest determination unless the complaint is drafted so 
narrowly as to make a mockery of judicial power.'' 489 F. Supp. 2d at 
15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in government 
antitrust enforcement actions, adding the unambiguous instruction that 
``[n]othing in this section shall be construed to require the court to 
conduct an evidentiary hearing or to require the court to permit anyone 
to intervene.'' 15 U.S.C. 16(e)(2); see also US Airways, 38 F. Supp. 3d 
at 76 (indicating that a court is not required to hold an evidentiary 
hearing or to permit intervenors as part of its review under the Tunney 
Act). This language codified what Congress intended when it enacted the 
Tunney Act in 1974, as, Senator Tunney, the author of this legislation, 
unambiguously explained: ``The court is nowhere compelled to go to 
trial or to engage in extended proceedings which might have the effect 
of vitiating the benefits of prompt and less costly settlement through 
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement 
of Sen. Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11. A court can make its public interest 
determination based on the competitive impact statement and response to 
public comments alone. US Airways, 38 F. Supp. 3d at 76.\3\
---------------------------------------------------------------------------

    \3\ See also United States v. Enova Corp., 107 F. Supp. 2d 10, 
17 (D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent 
a showing of corrupt failure of the government to discharge its 
duty, the Court, in making its public interest finding, should . . . 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').

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[[Page 89988]]

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Dated: December 6, 2016

Respectfully submitted,

_____/s/_____
Katherine Celeste
U.S. Department of Justice
Antitrust Division
Transportation Energy & Agriculture Section
450 Fifth Street NW., Suite 8000
Washington, DC 20530
Telephone: (202) 532-4713
Email: katherine.celeste@usdoj.gov

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Alaska Air Group, Inc. 
and Virgin America Inc., Defendants.

Case No.: 1:16-cv-02377.
Judge: Reggie B. Walton,
Filed: 12/06/2016,

Proposed Final Judgment

    Whereas, Plaintiff United States of America (``United States'') 
filed its Complaint on December 6, 2016, the United States and 
Defendants, Alaska Air Group, Inc. (``Alaska'') and Virgin America Inc. 
(``Virgin''), by their respective attorneys, have consented to entry of 
this Final Judgment without trial or adjudication of any issue of fact 
or law, and without this Final Judgment constituting any evidence 
against or admission by any party regarding any issues of fact or law;
    And whereas, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And whereas, this Final Judgment requires Defendants to undertake 
certain actions and refrain from certain conduct for the purpose of 
remedying the loss of competition alleged in the Complaint;
    and whereas, Defendants have represented to the United States that 
the actions and conduct restrictions described below can and will be 
undertaken, and that Defendants will later raise no claim of hardship 
or difficulty as grounds for asking the Court to modify any provisions 
contained below;
    Now, therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ordered, adjudged and decreed:

I. Jurisdiction

    The Court has jurisdiction over the subject matter of this action 
and Defendants. The Complaint states a claim upon which relief can be 
granted against Defendants under Section 7 of the Clayton Act, as 
amended, 15 U.S.C. 18.

II. Definitions

    As used in this Final Judgment:
    A. ``Alaska'' means Alaska Air Group, Inc., a Delaware corporation 
headquartered in Seattle, Washington, its successors and assigns, its 
Affiliates, and its subsidiaries or divisions, and their respective 
directors, officers, managers, agents, and employees.
    B. ``Alaska/American Codeshare Agreement'' means the Amended and 
Restated Codeshare Agreement entered into between Alaska and American, 
dated February 15, 2015, and all predecessors, exhibits, schedules and 
amendments thereto.
    C. ``Alaska/American Overlap Routes'' means any routes between two 
cities in the United States on which Alaska and American both provide 
nonstop scheduled air passenger service. For purposes of this 
definition only, the city that an airport serves will be determined by 
the City Market ID assigned to each airport by the U.S. Department of 
Transportation in the Airline Origin and Destination Survey (``DB1B''), 
and airports with the same City Market ID will be considered to serve 
the same city, except the following airports will not be considered to 
serve the same city as any other airport: (1) Los Angeles International 
Airport and (2) Norman Y. Mineta San Jose International Airport. The 
routes covered by this definition may change over the term of this 
Final Judgment as Alaska and American adjust their respective 
schedules. The Alaska/American Overlap Routes as of December 6, 2016 
are listed in Appendix A for illustrative purposes.
    D. ``American'' means American Airlines Group Inc., a Delaware 
corporation headquartered in Fort Worth, Texas, its successors and 
assigns, and its subsidiaries, divisions, groups and Affiliates, and 
their respective directors, officers, managers, agents, and employees.
    E. ``Affiliate'' means an entity that is related to another entity 
by one owning shares of the other, by common ownership, or by other 
means of control, and includes any airline that operates Flights for 
Alaska or American pursuant to a capacity purchase agreement, but such 
airline shall only be deemed an Affiliate with respect to such Flights.
    F. ``Codeshare Agreement'' means a contract between two airlines 
that allows them to market one another's flights by placing their 
respective unique, identifying codes on those flights. Each airline's 
code is established by the International Air Transportation 
Association.
    G. ``Connecting Itinerary'' means a route within the United States 
with at least one intermediate stop at any airport between the 
origination and destination airports.
    H. ``Defendants'' means Alaska and Virgin, and any successor or 
assignee to all or substantially all of the business or assets of 
Alaska or Virgin.
    I. ``US/AA Divestiture Assets'' means all rights and interests held 
by Defendants in the two gates at Dallas Love Field (``DAL''), eight 
slots at Washington Reagan National Airport (``DCA''), and 12 slots at 
New York LaGuardia Airport (``LGA''), acquired by Virgin pursuant to 
the Final Judgment entered in United States v. US Airways Group, Inc., 
Case No. 1:13-cv-01236 (CKK) (Dkt. No. 170) (D.D.C. Apr. 25, 2014).
    J. ``Flight'' means scheduled air passenger service, without any 
intermediate stops, between an origin airport and destination airport, 
both within the United States.
    K. ``Future Alaska-American Overlap Route'' means any Alaska-
American Overlap Route created by Defendants or American commencing 
service between two cities after the consummation of the Transaction.
    L. ``Key Alaska Airports'' means each of the following airports: 
(1) Portland International Airport (``PDX''); (2) Seattle-Tacoma 
International Airport (``SEA''); (3) San Francisco International 
Airport (``SFO''); and (4) Ted Stevens Anchorage International Airport 
(``ANC'').
    M. ``Key American Airports'' means each of the following airports: 
(1) Charlotte Douglas International Airport (``CLT''); (2) Chicago 
Midway International Airport (``MDW''); (3) Chicago O'Hare 
International Airport (``ORD''); (4) Dallas/Fort Worth International 
Airport (``DFW''); (5) Dallas Love Field (``DAL''); (6) Fort 
Lauderdale-Hollywood International Airport (``FLL''); (7) John F. 
Kennedy International Airport (``JFK''); (8) Miami International 
Airport (``MIA''); (9) New York LaGuardia Airport (``LGA''); (10) 
Philadelphia International Airport (``PHL''); (11) Phoenix Sky Harbor 
International Airport (``PHX''); and (12)

[[Page 89989]]

Washington Reagan National Airport (``DCA'').
    N. ``LAX'' means Los Angeles International Airport.
    O. ``Market'' means to sell tickets for a Flight pursuant to a 
Codeshare Agreement, either as a standalone Flight or as part of a 
Connecting Itinerary.
    P. ``Transaction'' means the transaction referred to in the 
Agreement and Plan of Merger by and among Alaska, Alpine Acquisition 
Corp., a wholly owned subsidiary of Alaska, and Virgin, dated April 1, 
2016.
    Q. ``Virgin'' means Virgin America Inc., a Delaware corporation 
headquartered in Burlingame, California, its successors and assigns, 
and its subsidiaries, divisions, groups, Affiliates, partnerships and 
joint ventures, and their directors, officers, managers, agents, and 
employees.
    R. ``Virgin/American Overlap Routes'' means any routes on which 
Virgin and American both provide nonstop scheduled air passenger 
service as of December 6, 2016. The Virgin/American Overlap Routes are 
listed in Appendix B and will not change over the term of this decree.

III. Applicability

    A. This Final Judgment applies to Alaska and Virgin, as defined 
above, and all other persons in active concert or participation with 
any of them who receive actual notice of this Final Judgment by 
personal service or otherwise.

IV. Prohibited Conduct

    A. Beginning sixty (60) calendar days after consummation of the 
Transaction, Defendants shall not directly or indirectly, under the 
Alaska/American Codeshare Agreement or otherwise:
    1. Market any American Flight serving a Virgin/American Overlap 
Route, or permit American to Market any Alaska Flight serving a Virgin/
American Overlap Route;
    2. Market any American Flight serving an Alaska/American Overlap 
Route, or permit American to Market any Alaska Flight serving an 
Alaska/American Overlap Route;
    3. Market any American Flight that originates or terminates at any 
Key Alaska Airport, or permit American to Market any Alaska Flight that 
originates or terminates at any Key American Airport; and
    4. Market any American Flight, or permit American to Market any 
Alaska Flight, serving any route between LAX and a Key Alaska Airport 
or a Key American Airport.
    B. Defendants shall not directly or indirectly sell, trade, lease, 
or sub-lease any of the US/AA Divestiture Assets without the prior 
written consent of the United States. Defendants shall not directly or 
indirectly transfer any interest in the US/AA Divestiture Assets to 
American or permit American to use the US/AA Divestiture Assets.
    C. Notwithstanding Section IV.B, nothing in this Final Judgment 
shall prevent Defendants from (i) engaging in one-for-one trades of 
slots at different times at the same airport, (ii) engaging in one-for-
one trades of gates at the same airport, (iii) continuing the subleases 
of the US/AA Divestiture Assets already in place as of December 6, 
2016; (iv) permitting any airline to use any slots or airport gates if 
required by lawful directive of an airport authority or any other 
governmental body; or (v) permitting any airline to use any slots or 
airport gates on an ad hoc basis to accommodate a safety, security, or 
exigent operational need.

V. Required Conduct

    A. Within thirty (30) calendar days of entry of this Final 
Judgment, Defendants shall certify to the United States that they have 
informed (i) all of Defendants' personnel involved in the 
implementation, operation, and enforcement of the Alaska/American 
Codeshare Agreement and (ii) all of Defendants' officers and directors 
of the obligations set forth in this Final Judgment.
    B. Within sixty (60) calendar days of the creation of a Future 
Alaska/American Overlap Route, Defendants shall comply with the 
prohibition set forth in Section IV.A(2) on that Future Alaska/American 
Overlap Route.
    C. Defendants shall certify to the United States annually on the 
anniversary date of the entry of this Final Judgment that Defendants 
have complied with all of the provisions of this Final Judgment.
    D. Defendants shall notify the United States annually on the 
anniversary date of the entry of this Final Judgment of:
    1. The identity of routes on which Alaska Markets American Flights, 
and separately for each route, whether Alaska Markets American Flights 
on a standalone basis, as part of a Connecting Itinerary, or both;
    2. The number of passengers that purchased tickets pursuant to the 
Alaska/American Codeshare Agreement or any other Codeshare Agreement 
between Alaska and American for American Flights Marketed by Alaska 
during the prior calendar year; and
    3. The amount of revenue that Alaska received during the previous 
calendar year from American pursuant to the Alaska/American Codeshare 
Agreement.
    E. If Defendants amend the Alaska/American Codeshare Agreement or 
enter into any new or restated Codeshare Agreement with American, 
Defendants shall provide a copy of such amendment or agreement to the 
United States at least thirty (30) calendar days in advance of such 
amendment or agreement becoming effective, unless the United States 
agrees in writing that Defendants may make such agreement(s) or 
amendment(s) effective at an earlier date. Defendants shall satisfy the 
obligations set forth in parts A, C, D, and E of this Section by 
providing the required certifications, notifications, and copies of 
agreements to the Chief of the Transportation, Energy, and Agriculture 
Section, Antitrust Division, U.S. Department of Justice.

VI. Compliance and Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders, or of determining whether the 
Final Judgment should be modified or vacated, and subject to any 
legally recognized privilege, from time to time authorized 
representatives of the United States Department of Justice, including 
consultants and other persons retained by the United States, shall, 
upon written request of an authorized representative of the Assistant 
Attorney General in charge of the Antitrust Division, and on reasonable 
notice to Defendants, be permitted:
    1. Access during Defendants' office hours to inspect and copy, or 
at the option of the United States, to require Defendants to provide 
hard copy or electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
Defendants, relating to any matters contained in this Final Judgment; 
and
    2. To interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment.
    C. No information or documents obtained by the means provided in 
this Section shall be divulged by the United States to any person other 
than an authorized representative of the

[[Page 89990]]

executive branch of the United States, except in the course of legal 
proceedings to which the United States is a party (including grand jury 
proceedings), or for the purpose of securing compliance with this Final 
Judgment, or as otherwise required by law.
    D. If at the time information or documents are furnished by 
Defendants to the United States, Defendants represent and identify in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and Defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United 
States shall give Defendants ten (10) calendar days' notice prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding).

VII. No Limitation on Government Rights

    Nothing in this Final Judgment shall limit the right of the United 
States to investigate and bring actions as necessary to prevent or 
restrain violations of the antitrust laws relating to the Alaska/
American Codeshare Agreement, or any past, present, or future conduct, 
policy, practice or agreement of Defendants.

VIII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for such further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

IX. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry.

X. Public Interest Determination

    The entry of this Final Judgment is in the public interest. The 
parties have complied with the requirements of the Antitrust Procedures 
and Penalties Act, 15 U.S.C. 16, including making copies available to 
the public of this Final Judgment, the Competitive Impact Statement, 
and any comments thereon, and the United States' responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and responses to comments filed with 
the Court, entry of this Final Judgment is in the public interest

DATED:_____

Court approval subject to the Antitrust Procedures and Penalties Act, 
15 U.S.C. 16

United States District Judge-------------------------------------------

Appendix A

   Alaska/American Domestic U.S. Overlap Routes as of December 6, 2016
------------------------------------------------------------------------
              Non-directional origin and destination pairs
-------------------------------------------------------------------------
                 Origin                            Destination
------------------------------------------------------------------------
Ted Stevens Anchorage International      Los Angeles International
 Airport.                                 Airport.
Ted Stevens Anchorage International      Phoenix Sky Harbor
 Airport.                                 International Airport.
Chicago O'Hare International Airport...  Portland International Airport.
Chicago O'Hare International Airport...  Seattle--Tacoma International
                                          Airport.
Dallas/Fort Worth International Airport  Portland International Airport.
Dallas/Fort Worth International Airport  Seattle--Tacoma International
                                          Airport.
Los Angeles International Airport......  Portland International Airport.
Los Angeles International Airport......  Salt Lake City International
                                          Airport.
Los Angeles International Airport......  Seattle--Tacoma International
                                          Airport.
John F. Kennedy International Airport..  Seattle--Tacoma International
                                          Airport.
Philadelphia International Airport.....  Seattle--Tacoma International
                                          Airport.
Phoenix Sky Harbor International         Seattle--Tacoma International
 Airport.                                 Airport.
Phoenix Sky Harbor International         Portland International Airport.
 Airport.
Ronald Reagan Washington National        Los Angeles International
 Airport.                                 Airport.
Baltimore--Washington International      Los Angeles International
 Airport.                                 Airport.
Newark Liberty International Airport...  Seattle--Tacoma International
                                          Airport.
John F. Kennedy International Airport..  San Diego International
                                          Airport.
Newark Liberty International Airport...  San Diego International
                                          Airport.
Miami International Airport............  Seattle--Tacoma International
                                          Airport.
Fort Lauderdale-Hollywood International  Seattle--Tacoma International
 Airport.                                 Airport.
Washington Dulles International Airport  Los Angeles International
                                          Airport.
------------------------------------------------------------------------

Appendix B

              Virgin/American Domestic U.S. Overlap Routes
------------------------------------------------------------------------
              Non-directional origin and destination pairs
-------------------------------------------------------------------------
                 Origin                            Destination
------------------------------------------------------------------------
Boston Logan International Airport.....  Los Angeles International
                                          Airport.
Chicago O'Hare International Airport...  Los Angeles International
                                          Airport.
Dallas Love Field Airport..............  Los Angeles International
                                          Airport.
Dallas/Fort Worth International Airport  Los Angeles International
                                          Airport.
Fort Lauderdale--Hollywood               Los Angeles International
 International Airport.                   Airport.
Los Angeles International Airport......  Miami International Airport.
Honolulu International Airport.........  Los Angeles International
                                          Airport.

[[Page 89991]]

 
McCarran International Airport.........  Los Angeles International
                                          Airport.
Los Angeles International Airport......  Washington Dulles International
                                          Airport.
Los Angeles International Airport......  Ronald Reagan Washington
                                          National Airport.
Los Angeles International Airport......  John F. Kennedy International
                                          Airport.
Los Angeles International Airport......  Newark Liberty International
                                          Airport.
Los Angeles International Airport......  Orlando International Airport.
Los Angeles International Airport......  Seattle--Tacoma International
                                          Airport.
Dallas Love Field Airport..............  San Francisco International
                                          Airport.
Dallas/Fort Worth International Airport  San Francisco International
                                          Airport.
Fort Lauderdale--Hollywood               San Francisco International
 International Airport.                   Airport.
Miami International Airport............  San Francisco International
                                          Airport.
John F. Kennedy International Airport..  San Francisco International
                                          Airport.
Los Angeles International Airport......  San Francisco International
                                          Airport.
Chicago O'Hare International Airport...  San Francisco International
                                          Airport.
Dallas Love Field Airport..............  Ronald Reagan Washington
                                          National Airport.
Dallas/Fort Worth International Airport  Ronald Reagan Washington
                                          National Airport.
Dallas Love Field Airport..............  LaGuardia Airport.
Dallas/Fort Worth International Airport  LaGuardia Airport.
Dallas Love Field Airport..............  McCarran International Airport.
Dallas/Fort Worth International Airport  McCarran International Airport.
Fort Lauderdale--Hollywood               John F. Kennedy International
 International Airport.                   Airport.
Miami International Airport............  John F. Kennedy International
                                          Airport.
Los Angeles International Airport......  Kahului Airport.
McCarran International Airport.........  John F. Kennedy International
                                          Airport.
------------------------------------------------------------------------

[FR Doc. 2016-29883 Filed 12-12-16; 8:45 am]
 BILLING CODE 4410-11-P