Leonard:

On November 10, 2007 you asked a number of questions regarding the allocation of operating capacity at John Wayne Airport.  I have spoken with our Airport Access and Noise staff and am pleased to provide the following:

1.    “What prevents the airport from making passenger allocations to all airlines, up to the total number of passengers allowed in the settlement agreement, thereby avoiding the seat capacity allocation process?

Capacity allocations are currently governed by the Phase 2 Commercial Airline Access Plan and Regulation.  The current version was approved by the Board of Supervisors.  The Access Plan specifically requires the allocation of seat capacity. 

2.    If the answer is that the seat allocation process is specifically required by agreement between the settling parties, what document requires this, and why could it not be amended by the parties if the concept of a passenger allocation system is more workable? 

Although the Access Plan currently provides for the allocation of seat capacity to air carriers, nothing in the Settlement Agreement prohibits the County from allocating passenger capacity instead of seat capacity.  However, if the County determined that it was interested in allocating to the air carriers in this manner, a number of substantial revisions would be required in the Access Plan. In connection with this process, it would be important to provide the air carriers and other interested parties with an opportunity to provide input on the possible revisions to the allocation process and to discuss whether the added assurances provided by allocating passenger capacity outweigh the flexibility and assurance of providing the maximum amount of available capacity at the Airport that is provided by allocating seat capacity.

Your e-mail also states that “it is reasonable to ask whether it is better to allocate passengers rather than seats to the air carriers.”  I thought it might be helpful to share some of the logic behind the concept of allocating seat capacity.

As you know, in addition to an allocation of Regulated Average Daily Departures (ADDs), air carriers must also receive an allocation of seat capacity.  This seat capacity reflects the specific equipment each air carrier intends to use during the Plan Year.  Once the seat capacity necessary to support the intended operation of the Regulated ADDs is allocated, the County allocates additional seat capacity to requesting airlines up to the level at which the County believes will allow it to remain within the Settlement Agreement Million Annual Passenger (MAP) limitation.

This additional (“supplemental”) seat capacity is allocated annually, and is an important basis for the operation of Class E aircraft by the air carriers at JWA.  All Class E operations (with the exception of the recently created Permanent Class E ADDs) are based upon supplemental operating capacity in the form of “seats.”  In the event circumstances indicate that the annual MAP limitation may be exceeded, this supplemental seat capacity is the county's “safety valve” for first withdrawal of capacity to remain within the MAP limitation. 

The county's position has long been that there is a tradeoff between allocating seat capacity versus passenger capacity. More certainty could be provided with respect to compliance with the MAP limitation without the possibility of withdrawals by allocating passengers, but this would likely result in less Class E capacity available to the air carriers.  Allocating seats, however, provides the County with the flexibility to maximize capacity allocations for Class E operations while still providing a safety mechanism for withdrawal of this capacity, if necessary.

It is important to note that allocating passenger capacity would ensure MAP compliance without the possibility of capacity withdrawals.  It would, however, also take away the county's flexibility in ensuring that the maximum capacity is flown each Plan Year.  In order to maintain that flexibility, the County would have to consider the same two variables used in allocating seats, i.e., average passenger (instead of seat) capacity of the ADDs and the average annual load factor.   

In sum, the allocation of seat capacity (instead of passenger capacity) creates a mechanism that:
•    provides the maximum feasible flexibility to the air carriers in selecting the mix of aircraft types used by them in their service at JWA;
•    ensures that the maximum amount of available capacity is used to serve the air traveling public; and
•    provides a fair mechanism by which air carrier capacity reductions can be effected if the County determines that reductions are necessary to ensure adherence to the MAP limitation.

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January 9, 2008
rev. April 8, 2008