Spirit Airlines has gone to court, calling the way that the government awarded new ‘beyond perimeter’ slots at Washington National’s airport ‘bogus’ and demanding that their proposal to fly non-stop from the close-in D.C. to San Jose be reconsidered. And they’re absolutely right.

By law, flights to and from Washington’s close-in National airport are limited to 1,250 miles, except for a handful of trips created by Congress and handed out by the Department of Transportation.

DOT finalized its award of new ‘beyond-perimeter’ slots at Washington’s National airport provided for in last year’s FAA Reauthorization, granting flights to American, Delta, United, Southwest, and Alaska. But their process for doing this was pretty clearly illegal. They made up standards out of whole cloth for which airlines were eligible.

Here are the (5) flights that were granted:

• American Airlines: San Antonio
  
• Alaska Airlines: San Diego
  
• Southwest Airlines: Las Vegas (adds to existing American Airlines service)
  
• Delta Air Lines: Seattle (adds to existing Alaska service)
  
• United Airlines: San Francisco (adds to existing United and Alaska service)

JetBlue asked for an additional flight from DC to San Juan. Frontier asked for a flight to compete with JetBlue’s current one to San Juan. And Spirit asked to fly to San Jose, California.

Congress gamed this by stating that four of the new routes had to go to the largest airlines already serving the airport (non-limited incumbents) and one to an existing airline at the airport that was smaller (limited incumbent). New entrants to the market were legally barred from one of the slot pairs.

In case there was any doubt what was intended, Senator Maria Cantwell – who chairs the committee that wrote the law – sent a letter to Transportation Secretary Pete Buttigieg making clear that American, Alaska, Southwest and Delta should get these slots. The fix was in.

Congress granted Alaska the limited incumbent slot pair, and granted American, United, Delta and Southwest the non-limited incumbent slot pairs.

To figure out which airline gets the ‘limited incumbent slot’ DOT decided that only Alaska Airlines was eligible. However Alaska is not a limited incumbent under the law – and Spirit Airlines, which got passed over, is.

Spirit Airlines has filed a brief supporting Frontier’s legal challenge to the Department of Transportation decision about which airlines would receive the new slots.

Legally, there are (3) types of airlines that could service National airport.

• New entrant carrier: has never had a slot at DCA and isn’t currently operating at DCA. In other words, a completely new player at the airport.

• Limited incumbent carrier: holds fewer than 40 slots at the airport. If an airline ever held slots at DCA since 1985 and then gave them up or transferred them away, those slots still count toward its total​. This rule is meant to prevent gaming the system (an airline can’t sell off slots one day and claim to be “small” the next day to grab special treatment). Once you’ve ever had slots at DCA, you don’t get to erase that history when determining if you’re a limited incumbent​.

• Non-limited incumbent carrier: holds 40 or more slots at the airport.

The law required 4 of the 5 roundtrips go to non-limited incumbent carriers. The fix was in for big airlines. The other roundtrip was supposed to go to a limited-incumbent. And not a single one was permitted to go to a new entrant.

But who are the limited incumbents?

• Alaska: DOT said Alaska is a limited incumbent, but 49 U.S.C. § 41714(k) requires you to look not just at their slots but also at those of codeshare partners. And Alaska puts its code on about 100 American flights out of the airport (the law doesn’t actually distinguish whether codesharing happens at this airport or not, but it happens to). And it’s black-letter law that DOT should have considered Alaska plus American in evaluating its total number of slots.

• Frontier: They actually operate at the airport, so they might seem like an incumbent, but all of their slots are exemption slots that fly beyond the airport’s 1,250 mile perimeter (to Denver) and those do not count and so Frontier should actually be a new entrant even though they fly from the airport today.

• Spirit: does not fly from National airport, but between ~ 2008 and 2012 Spirit operated there to Fort Lauderdale and at one point also flew to Myrtle Beach. The fact that they used to serve the airport makes them a limited incumbent, and not a new entrant. They’re actually the only limited incumbent that should have been eligible, but DOT deemed them ineligible because they do not currently serve the airport and were mistakenly considered a new entrant.

DOT made up its own rules and post-hoc justifications. They said you first look at whether an airline is an incumbent (flies from the airport) and then evaluate how much they fly. And they said that Alaska’s codesharing with American doesn’t count because they don’t really gain market access through it. Neither of these is supported in law, and the market claim is bizarre since they put their code on American flights at the airport.

Pre-Loper Bright you might expect a court to just accept DOT’s expertise in the matter. But they aren’t supposed to do that! Whether a judge will understand what happened isn’t clear. Flights using these new slots have already begun. Investments are being made.

It seems like the Department of Transportation, though, has an opportunity to acknowledge error here because it was made by the predecessor administration. It’s actually a time where they’d be on solid ground saying that the predecessor acted improperly and they’re fixing it.