Joint Application of Delta Air Lines, Inc. and Korean Air Lines Co., Ltd. for Statements of Authorization Under 14 C.F.R. Part 212 (Blanket Code-Share Authority) / July 14, 1998

Re: Joint Application of Delta Air Lines, Inc. and Korean Air Lines Co., Ltd. for Statements of Authorization Under 14 C.F.R. Part 212 (Blanket Code-Share Authority)

Dear Mr. Gretch:

Delta Air Lines, Inc. ("Delta") and Korean Air Lines Co., Ltd. ("KAL") (collectively the "Joint Applicants") hereby apply for blanket Statements of Authorization to engage in code-share operations consistent with the U.S.-Korea Open Skies Agreement executed in final form on June 9, 1998.

This historic new aviation agreement provides for unrestricted air service opportunities (specifically including code-share services) for U.S. and Korean carriers operating between the United States and Korea and to points beyond and behind the two countries. Effective August 1, 1998, Delta and KAL intend to expand their existing code-share/blocked-space arrangement to include new reciprocal code-share services to the points identified in Attachment 1.

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Consistent with recent Department policy and in order to promote administrative efficiency, the Joint Applicants request that the Department approve this request for blanket code-share authority. The Joint Applicants request that this application be approved as soon as possible, but no later than July 21, 1998, to remain in effect for a period of indefinite duration. The Joint Applicants are conducting a poll of all interested carriers and will advise the Department of the results as soon as the poll is completed.

This expanded authority will enable the carriers to implement immediate and future code-share services which are explicitly permitted under the Open Skies Agreement. Specifically, the Joint Applicants apply for the following authority:

(1) A Statement of Authorization under Part 212 of the Department's regulations to enable Delta to display KAL's "KE" designator code on any flight operated by Delta between (a) any points within the United States, in conjunction with services held out by KAL between Korea and the United States, (b) any point or points in the United States, on the one hand, and any point or points in Korea, on the other hand (either nonstop or via any intermediate point or points in any third country), (c) any point or points in the United States, on the one hand, and any point or points in any third country, on the other hand, and (d) any point or points in Korea, on the one hand, and any point or points in any third country, on the other hand; and

(2) A Statement of Authorization under Part 212 of the Department's regulations to enable KAL to display Delta's "DL" designator code on any flight operated by KAL between (a) any points within Korea, in conjunction with services held out by Delta between the United States and Korea, (b) any point or points in Korea, on the one hand, and any point or points in the United States, on the other hand (either nonstop or over any intermediate point or points in any country), (c) any point or points in Korea, on the one hand, and any point or points in any third country, on the other hand, and (d) any point or points in the United States, on the

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one hand, and any point or points in any third country, on the other hand.

The Joint Applicants further request, for purposes of administrative efficiency, that their existing code-share operations, identified in Attachment 2, be authorized under and subsumed within this blanket Statement of Authorization. With respect to new and existing multi-stop single-plane services, the Joint Applicants request operational flexibility to omit or substitute other authorized intermediate points; em to serve ATL-SEL nonstop or via ATL-L,AX-SEL in lieu of ATL-ORD-SEL.

To the extent required, Delta and KAL request a waiver of the 45-day advance filing requirements for Statements of Authorization under Part 212. Delta and KAL intend to begin marketing and sales activities as soon as Statement of Authorization authority is received, and to begin operating service to the points listed in Attachment 1 on or about August 1, 1998.

In further support of this Joint Application, Delta and KAL state the following:

1. Approval of this application meets the standards applicable to grants of Statements of Authorization under Part 212, and is in the public interest for the following reasons:

a) Approval of this application is fully consistent with the terms of the U.S.-Korea Open Skies Agreement and in particular Art. 8(7) of that agreement which specifically authorizes code-share services. Approval is also consistent with the Department's numerous prior grants of Statement of Authorization authority to Delta and KAL. See, em Statements of Authorization approved May 6, 1998 for New York (EWR)-Seoul, Anchorage-Seoul, Atlanta-Chicago-Seoul, Washington (Dulles)-New York (JFK)-Seoul, Los Angeles-Honolulu-Seoul, and Boston-New York (JFK)-Seoul services.

b) Grant of this application will enable Delta and KAL to implement beneficial new code-share services consistent with the Open Skies Agreement. Approval of this application will enable Delta and KAL to respond quickly to service demands and changes in the marketplace, providing the carriers with flexibility to adjust their code-share services without the need to

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obtain :Department approval to amend their code-share authority every time they seek to add another point.

c) Grant of this application will enhance competitive and service options for travelers flying between the United States and Korea and points beyond. With respect to beyond services, approval of blanket authority under Part 212 will allow Delta and KAL to benefit from third-country code-share access to the fullest extent contemplated by the U.S.-Korea Open Skies Agreement and other applicable international agreements and will allow the Joint Applicants quickly to enter new markets as opportunities arise.

2. Approval of these Statements of Authorization would be consistent with the Department's recent efforts to reduce the administrative burden both on carrier applicants and on the Department. Thus, the Joint Applicants will not need to seek new Statements of Authorization every time new code-share services consistent with applicable bilateral agreements are implemented. An added benefit is that the Joint Applicants' ability to implement new code-share services will not be unnecessarily delayed by the regulatory process, and the traveling public will be able to enjoy new services more quickly.

4. Grant of the Statements of Authorization would be consistent with Department policy and precedent. See U.S. International Air Transportation Policy Statement, April 1995, pp. 4-5. In the policy statement, the Department specifically recognizes that code-share arrangements "can provide a cost-efficient way for carriers to enter new markets, expand their systems and obtain additional flow traffic to support their operations ... " Id. at 4.

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6. Delta and KAL will comply with all applicable Department rules relating to code-share service, including 14 C.F.R. § 399.88, and with each of the other conditions normally imposed by the Department on code-share arrangements.

7. Delta and KAL will comply with the 30 day advance notice requirement and other conditions normally imposed by the Department on similar blanket code-share authorizations. See, Ad. Order 98-4-8 at ordering paragraph 5. (United/Lufthansa blanket code-share approval).

8. Delta hereby states that this application will have no impact on Delta's CRAF commitments.

9. Because the Department has previously evaluated and approved the operative Delta/KAL code-share/blocked space agreement and the services contemplated herein are consistent with the terms of the open skies agreement, this application is non-controversial and should be granted promptly.

10. Delta and KAL request expeditious consideration of this application and approval by no later than July 21, 1998, to allow the carriers to implement new services planned for August 1, 1998. The Joint Applicants request approval for an indefinite duration, to avoid unnecessary submission and review of non-controversial requests for authority, consistent with recent Department practice.

11. In conclusion, by granting this application, the Department will provide Delta and KAL the flexibility to implement code-share services that will result in expanded operations by the carriers and improved international service options for the traveling public, while reducing the administrative burden on the Joint Applicants and the Department. Moreover, prompt approval of this application will allow Delta and KAL to enjoy the benefits available to U.S. and

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Korean carriers under the recently concluded Open Skies Agreement to the fullest extent possible.

WHEREFORE, Delta and KAL respectfully request that the Department promptly grant this Joint Application for Statements of Authorization.

Respectfully submitted,

ZUCKERT SCOUTT ,James Devall, Alexander Van der Bellen, Counsel for Delta Air Lines, Inc., (202) 663-8060

SHAW PITTMAN, Robert Cohn, William Callaway, Jr., Counsel for Korean Air Lines Co., Ltd., (202) 298-8660