98-10 / United and Lufthansa / Blanket Statements / Answer of Northwest / February 3, 1998
Mr. Paul L. Gretch
Director, Office of International Aviation
U.S. Department of Transportation
Room 6402D, X-40
400 Seventh Street, S.W.
Washington, D.C. 20590
Re: Joint Application of United Air Lines, Inc. and Lufthansa German Airlines for (1) Blanket Statements of Authorization under 14 C.F.R. Parts 207 and 212 and (2) Renewal of Existing Statements of Authorization (Open Skies Code-Share Operations)
Dear Mr. Gretch:
By letter dated
January 26, 1998, United Air Lines, Inc. ("United") and Lufthansa German Airlines ("Lufthansa") have applied for renewal of existing statements of authorization and a blanket statement of authorization to enable Lufthansa and United to display each other's designator code on flights in U.S.-Germany and third-country markets so long as the carriers possess the underlying route authority. Northwest expresses no position on the renewal request but wishes to comment on the request for a blanket statement of authorization.According to United and Lufthansa, the purpose of the blanket authorization is to ease the administrative burden of filing a multitude of code-share applications and to speed up marketplace responses. On the latter point, the joint applicants have stated (at 2) that "[a]pproval of this application will . . . enable United and Lufthansa to respond quickly to service demands and changes in the marketplace, as it will provide the carriers with the flexibility to adjust their codeshare services without the need to obtain Department approval to amend the code-share authority every time they seek to add another third-country beyond point." Northwest shares the United/Lufthansa view about the need to streamline the code-share process in circumstances where the United States and the government of a U.S. airline's foreign partner are signatories of an open skies agreement. Accordingly, Northwest supports the United/Lufthansa request so long as the Department includes certain safeguards and ensures consistency in comparable situations.
Mr. Paul L. Gretch
February 3, 1998
Page 2
First, the blanket authorization should be subject to the same conditions imposed by the Department when it granted blanket authorizations to the United/SAS and Delta/Swissair/Sabena/ Austrian alliances, including the condition that the parties give advance notice before beginning any new code-share service. See
Notice Approving United/SAS Application, 97-270, May 20, 1997; Notices Approving Delta/Swissair, Delta/Sabena and Delta/Austrian Applications, 97-238, 97-239 and 97-243, April 30, 1997.Second, the Department should make clear that the blanket statement of authorization does not cover code sharing in third country markets that restrict code sharing and other services by U.S. carriers. United may assume this restriction to be implicit, having stated (at 4) that "[i]mplementation of new code-share services to third-country points beyond the U.S. and Germany would be implemented only to the extent permitted by the carriers' respective international route authorities and the applicable bilateral agreements." However, especially because United already possesses extensive DOT route authority in thirdcountry markets, many of which are subject to restrictive bilaterals, the Department should clearly articulate this point. A provision already in United's DOT route authority provides such protection. 1/ Something comparable should be incorporated in
1/ See
Order 97-6-16, confirming Notice of Action Taken, Docket OST-97-2126, May 2, 1997. According to that Notice:The route integration authority granted is subject to the condition that any service provided under this exemption shall be consistent with all applicable agreements between the United States and the foreign countries involved. Furthermore, (a) nothing in the award of route integration authority requested should be construed as conferring upon United rights (including fifth freedom intermediate and/or beyond rights) to serve markets where U.S. carrier entry is limited unless United notifies us of its intent to serve such a market and unless and until the Department has completed any necessary carrier selection procedures to determine which carrier(s) should be authorized to exercise such rights; and (b) should there be a request by any carrier to use the limited entry route rights that are included in United's authority by virtue of the route integration exemption granted here, but that are not then being used by United, the holding of such authority by route integration will not be considered as providing any preference for United in a competitive carrier selection proceeding to determine which carrier(s) should be entitled to use the authority at issue.
Mr. Paul L. Gretch
February 3, 1998
Page 3
whatever blanket statement of authorization may be issued.
Third, if it grants the blanket statement of authorization requested here, the Department also should declare that its policy is to grant comparable statements of authorization whenever the United States and the government of a U.S. airline's foreign partner have signed an open skies agreement. This would ease the regulatory burden of many U.S. and foreign carriers, including Northwest and KLM. Northwest has expanded on this proposition in its answer to the January 23, 1998 Petition of American Airlines, Inc. for a Policy Statement To Establish Indefinite Duration for Certain Authorities, Docket
OST-98-3375.
Respectfully submitted,
Megan Rae Poldy
Associate General Counsel
cc: Counsel for United Air Lines, Inc. and Lufthansa