OST-97-2965 / OST-97-2966 / Undocketed / OST-97-2982 / OST-96-1700 / OST-97-2058 / Ost-97-2054-2057 / American and Iberia/Lan Chile/British Airways/TACA Group / Answer of Continental to Motion of American / October 29, 1997

Application of

under 49 U.S.C. § 40109 for exemption

Application of

for exemption under 49 U.S.C. § 40109 (former Section 416(b) of the Federal Aviation Act of 1958, as amended)

Joint Application of

for Statements of Authorization Under 14 CFR Parts 207 and 212 (Reciprocal Code-Share Services)

Application of

for an exemption and Statements of Authorization

Joint Application of

under 49 USC §§ 41308 and 41309 for approval of an antitrust immunity for alliance agreement

Joint Applications of

for exemptions, certificate authority, undocketed foreign air carrier permit authority, and statements of authorization

1/ Common names of carriers are used.

Answer of Continental

Page 2

demonstrate definitively that relevant information submitted in the American/ British Airways proceeding must be available, on a confidential basis, to all the parties involved in the Department's proceedings affecting American's comprehensive scheme to form alliances with dominant carriers worldwide and eliminate competition.

Continental states as follows in opposition to American's motion:

1. American alleges that Delta's confidential answer to the American/Iberia code-share application used information obtained from confidential documents submitted in connection with the joint application of American and British Airways in violation of the confidentiality procedures established by the Department /2 despite the fact that Delta filed its answer in the American/British Airways docket and served the confidential version only on persons who had submitted confidentiality affidavits in that proceeding. Under these circumstances, American's motion seeks to exalt form over substance, as Delta has demonstrated. More importantly, however, the American motion reveals American's true motive -- preventing a comprehensive review of its worldwide alliance strategy.

2. American has filed its alliance applications in piecemeal fashion to preclude a comprehensive review of the overall anti-competitive effect all the proposed alliances will have. American is thus attempting to obscure its master

Answer of Continental

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alliance strategy to eliminate competition, but the Department must not aid and abet American's attempt to obfuscate its global anticompetitive ambitions. Many of the documents filed in accordance with the confidentiality procedures in the American/British Airways proceeding contain information highly relevant to the American/Iberia and American/TACA proceedings as well as proceedings involving other American alliances. American was directed to provide information on its alliances and potential alliances and investments so the Department could determine the effect the proposed alliances would have on competition. Clearly, information in the American/British Airways proceeding on the very same alliances which are now before the Department in other proceedings is highly relevant to the Department's consideration of those alliances. Similarly, information on each of the American alliances is relevant to the other American alliances because all of American's alliances are interrelated and because each individual American alliance has a harmful incremental effect on competition in all of the alliance regions. The effect is particularly harmful when the American alliances intersect at Miami or affect the same geographic region, such as Latin America.

3. The documents related to American's alliances and their interrelationships are relevant to the American alliance proceedings throughout Latin America and across the Atlantic now pending before the Department, and the confidentiality of those documents can be preserved to the extent necessary through the Department's confidentiality procedures. Accordingly, the confidential

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documents submitted in the American/British Airways proceeding should be made available to all interested parties in the related proceedings willing to comply with the Department's confidentiality procedures so that all appropriate arguments can be made and the Department can consider all of the issues necessarily raised by American's interlocking alliances. More information submitted in the American/ British Airways proceeding is highly relevant to the American/Iberia and American/TACA alliances than that which Delta has identified in its confidential answer to the American/Iberia code-share application. For that reason, the Department must first allow all parties to use confidential information submitted in connection with the American/British Airways proceeding in connection with these proceedings to submit additional comments containing that confidential information. Similarly, the documents submitted in connection with the American/British Airways application should be made available to all interested parties in all of the American alliance proceedings willing to comply with standard confidentiality procedures, regardless of whether or not the applications are consolidated, and the American motion to strike and for sanctions should be denied. So long as only those parties submitting appropriate confidentiality affidavits receive the protected information, any legitimate American concerns about confidentiality will be satisfied. /3

3/ The only change in standard procedures would require parties to indicate in their affidavits, or the Department to determine, that the same information could be used in any American alliance proceeding.

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WHEREFORE, for the foregoing reasons, Continental urges the Department to make all confidential documents submitted in connection with the joint application of American and British Airways available for use in all of the American alliance proceedings by those parties who submit to the Department's confidentiality procedures, and to deny American's motion to strike and for sanctions.

Respectfully submitted,

CROWELL & MORING LLP

R. Bruce Keiner, Jr.

Lorraine B. Halloway

John I. Blanck, Jr.

Counsel for Continental Airlines, Inc.

October 29, 1997