OST-97-3092 and Undocketed / Aeroflot and Continental / US-Russia / November 21, 1997
Applications of
AEROFLOT RUSSIAN INTERNATIONAL AIRLINES
and
CONTINENTAL AIRLINES, INC.
for Statements of Authorization under 14 C.F.R. Parts 207 and 212 and exemptions under 49 U.S.C. § 40109
ANSWER OF DELTA AIR LINES, INC.
On
November 6, 1997, Aeroflot Russian International Airlines ("Aeroflot") end Continental Airlines, Inc. ("Continental") applied for exemptions and statements of authorization to implement a reciprocal code-share arrangement to provide services between the United States and Russia. Delta hereby submits this answer to the Aeroflot/Continental application.1. The failure of the Government of Russia to honor U.S. carrier third-country code-share rights compels the deferral of the Aeroflot/Continental request, pending resolution of outstanding bilateral issues. Indeed, Aeroflot and Continental as much as concede that their application was predicated on "a comprehensive settlement of pending issues" during last week's negotiations, and that "Continental and Aeroflot have filed this application now to assure that
Answer of Delta Air Lines, Inc.
Page 2
all interested parties are aware of [the Continental/Aeroflot] code-share arrangement in advance of those negotiations."
Application at 4-5. No progress was made during the negotiations that would support the grant of the instant application. The government-to-government talks held November 12-14 made no progress in resolving Russia's continued denial of third-country code-share rights to U.S. carriers, including Delta. As has been reported:U.S.-Russia talks went nowhere fast after three days in Moscow. Expectations that Russia's hard line was merely an opening position proved wrong. Sources said Russian negotiators wanted to reduce current U.S. rights and expand options for Russian airlines.
Aviation Daily, November 17, 1997.
In these circumstances, the Department should not allow Aeroflot to enjoy the benefits of expanded U.S. access to new cities and a new code-share arrangement with Continental.
2. In the absence of a new bilateral arrangement, comity and reciprocity would not support the joint application. Aeroflot and Continental state that, because the Annexes to the U.S.-Russia agreement have expired, their requests for new route and code-share authority are governed by principles of comity and reciprocity. There has been a clear failure of reciprocity of the part of Russia. Moreover, the working assumption has been that the United States and Russia would continue to allow carriers to exercise the rights described in
Answer of Delta Air Lines, Inc.
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the Annexes, until a new agreement had been worked out. Russia has failed to allow U.S. carriers to exercise rights contained in the bilateral Annexes to perform third-country code-share service. At the same time, Aeroflot seeks a major expansion its route rights, together with code-share privileges, to serve U.S. cities including Boston, Cincinnati, Kansas City, and Minneapolis/St. Paul. which are not included in the route description for Russian carriers. The substantial new rights sought by Aeroflot should be addressed in a new bilateral agreement. The grant of any additional authority to Aeroflot before such an agreement is concluded must be avoided, or the United States would seriously compromise its bargaining position.
3. The Department is fully aware of Russia's failure to honor its bilateral commitments with respect to code-sharing, which is also the subject of a formal complaint by United under 49 U.S.C. section 41310 (
Docket OST-97-2888). The Department recently stated that it was "very concerned over the issues raised in United's complaint. indeed, even before the filing of the complaint, we had made clear our view that these important issues should be addressed directly with the Russian Government through diplomatic channels." Order 97-11-3 at 2. Until these issues have been satisfactorily resolved, the Department should not authorize new code-share services by Aeroflot.
Answer of Delta Air Lines, Inc.
Page 4
4. The Department is also aware that Delta has been prevented from implementing third-country code-share services to Russia, in conjunction with Austrian Airlines, between Vienna and Moscow and between Vienna and St. Petersburg. Austrian was already serving both of the routes, so there is no question that Austrian was authorized to serve Russia. Delta was able to implement the service in June 1997, but soon after implementation, Russia threatened action against Austrian, forcing Delta to terminate the code-share service. /1
These actions are inconsistent with the rights contained in the bilateral agreement. The U.S. Government specifically negotiated for and obtained thirdcountry code-share rights in exchange for valuable rights conferred on Russian carriers. The United States should not consider requests for code-share authority involving Aeroflot until U.S. carriers such as Delta are allowed to implement their proposed third-country code-share services.
1/ Delta also plans to introduce third-country code-share service to Russia via Brussels, Belgium in conjunction with Sabena, as soon as the difficulties regarding authorization of code-share service have been resolved with the Russian MOT.
Answer of Delta Air Lines, Inc.
Page 5
WHEREFORE, for all the foregoing reasons, Delta urges the Department to defer action on the Aeroflot and Continental applications.
Respectfully submitted,
Robert E Cohn
Alexander Van der Bellen
SHAW PITTMAN POTTS & TROWBRIDGE
2300 N Street, N.W.
Washington, D.C. 20037
(202) 663-8060
Counsel for DELTA AIR LINES, INC.