OST-98-3476 / United and Lufthansa / Germany-Sarajevo and Zagreb / February 12, 1998

Joint Application of

Docket OST 98-3476

for an exemption pursuant to 49 USC §40109 and a Statement of Authorization pursuant to 14 CFR Part 212

(Code Share: Germany-Sarajevo, Bosnia and Zagreb, Croatia)

United Air Lines, Inc. ("United") requests an exemption from §41101 pursuant to 49 U.S.C. §40109 to allow it to offer services between points in the U.S., on the one hand, and Sarajevo, Bosnia, and Zagreb, Croatia, on the other hand, via points in Germany, and to integrate these services with United's other outstanding route authorizations consistent with applicable international agreements. United proposes to offer services to Sarajevo and Zagreb in conjunction with its codeshare arrangements with Lufthansa German Airlines ("Lufthansa"). Services will be operated via connections at points in Germany.

Joint Application of United and Lufthansa

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Lufthansa requests a Statement of Authorization to code share for United on Lufthansa's flights between points in Germany and Sarajevo and Zagreb. United and Lufthansa request that their respective authority be issued to be effective immediately and to continue for a period of two (2) years. /1 In support of their request, United and Lufthansa submit the following:

1. United is planning to offer code-share service with Lufthansa on the latter's flights between points in Germany and both Sarajevo and Zagreb. Lufthansa presently operates services from both Frankfurt and Munich to Zagreb and will be starting Munich-Sarajevo service on March 29, 1998. These flights will connect with United/Lufthansa flights to Frankfurt and Munich from the U.S. The code share will enable United to hold out services between the U.S. and Sarajevo and Zagreb, the major cities and capitals of Bosnia and Croatia, respectively. These

1/ Lufthansa has already joined in an application dated January 26, 1998, requesting a blanket statement of authorization to code share for United to points in third countries, including Croatia and Bosnia, subject to a 30-day advance notice condition. In the event the pending joint application is granted prior to action on the instant application, Lufthansa's request herein will be moot except insofar as the 30-day notice is required. In that event, this application should be deemed Lufthansa's 30-day notice pursuant to the blanket statement of authorization.

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services will begin as soon as all necessary government approvals have been received.

2. United requires exemption authority to serve Sarajevo and Zagreb. /2 United is already authorized to serve all points in Germany by its Certificate of Public Convenience and Necessity for Route 57. Lufthansa already has the underlying authority to serve both Sarajevo and Zagreb from Germany. Lufthansa requests a Statement of Authorization under 14 C.F.R. Part 212 to code share for United on flights between points in Germany and Sarajevo, Bosnia, and Zagreb, Croatia.

3. United's proposed U.S.-Sarajevo/Zagreb code-share services via Germany are consistent with the terms of the bilateral air services agreement between the U.S. and Germany. Services between the U.S. and Bosnia and Croatia are governed by principles of comity and reciprocity. The proposed code-share services are expected to be approved pursuant to those principles. United's Germany-Sarajevo and Germany-Zagreb

2/ United holds a certificate of public convenience and necessity authorizing service to points in Yugoslavia which formerly included Sarajevo and Zagreb. The Department advised United, however, that specific exemption authority is required in order to serve those two points under current circumstances.

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services will be blind sectors for traffic under the UA designator code -- i.e., United will not be selling service to local traffic between Germany and either Sarajevo or Zagreb.

United also requests route integration authority. This will enable United to integrate its new authority to serve Sarajevo and Zagreb with its existing Certificates of Public Convenience and Necessity and exemption authority. This would allow United to serve Sarajevo and Zagreb via routings other than points in Germany should the occasion arise to do so. The route integration exemption should be subject to the normal condition that services may be integrated consistent with applicable international agreements and subject to the receipt of the necessary foreign government approvals.

5. The code-share services of United and Lufthansa are offered pursuant to their alliance agreements which are on file with the Department in Dockets 49223 and OST-96-1116. These services will not affect United's commitment of equipment to the CRAF. United will comply with the conditions of 14 C.F.R. §399.88 and agrees to take responsibility for traffic on these code-share flights ticketed under its "UA*" designator code.

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6. United and Lufthansa propose to begin operating codeshare services to Zagreb as soon as they have received all necessary approvals and will serve Sarajevo as early as March 29, 1998, when Lufthansa commences services to that point. In these circumstances, United and Lufthansa request expeditious grant of their respective exemption and Statement of Authorization requests. /3

WHEREFORE, on the basis of the foregoing, United requests an exemption from §41101 pursuant to 49 U.S.C. §40109 to allow it to offer services between points in the U.S., on the one hand, and Sarajevo, Bosnia, and Zagreb, Croatia, on the other hand, via points in Germany, and to integrate these services with services operated pursuant to United's other outstanding certificate and exemption authority consistent with applicable international agreements and foreign government approvals. Lufthansa requests a Statement of Authorization under 14 C.F.R. Part 212 to code share for United on Lufthansa's flights between points in Germany and Sarajevo, Bosnia, and Zagreb, Croatia.

3/ United and Lufthansa request a waiver of the 45-day advance filing period of §212.5(d)(2) in order to start U.S.-Zagreb code-share service as soon as the necessary approvals have been granted.

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United requests that its exemption be issued for a period of two (2) years and Lufthansa requests that its Statement of Authorization be issued for a period of two (2) years or to be coextensive with the term of the blanket statement of authorization requested in the joint application dated January 26, 1998. Finally, United And Lufthansa request such other different relief as the Department may deem to be consistent with the public interest.

Respectfully submitted,

JAMES S. CAMPBELL

WILMER, CUTLER & PICKERING

Counsel for LUFTHANSA GERMAN AIRLINES

JOEL STEPHEN BURTON

GINSBURG, FELDMAN and BRESS

Counsel for UNITED AIR LINES, INC