OST-98-3552 / Lufthansa / Frankfurt-Chicago / February 24, 1998

Application of

Lufthansa German Airlines / Docket OST-98-3552

for an exemption from Subparts K and S of Part 93 of Title 14, Code of Federal Regulations, pursuant to 49 U.S.C. § 41714(b)(1)

Pursuant to 49 U.S.C. § 41714(b)(1), Lufthansa German Airlines ("Lufthansa") hereby applies for an exemption from Subparts K and S of 14 C.F.R. Part 93 to the extent necessary to enable Lufthansa to introduce a new daily roundtrip combination service between Chicago O'Hare International Airport and Frankfurt, Germany.

In support of its Application Lufthansa states as follows:

1. Lufthansa wishes to introduce a new daily roundtrip combination service between Chicago and Frankfurt using Stage 3 Airbus A340 aircraft on May 1, 1998.

2. On October 14, 1997, Lufthansa filed with the Federal Aviation Administration a timely request for additional slots at Chicago O'Hare for the upcoming summer 1998 traffic season. Lufthansa requested a daily arrival slot at 7:45 p.m. /1 Lufthansa received notification from the FAA earlier this month that the FAA is unable to grant Lufthansa's request for a 7:45 p.m. O'Hare arrival slot because Lufthansa's "request, along with the request of other carriers for new or additional slots, exceeds the total number of slots that the FAA is able to allocate."

3. 49 U.S.C. § 41714(b)(1) authorizes the Secretary of Transportation to grant exemptions from the High Density Rule for foreign air transportation if such action is "in the public interest." Grant of Lufthansa's exemption request is clearly in the public interest for the following reasons:

(a) Lufthansa's proposed new service will provide significantly increased capacity and additional travel options for large numbers of passengers traveling between points in the U.S. and points in Germany and beyond. This desirable outcome is attributable to the fact that the proposed Lufthansa service will operate between the United States' largest hub airport and the largest continental European hub airport, thus maximizing potential connectivity between the route networks centered on these hubs, 2/ Approval of Lufthansa's exemption request will

1/ Lufthansa's planned 10:15 p.m. departure from O'Hare falls outside the period of restricted operations at the airport.

2/ The Department has previously approved and granted antitrust immunity for Alliance Agreements between Lufthansa and United Air Lines ("United"), finding that their Alliance "will enhance competition overall and allow the airlines to provide better

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therefore enable U.S. travelers and shippers to derive to the fullest extent possible the benefits resulting from optimal capacity on the single most important route between the U.S. and Continental Europe.

(b) Lufthansa's proposed introduction of additional capacity between Chicago and Frankfurt will also result in benefits to U.S. travelers and shippers because of the specific times at which Lufthansa proposes to operate its additional flights. Lufthansa's proposed new services would arrive in and depart from Chicago approximately two to three hours later than any of the existing non-stop Chicago-Frankfurt flights. /3 Approval of Lufthansa's application will mean that both local Chicago travelers and most U.S.-originating passengers making connections at O'Hare onto Lufthansa's Frankfurt-bound flights will be able to spend an entire workday in the U.S. before departing for Frankfurt and points beyond in Germany and Europe. /4 Similarly, Lufthansa's 5:30 p.m. departure at Frankfurt for the return flight to Chicago will enable U.S. travelers to spend the better part of the workday in Europe

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service and enable them to operate more efficiently." Order 96-5-12 at 15. That decision has enabled Lufthansa and United to enhance the coordination of their respective route networks.

3/ Indeed, if Lufthansa's exemption request is granted, Lufthansa's new service will be O'Hare's first late evening departure to Continental Europe operated on a daily basis.

4/ Many experienced travelers also strongly prefer late evening departures from the U.S. when flying to Europe because such flights are less disruptive to established sleep patterns.

before embarking on return travel to Chicago and U.S. cities served on a connecting basis via Chicago.

(c) Lufthansa's proposed service will also establish for the first time attractive two-segment online connecting services to O'Hare from points in important developing markets. Lufthansa's 5:30 p.m. Frankfurt departure is scheduled so that it connects with a bank of 36 incoming Lufthansa flights, many of which serve points in Eastern Europe and Central Asia that currently do not enjoy convenient, two-segment online connecting service to Chicago. Approval of Lufthansa's exemption application will therefore mean that Chicago and Chicago-connecting passengers will be able to travel for the first time to/from cities such as Kiev, Minsk or Katowice without having to change carriers or make multiple changes of plane between Chicago and their European/Central Asian destination.

4. Approval of Lufthansa's application would further the objectives of the U.S.-Germany open skies bilateral air services agreement and is strongly supported by principles of comity and reciprocity. The two U.S. carriers serving the Chicago-Frankfurt route on a nonstop basis (United and American Airlines) currently offer a combined total of 21 roundtrip frequencies per week; Lufthansa, the sole German carrier serving the route, presently offers only seven roundtrip flights per week between the two cities. More generally, U.S. carriers presently hold far more slots at German airports than do Lufthansa and other German airlines at U.S. airports.

WHEREFORE, Lufthansa respectfully requests that the Department grant it an exemption from Subparts K and S of 14 C.F.R. Part 93 to the extent necessary to enable Lufthansa to introduce a new daily roundtrip combination service between Chicago O'Hare International Airport and Frankfurt, Germany.

Respectfully submitted,

James S. Campbell

J. Edward Cox

WILDER, CUTLER & PICKERING

2445 M Street, N.W.

Washington, D.C. 20037-1420

(202) 663-6000

Counsel for Lufthansa German Airlines

Dated: February 24, 1998