OST-95-369 / OST-96-1348 / OST-96-1560 / United Air Lines / Renewal and Amendment of Exemptions / February 27, 1998

 

Application of

UNITED AIR LINES, INC.

Dockets OST-95-369 / OST-96-1348 / OST-96-1560

for an exemption pursuant to 49 USC and 40109

(Code Share: U.S.-Lyon, France; U.S.-Nairobi, Kenya; U.S.-Manchester, England; U.S.-Baku, Azerbaijan; and U.S.-Ashkhabad, Turkmenistan)

 

APPLICATION OF UNITED AIR LINES, INC.

FOR RENEWAL AND AMENDMENT OF EXEMPTIONS

 

By Orders 96-6-28, 96-9-28 and 98-1-17, the Department of Transportation granted or renewed the exemption authority of United Air Lines, Inc. ("United") to operate scheduled service between points in the United States, on the one hand, and Manchester, England (Docket OST-96-1348, Order 96-ó-28); Baku, Azerbaijan, and Ashkhabad, Turkmenistan (Docket OST-96-1560, Order 96-9-28); and Lyon, France, and Nairobi, Kenya (Docket OST-95-369, Order 98-1-17), on the other hand. These orders permit services to be operated in some cases via all points in Germany (Order 98-1-17) and in others via specific points in Germany, such as Frankfurt (Order 96-9-28) or Munich (Order 96-ó-28). The exemption authority to serve Lyon and Nairobi is further conditioned in that United can offer service only "under its code-sharing arrangement with Lufthansa." Order 98-1-17. These

 

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various routing or operational limits were imposed in circumstances where United's code-share operations were originally limited to services under its arrangements with Lufthansa which involved connections at one or more points in Germany.

United hereby applies for renewal of this authority pursuant to 49 U.S.C. Section 40109 for a period of two years. United also requests that its exemption authorizations be amended to allow United to serve these points from the U.S. via points in other countries which United is authorized to serve in addition to Germany and to offer service with code-share partners other than Lufthansa. This will permit code-share service, for example, via points in Scandinavia (Denmark, Norway and Sweden) on Scandinavia Airlines System ("SAS") or via points in the U.K. with British Midland Airways, Ltd. For example, British Midland is beginning service to Manchester from London Heathrow on March 29, 1998. The amended exemption authority is needed to allow United to code share on those services.

United invokes and relies upon the provisions of Section 558 (c) of the Administrative Procedure Act (5 U.S.C. Section 558 (c)), as implemented by Part 377 of the Department's Special Regulations, to continue in effect its existing exemption authority pending final action on this renewal application. The

 

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authority is currently effective through May 29, 1998 (Manchester), August 20, 1998 (Baku and Ashkhabad) and December 29, 1999 (Lyon and Nairobi). This renewal application is being timely filed in compliance with the Department's rules. United requests that its amended exemption authority be granted for a period to be co-extensive with the renewed and amended exemption authority granted pursuant to its application, dated February 24, 1998, in Docket OST-96-1554. /1

In support of its request, United submits the following:

1. By this amendment, United would remove the specification of an intermediate point or points in Germany and allow service via any authorized point. United, therefore, requests the authority to integrate services authorized herein with other services authorized under other outstanding certificates of public convenience and necessity and exemption authorizations to the extent such integration is consistent with applicable international agreements. United also agrees to accept the standard route integration condition relating to

1/ In Docket OST-96-1554, United has requested a similar amendment of exemption authority issued in that proceeding in order, for example, to allow the substitutions of (a) SAS for Lufthansa and (b) Copenhagen and Stockholm for Frankfurt with respect to United's code-share services to Tallinn, Estonia.

 

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inauguration of services in limited-entry markets. /2 This will afford United the flexibility to offer code-share service over the most convenient routing. /3

2. The Department has found that the authority at issue here is consistent with the applicable bilateral agreements or comity and reciprocity applicable to air services between the United States and those countries concerned. See Orders 96-6-28, 96-9-28 and 98-1-17 and previous orders in those respective dockets. With respect to the proposed United/British Midland code-share service between London Heathrow and Manchester, that service is consistent with the provisions of the U.S./U.K. agreement, as amended by the U.S./U.K. Memorandum of

2/ See Order 97-10-8, Attachment E at 2 and Certificate Amendment for Route 130 at 2. Under that standard condition United will give advance notice of any proposal to integrate services involving limited-entry markets and, where appropriate, the Department will afford other carriers the opportunity to seek such limited authority.

3/ United's code-share partners will conform with the relevant procedures applicable to their statements of authorization to display United's designator code on flights to points covered by this exemption. In some cases, such as British Midland, specific statements of authorization will be required on an ad hoc basis. With respect to the proposed London Heathrow-Manchester services, for example, British Midland is today filing application for an appropriate statement of authorization. In other cases, such as SAS, this will involve blanket authority that is subject to a 30-day notice to the Department of new codeshare service.

 

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Consultations, dated June 5, 1995. /4 The U.S. has "open skies" agreements with each of the Scandinavian countries authorizing U.S. carriers to serve any point beyond Scandinavia.

3. United is fit, willing and able to continue to offer services between the U.S. and the cities listed in the exemption. See, e.g., United Air Lines, Inc., Route 747, Order 97-10-14 (U.S.-South Africa and Zimbabwe), and Route 130 Renewal, Order 97-10-8. United requests that the Department take official notice pursuant to Rule 24 of its Procedural Regulations of all data filed to establish such fitness.

4. Renewal and amendment of United's exemption authority, as requested herein, is clearly in the public interest and will ensure continuation and expansion of these services. United is currently using these exemptions to provide on-line service between the U.S. and several of the foreign points contained in the exemption through code-sharing on Lufthansa's flights via Germany. Amendment, as requested, will allow United to offer

4/ Under the June 5, 1995 MOC, all U.S. carriers are authorized to operate services to any regional point in the U.K. such as Manchester without limitation as to designations or capacity. As a U.S. carrier authorized to serve London Heathrow, United is authorized to carry transit and online connecting traffic between London Heathrow and Manchester. U.S. Route 1A. United's code-share traffic on British Midland's Heathrow-Manchester services will be limited to such transit and online connecting traffic transported to Heathrow on United's existing services.

 

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code-share services to these points on other routings involving services of its United's other European code-share partners such as the proposed British Midland code share to Manchester via Heathrow or SAS services via connections in Scandinavia. With the flexibility permitted by the exemption amendment, United will increase or maintain code-share service from the U.S. to the foreign countries named in the exemption via intermediate stops at points such as London, Copenhagen, Oslo, or Stockholm as well as other authorized connection points as new service opportunities develop.

5. By this amendment United is seeking to serve the previously listed cities via any intermediate point, which is consistent with the authority granted to United for service to similar countries (See Notice of Action Taken dated December 4, 1997 in Docket OST-97-3109 and Order 98-1-6). The route integration authority requested herein will facilitate service via other authorized connection points.

6. United also requests elimination of the condition in Order 98-1-17 which limits its code-share service to Lyon, France and Nairobi, Kenya to services "under its code-sharing arrangement with Lufthansa." That condition has not been applied to United's other code-share exemption authorizations such as those issued by Orders 96-3-17, 96-6-28, 96-9-28 and 98-1-6.

 

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There is no reason to limit United's services to Lyon and Nairobi to those operated by Lufthansa, and United should be permitted to use the services of other partners serving those points if good connections exist, subject to the issuance of appropriate statements of authorization to those partners.

7. United requests a renewal of its exemption authorizations, as amended herein, for a period of two years or until final action on United's amended application for a certificate of public convenience and necessity in Docket OST-95625. This will avoid unnecessary and repetitive renewals of an ongoing service that has already been determined to be consistent with Department policy. The Department most recently granted these code-share exemptions for two-year periods and United's request is consistent with those prior decisions.

United requests expeditious action on this application so that it can offer code-share services on the flights to be operated by British Midland between London Heathrow and Manchester. Those services begin on March 29, 1998.

8. United's participation in the Civil Reserve Air Fleet Program ("CRAF") will not be affected by renewal or expansion of the requested authority.

WHEREFORE, for the foregoing reasons, United urges the Department to renew and amend the exemption authority identified

 

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above and to grant it such other and different relief as the Department finds to be consistent with this application and with the public interest. This renewal should be effective immediately and should remain in effect for a period of two years /5 or until final action on United's application for a certificate of public convenience and necessity in Docket OST-95-625.

 

Respectfully submitted,

JOEL STEPHEN BURTON

GINSBURG, FELDMAN and BRESS CHARTERED

1250 Connecticut Avenue, N.W.

Suite 800

Washington, D.C. 20036

(202) 637-9130

Counsel for

UNITED AIR LINES, INC.

DATED: February 27, 1998

5/ As noted previously, for ease of administration the two-year period should be co-extensive with the term of United's renewed and amended exemption authority in Docket OST-96-1554 requested pursuant to its application dated February 24, 1998, in that docket.