OST-98-3419 / 1998 US-Japan Combination / Response of Dallas/Fort Worth International Airport / March 26, 1998

Clearly the Department's decision in Order 98-3-15 serves to maximize the economic benefits of the new U.S.-Japan agreement to be reaped this year by Dallas/Fort Worth and the other affected U.S. communities. As we pointed out in Dallas/Fort Worth's

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Motion, the annual economic benefit for Dallas/Fort Worth from the new DFW-Osaka route is forecast at $650 million annually, but delayed inauguration until April 1999 would have cost the Dallas/Fort Worth Metroplex some $270 million in lost export earnings, Japanese tourist revenues and inward investment. Dallas/Fort Worth Motion, Attachment 1. For the five U.S. communities -- Dallas/Fort Worth, Portland, Boston, Houston, and New York -- that are slated to receive new Japan flights later in 1998 the cost of delay would have totaled some $1.617 billion. Id. We concur with the Department's assessment that "many of these public benefits would be lost if we waited until the year 2000 to implement a substantial portion of the route rights that we can implement now." Order 98-3-15, p. 8.

Dallas/Fort Worth urges the Department, after considering any objections, to issue its Final Order awarding new U.S.-Japan authority by April 30, 1998 at the latest. The U.S. carriers planning to start new services in October through December 1998 need to file their slot requests for winter 1998/1999 slots with the IATA Schedules Coordinating Committee by the end of May. Their Department route awards should be in hand by then to facilitate the slot assignment process at the Japanese airports involved (e.g., Narita, Osaka, Fukuoka).

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On March 19, 1998 Continental Micronesia filed to amend its U.S.-Japan frequency application to seek five frequencies for Honolulu-Tokyo service effective December 15, 1998. On March 24, 1998 American filed a supplement to its U.S.-Japan application seeking one more San Jose-Tokyo frequency effective 60 days after final Department approval. By its March 23 and March 24 Notices the Department directed that answers to the Continental and American applications be filed by this date. Dallas/Fort Worth can support both the Continental and American supplemental requests provided such requests do not delay or jeopardize the Department's prompt finalization of the grant of 64 frequencies for DFW-Osaka and the other 1998 start-ups tentatively awarded by Order 98-3-15.

Continental alleges that in light of Order 98-3-15 it "now has DC-10 aircraft available" and can begin five Honolulu-Tokyo frequencies on December 15, 1998 rather than February 2000 as originally planned. Continental Supplement, p. 2. Ironically, Continental cites as a public benefit in support of its request the need of the State of Hawaii's economy for replacement Hawaii-Japan frequencies in light of service reductions by the incumbents including Continental's alliance partner and controlling shareholder, Northwest. Id. Since the "immediate authorization of the 1998 proposals" as the Department found in

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Order 98-3-15 "provides for greater public interest benefits," grant of Continental's supplement is consistent with the Department's policy objectives as stated in the Show Cause Order. With the grant of 64 frequencies for the 1998 start-ups (and reservation of 14 frequencies for the new TWA and Hawaiian services), there are still 12 additional frequencies available for new U.S.-Japan services. Continental's request for five can be granted, and still leave frequencies available for other new services.

Continental, however, cannot have its cake and eat it too. Continental cannot continue to attack the Department's actions in Order 98-3-15 as unlawful and prejudicial, Continental Supplement, p. 2, and at the same time expect to be granted Honolulu-Tokyo frequencies for start-up in December 1998. If Continental truly wants to aid Hawaii's economy and provide replacement Hawaii-Japan frequencies in 1998, 1/ Continental must recognize that prompt finalization of Order 98-3-15 and award of 64 frequencies for proposed 1998 start-ups is essential. It is the only Department procedure for awarding new Japan frequencies that will assure that new 1998 services such as DFW-Osaka or Honolulu-Tokyo can be implemented this year.

1/ As well as new Houston-Tokyo nonstop service in December 1998.

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If Continental continues to object to the Department's awards in Order 98-3-15, it will be clear that Continental's objective is not to bring new services to the Honolulu-Tokyo market (or Houston-Tokyo for that matter) this year, but to place further procedural obstacles in the path of Department finalization of Order 98-3-15. If this turns out to be Continental's tactics, Dallas/Fort Worth must oppose Continental's supplemental application.

American's March 24 supplement seeks one frequency to "topoff" its San Jose-Tokyo service to the level of daily service. Even with grant of Continental's five frequencies for Honolulu-Tokyo, frequencies are still available to grant American's request. Assuming Continental's supplement is granted, Dallas/Fort Worth supports grant of American's supplemental request for one frequency for San Jose-Tokyo as well. Again such awards will provide for "maximum implementation" of new U.S.Japan frequencies in 1998. Order 98-3-15, p. 7.

On March 25, 1998 Delta also filed an amended Japan frequency application seeking six new frequencies for Honolulu-Tokyo service beginning December 15, 1998. By its March 25 Notice the Department directed that answers to Delta's application also be filed today.

Delta's request for six frequencies in connection with Continental's request for five, and American's request for one

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frequency would fully utilize the 12 available frequencies that were still available when Order 98-3-15 was issued. Dallas/Fort Worth supports grant of Delta's application -- however belatedly filed -- for the same reasons that we support grant of the American and Continental post-Order 98-3-15 requests. Such awards for 1998 services will provide maximum benefit in terms of new U.S.-Japan frequencies for U.S. communities and U.S. airlines this year.

Nonetheless should any new applications proposing use of U.S.-Japan frequencies in 1998 be filed, Dallas/Fort Worth would be forced to reconsider its position. Should applications resulting in requests for more than the 90 available frequencies for 1998 services be filed, Dallas/Fort Worth would urge that the initial 64 frequencies tentatively approved by Order 98-3-15 be finalized, and that all post-Order 98-3-15 requests be decided in an separate proceeding.

The post-Order 98-3-15 amendments -- however well intended -- are late-filed and the carriers should pay a price for their tardiness. These requests should not be allowed to delay or sidetrack the award of the 64 frequencies for new 1998 services tentatively awarded by Order 98-3-15. The applications timely-filed should receive greater and more immediate consideration from the Department than those filed belatedly by the carriers. The American, Continental, Delta and any other subsequent

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applications should then be placed at issue in a separate case for award of the 12 Japan frequencies not allocated by Order 98-3-15.

In summary, Dallas/Fort Worth supports grant of the American, Continental and Delta supplemental requests so long as such grants do not delay the prompt finalization of Order 98-3-15 by April 30, 1998. If additional requests for 1998 frequencies are filed, all post-Order 98-3-15 requests should be decided in a separate proceeding.

Respectfully submitted,

Michael F. Goldman

Bagileo, Silverberg & Goldman, L.L.P.

1101 30th St., N.W., Suite 120

Washington, DC 20007 (202) 944-3305

Counsel for the Dallas/Fort Worth International Airport