OST-97-2965 / OST-98-3626 / OST-98-3640 / Undocketed / American / Iberia / Air Nostrum / Aviaco / Petition of United for Review of Staff Action / May 20, 1998
Applications of
AMERICAN AIRLINES, INC. ("American") /
Docket OST-97-2965IBERIA LINEAS AEREAS DE ESPANA, S.A
. ("Iberia") / Docket OST-98-3626 and Undocketedfor an exemption under 49 U.S.C. §40109 and statements of authorization under Parts 207 and 212 (reciprocal codeshare Services)
Joint Application of
AIR NOSTRUM, LINEAS AEREAS DEL MEDITERRANEO, S.A. ("Air Nostrum")
AVIACION Y COMERCIO, S.A. ("Aviaco") /
Docket OST-98-3640for an exemption pursuant to 49 U.S.C. §40109 )
PETITION OF UNITED AIR LINES, INC.
FOR REVIEW OF STAFF ACTION
Pursuant to 14 CFR §385.5 /1, United Air Lines, Inc. ("United") petitions for review of staff action with respect to a portion of the
Notices of Action Taken dated April 30, 1998, in the above-captioned proceedings. Specifically, United requests the Department to review the staff's oral approval of statements of authorization issued to the Spanish carrier applicants to1/ According to those Notices, this petition is not due until 10 days after the Department order confirming the oral staff action. That confirming order has not been issued but United is filing in advance of the due date.
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display the code of American Airlines, Inc. ("American") on services between Madrid and Rome, Italy. Such approval is inconsistent with Department precedent and raises a substantial and important question of policy. On review, that action should be reversed and the applications for statements of authorization should be dismissed with respect to Madrid-Rome service. In support of its request, United submits the following:
1. By Notices of Action Taken, dated April 30, 1998, the Department's staff orally approved statements of authorization for Iberia, AVIACO and Air Nostrum to display the designator code of American on services between, inter alia, Madrid and Rome. This action was based on a finding that such service was consistent with the U.S./Spain bilateral air services agreement. That agreement authorizes a U.S. carrier to serve Rome as a point beyond Madrid.
2. In its action, the staff apparently overlooked the fact that code-share service by American to Rome via Madrid is inconsistent with the U.S./Italy agreement. While that agreement authorizes third-country carrier code shares, it also limits the number of frequencies and routings that may be operated by a carrier, such as American, that is designated under the February 8, 1990 Memorandum of Understanding ("MOU"). Under that agreement, American may operate seven weekly frequencies for services between a point in the U.S. and Rome and Milan. No
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intermediate points are authorized. American uses all seven of its frequencies for its daily Chicago-Milan service.
3. When United and Lufthansa proposed to operate codeshare services via Germany between the U.S. and Italy, including Rome and Milan, the Department dismissed their applications. The basis for the dismissal was United's lack of authority to hold out code-share services via Frankfurt and to operate in excess of the seven weekly frequencies it provided in its own aircraft between Washington and Milan. /2 United, like American, is designated under the 1990 MOU.
4. The Department should not treat these two U.S.-Italy third country code-share services differently. United's U.S./Italy code-share service via Germany was consistent with the U.S./Germany agreement just as American's is consistent with the U.S./Spain agreement. Neither is consistent, however, with the U.S./Italy agreement.
Either both code shares should be approved, or both dismissed. Having already dismissed the United/Lufthansa code share, the Department should grant the same relief with respect to American/Iberia, et al. American urged the same relief when
2/ See Order 96-7-44 dismissing United exemption application. Lufthansa's related application dated June 13, 1994, for a statement of authorization to code share on services to Italy (including Rome and Milan) was dismissed on April 16, 1998.
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United and Lufthansa requested extrabilateral authority to code share to Italy via Frankfurt:
As United concedes, the requested [United/ Lufthansa code-share] authority is extrabilateral. The U.S.-Italy Air Transport Agreement is one of the most restrictive in all of Europe, and severely limits Third and Fourth Freedom services operated by U.S. carriers. American, for example, is allowed only one daily roundtrip between a single U.S. gateway (Chicago) and Milan/Rome. Before the Department devotes negotiating resources to seeking third-country codesharing for the benefit of Lufthansa, it should insure that the interests of U.S. carriers for expanded competitive opportunities in nonstop U.S.-Italy markets have been met... [T]he Department should not grant extrabilateral code-sharing rights in the U.S.-Italy market.
Consolidated Answer of American Airlines, dated June 22, 1994, in Docket 49597 and undocketed at 1-2. The same reasoning requires dismissal of the applications of Iberia, AVIACO and Air Nostrum for statements of authorization to display American's designator code on their services between Madrid and Rome.
5. United requests the Department to review the staff's oral action in approving the statements of authorization for Madrid-Rome code-share service by Iberia, AVIACO and Air Nostrum
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and on review to reverse that action and dismiss the relevant portions of these applications.
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: May 20, 1998