OST-98-4824 / Air France / High Density Rule – Chicago O’Hare / Answer of American Airlines / December 10, 1998

Application of :

for exemption from the slot limitation regulations (FAR, Part 93, Subparts K and S) at O'Hare International Airport

American Airlines, Inc. hereby answers in opposition to the application submitted on December 1, 1998 by Air France for exemption slots at Chicago O'Hare International Airport to serve Paris, France. Air France's application seeking slot relief from the Government of the United States should be denied unless the Government of France ensures that the slots American has requested are made available at Paris Orly Airport for American's proposed new daily service from Los Angeles.

Under provisions of the Air Transport Agreement between the United States and France signed on June 18, 1998, American was awarded seven additional frequencies for service between Los Angeles and Paris by Order 98-10-19, October 20, 1998, made final by Order 98-11-19, November 19, 1998. American has proposed to start Los Angeles-Paris (Orly) service on June 1, 1999.

- 2 -

An entity known as Airport Coordination Paris is in charge of the slot coordination process at the Paris airports. The head of slot coordination (presently, Mr. Eric Herbane) is appointed by the DGAC, the French Government agency that has a role analogous to that of DOT in the United States.

On October 19, 1998, American requested a daily arrival slot at Orly at 0945 UTC (1145 local time), and a daily departure slot at 0800 UTC (1000 local time), effective June 2, 1999 and through the end of the summer 1999 traffic season on October 30, 1999, to operate its planned Los Angeles-Paris service On November 13, 1998, the head of slot coordination informed American that Orly's total annual limitation of 250,000 movements had been reached for 1999, and that no slots could be allocated for American's Los Angeles-Paris flights.

American is presently pursuing this matter with the coordinator and with the Government of France, with the assistance of the Government of the United States. American is hopeful that the matter will be resolved promptly. It is clear that the United States, in negotiating the new Air Transport Agreement with France, was assured that slots would be available at Paris airports for additional U.S. carrier services. American was specifically advised by members of the French delegation during the April 1998 negotiations that slots for one additional daily service at Orly would be made available to

— 3 —

American. It is now incumbent on the Government of France to fulfill its commitments.

Unless American receives the slots it has requested at Orly for Los Angeles-Paris service, the Department should deny Air France's application in this docket for exemption slots at O'Hare for Chicago-Paris service. The relevant statutory provision, 49 USC 41714(b)(1), provides that "[i]f the Secretary finds it to be in the public interest at a high density airport," the Secretary "may grant" exemption slots to enable foreign air carriers to provide foreign air transportation. In the circumstances presented here, where American has been denied the slots it is seeking at Orly to exercise rights under the Air Transport Agreement between the United States and France, it is conclusively contrary to the public interest for the Department to award exemption slots at O'Hare to Air France to serve Paris.

As far as we know, Air France's application, and another recent application by Lufthansa, /1 are the only instances in which foreign carriers have applied for exemption slots to serve between the U.S. and points in their homelands at the very time that a U.S. carrier is being denied the

- 4 -

The Department should also take into account the fact that Air France is now closely allied with three U.S. carriers -- Delta Air Lines, Continental Airlines, and Northwest Airlines .2 American and other independent U.S. carriers in the U.S.-France market are already at a considerable competitive disadvantage to the dominant position that Air France is consolidating through its various alliances. For these reasons as well, it is contrary to the public interest for the Department to assist Air France with exemption slots at Chicago

2While Air France does not itself yet have an alliance with Northwest, Continental and Northwest have entered into a worldwide alliance, which clearly suggests that Air France will partner with Northwest. Moreover, Northwest has an immunized alliance with KLM, which in turn has entered into an alliance with Alitalia, which in turn has an alliance with Continental.

- 5 -

O'Hare, and particularly when the Government of France has yet to take action to ensure that American receives its requested slots at Orly.

Accordingly, the application by Air France for O'Hare exemption slots should be denied unless American receives the slots it has requested at Orly to serve between Los Angeles and Paris beginning June 1, 1999.

Respectfully submitted,

CARL B. NELSON, JR.

Associate General Counsel American Airlines, Inc.

December 10, 1998