OST-98-3863 / 1998 US-Brazil Combination / Motion of Delta Air Lines / January 8, 1999

Delta Air Lines, Inc. ("Delta") hereby files this Motion requesting that the Department reopen the record and require the production of additional evidence by Continental Airlines, Inc. ("Continental") concerning its load factors and on board passengers for the Newark-Rio de Janeiro and Newark-Sao Paolo nonstop flights from the commencement of those operations through December 31, 1998.

Delta is concurrently filing Objections to the Department's Show Cause Order in the above-captioned proceeding. Delta objects to the Department's failure to consider critical facts which indicate that Continental is squandering valuable U.S.-Brazil frequencies on superfluous double-daily Newark-Brazil nonstop flights that benefit few passengers and produce grossly uneconomic load factors. The evidence of record establishes that Continental could more

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productively use seven of its existing frequencies to provide Houston-Sao Paolo service by consolidating its Newark-Brazil services on a single flight.

Based on available T-100 data (which the Department's Instituting Order released for public use in this proceeding) for the first year of operations (year-ended June 30, 1998), Continental's load factors have averaged 33% on its Newark-Rio de Janeiro nonstop flights and 44% on its Newark-Sao Paulo flights. Unfortunately, there is a substantial delay of approximately six months in the availability of T-100 data. In light of Continental's November 16, 1998 Motion to Postpone new service for 18 months due to an alleged "severe economic downturn" in Brazil, it is highly likely that Continental's poor performance on the Newark-Brazil flights has persisted or deteriorated.

Continental has the best evidence regarding the current performance of its Newark-Brazil flights. Thus, Continental should be directed to submit, by month, its load factors and on board traffic separately for each of the Newark-Brazil nonstop flights through December 31, 1998. The data submission should be updated monthly until the Department issues its final decision.

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The evidence requested by Delta is relevant and material, indeed essential, to the Department's decision in this proceeding. The Instituting Order states that the

Delta's objections demonstrate that Continental is squandering valuable U.S.-Brazil frequencies by operating grossly uneconomic double-daily service between Newark and Brazil, which is being utilized by very few consumers. By combining two unhealthy, money-losing nonstop flights into a single flight serving both Brazil cities from Newark, Continental would be able to use seven existing frequencies to implement its proposed Houston-Sao Paulo nonstop service, and produce the benefits that the Department concluded would be produced by that service, without denying the substantial additional benefits of Delta's Boston-New York-Sao Paolo-Montevideo proposal. Indeed, Continental admitted that, in the absence of an award in this proceeding, it would use its existing frequencies to initiate Houston-Sao Paolo nonstop service. See, Continental Brief at 6-7.

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In order for the Department to have a complete and up to date record concerning Continental's under-utilization of U.S.-Brazil frequencies, Delta's Motion to reopen the record for receipt of additional evidence from Continental should be immediately granted. Since Continental does not propose to commence service until December 1999, and in light of the Department's pendente lite award to United, the short delay that would result from the grant of this motion would not adversely affect the utilization of the seven weekly frequencies available in this proceeding.

WHEREFORE, Delta urges the Department promptly to grant this Motion to reopen the record and to direct Continental to submit additional evidence as discussed above.

Respectfully submitted,

Robert E. Cohn

SHAW PITTMAN POTTS & TROWBRIDGE

2300 N Street, N.W.

Washington, D. C. 20037- 1128

(202) 663-8060

Counsel for DELTA AIR LINES, INC.