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OST-96-1065

American Airlines

OST-96-1065	December 23, 1998	Application for Renewal of Frequency Allocation	US-Brazil
		Service List

American Airlines, Inc. hereby applies for renewal of its allocation, most recently renewed by Order 97-3-35, March 28, 1997, of seven weekly combination U.S.-Brazil frequencies. American uses this allocation to provide daily nonstop service between New York (JFK) and Rio de Janeiro.

Counsel:  American, Carl Nelson, Jr., 202.496.5647, carl_nelson@amrcorp.com

American Airlines, Inc.

OST-96-1065

Filed December 23, 1998 Issued January 28, 1999

Notice of Action Taken

New York-Rio de Janeiro

Scheduled foreign air transportation of persons, property, and mail between New York, New York (JFK) and Rio de Janeiro, Brazil

By:  Paul Gretch

American Airlines, Inc.

OST-96-1065

March 31, 1999

Petition of Delta

New York - Rio de Janeiro

Delta Air Lines. Inc. hereby requests the Department to reallocate to Delta the seven U.S.-Brazil frequencies that were allocated to American Airlines Inc. for use on nonstop service between New York (JFK) and Rio de Janeiro' as a result of American's decision to terminate JFK-Rio de Janeiro nonstop service effective April 30, 1999.

Counsel:  Shaw Pittman, Robert Cohn for Delta, 202.663.8060

American Airlines, Inc. / Petition of Delta Air Lines, Inc.

OST-96-1065

April 9, 1999

Answer of American Airlines

Allocation of Seven U.S.-Brazil Frequencies - New York - Rio de Janeiro; Petition of Delta Air Lines

HTML

American has announced that it is suspending New York-Rio de Janeiro nonstop service on April 30, 1999. Delta erroneously asserts that the frequencies used for such service will therefore be dormant, and should be reallocated to Delta. These frequencies will not be dormant, and are not available for reallocation.  During this temporary period, American will operate an additional daily Miami-Rio de Janeiro nonstop flight, which will provide convenient on-line connections to all three New York area airports, LaGuardia, JFK, and Newark. That service will begin on July 2, 1999. Accordingly, the seven frequencies that Delta's petition is seeking will not be dormant.

Counsel:  Carl Nelson, Jr. for American, carl_nelson@amrcorp.com

American Airlines, Inc.

OST-96-1065

April 9, 1999 Docketed April 13, 1999

Motion for Leave to File - Reply of Delta Air Lines Microsoft Word 97 Scanned Version

Seven US-Brazil Frequencies - New York-Rio de Janeiro; Petition of Delta Air Lines

American concedes that it will cease nonstop service between New York and Rio de Janeiro on April 30, 1999. Nevertheless, American claims that the frequencies that were allocated to American by the Department specifically to fund that service "will not be dormant, and are not available for reallocation." American is wrong in claiming that it has the authority to move the seven frequencies from New York to Miami. It misreads the Order granting it those frequencies and misapplies the Department's policy.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

OST-96-1065

April 9, 1999 Docketed April 13, 1999

Answer of The New York Parties to Petition of Delta Air Lines

Seven US-Brazil Frequencies - New York-Rio de Janeiro; Petition of Delta Air Lines

The New York Parties regret that American Airlines, after years of continued high quality service between John F. Kennedy International Airport (JFK) and Rio de Janeiro, Brazil has decided to discontinue non-stop service to this destination. We believe that this loss will seriously damage the New York-Brazil air service market. We further believe the U.S. Department of Transportation could help ameliorate this critical situation by permitting the entrance of Delta Air Lines into the market.

By:  Port Authority of New York, Robert Kelly, 212-435-3623

American Airlines, Inc.

OST-96-1065	June 16, 1999	Supplement to Petition of Delta Air Lines Scanned Copy	Allocation of Seven US-Brazil Frequencies - New York-Rio de Janeiro
		Attachment:  Delta's Proposed New York-Sao Paulo-Montevideo Service

In contrast to the "economic conditions" cited by American as the reason for the cancellation of its poorly performing Rio de Janeiro service, Delta’s Atlanta-Brazil routes have matured and continue to experience healthy loads. Delta is ready to launch new Brazil service at New York, but with only one-seventh the frequencies held by American, enough for just one daily flight, Delta does not have the ability to do so without additional frequencies. It would be untenable for the Department to allow American to hold onto its large cache of 49 Brazil frequencies -- and move the seven frequencies specifically earmarked by the Department for service at New York only to duplicate service at American’s Miami hub -- while excluding Delta from providing competitive Brazil service at the critically important JFK gateway.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

American Airlines, Inc. - Allocation of U.S.-Brazil Frequencies

OST-96-1065

June 21, 1999

Answer of the New York Parties to the Supplement to the Petition of Delta

New York - Rio de Janeiro

The New York Parties are very concerned that service between John F. Kennedy International Airport (JFK) and Rio de Janeiro, Brazil has not yet been reinstituted to the levels of early 1099. We believe that this loss will seriously damage the New York-Brazil air service market. We further believe the U.S. Department of Transportation could help ameliorate this critical situation by permitting the entrance of Delta Air Lines into the Brazil market, as soon as possible.  We are concerned that current service levels are being further compromised by the decision of the Brazilian flag carrier Varig to decrease capacity in the New York region. We believe Varig's decision was based not on a weakening of the demand in the market, but was caused by the recent devaluation of the "real" which resulted in an effective 5% increase in the Brazilian carrier operating costs, significantly increasing its financial burden.

By:  Bradley Rubinstein, Manager, Air Service Development & External Affairs, 212.435.6323

American Airlines, Inc.

The frequencies Delta has targeted are not unused. American suspended daily New York-Rio de Janeiro nonstop service on April 30, l999, and is instituting additional daily Miami-Sao Paulo nonstop service on July 2, l999, well before the 90-day dormancy period would end on July 29, l999. Indeed, thousands of passengers are already booked on American's new service. Contrary to Delta's assertion, there is no issue of dormancy. Nor is there any logic to Delta's position that American cannot transfer its frequencies from New York-Rio de Janeiro to Miami-Sao Paulo, when Delta itself is seeking to move the frequencies from New York-Rio de Janeiro to New York-Sao Paulo. If these can only be used in the New York-Rio de Janeiro city-pair by American, as asserted by Delta, then why should Delta be allowed to take such allegedly specific frequencies away from American, only to move them to a different city-pair itself?

Counsel:  American, Carl Nelson, 202-496-5647

American Airlines, Inc.

Counsel:  Carl Nelson, Jr., 202.496.5647, carl_nelson@amrcorp.com

American persists in ignoring the unique and special circumstances surrounding the Department's award of the seven frequencies to American and the clear and unambiguous language of the Department's Order. American, by far the largest U.S.-Brazil frequency holder, was reluctantly awarded the seven frequencies by the Department because there were no U.S.-Brazil designations available at the time to competitors and the frequencies would have otherwise gone unused. The award of New York-Brazil frequencies to American was in effect a default award.  The long-term needs of the U.S.,-Brazil market would not be well served by allowing American to move those frequencies to Miami to further buttress its dominant position to Brazil. Indeed, Delta and the New York Parties have demonstrated that "the longer term needs" would best be served by allocating the seven frequencies to Delta for New York-Brazil-Uruguay service. Delta has only a single route to Brazil and holds only seven weekly frequencies. American, by contrast, has 49 frequencies -- seven times more than Delta. American's attempt improperly to transfer the frequencies to Miami, its Latin America stronghold, in order to forestall competition from Delta at the New York gateway, would not be in the public interest and should not be permitted.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060, robert.cohn@shawpittman.com

Petition of Delta Air Lines, Inc.

By this order, we have decided to authorize American Airlines, Inc. (American) to use temporarily the seven weekly frequencies allocated to it for New York-Rio de Janeiro service, for service in the Miami-Rio de Janeiro market, pending conclusion of a proceeding for long-term allocation of these frequencies.

By:  Bradley Mims

Delta Air Lines, Inc. | US-Brazil Frequencies

Delta requests the Department to institute immediately a long-term route proceeding. There is no sound basis for deferral and Delta disagrees with Order 99-7-1 that economic conditions affecting the U.S.-Brazil market warrant deferral of the institution of the proceeding.  Delta seriously questions whether the state of the Brazil economy should be a relevant consideration to the institution of a route proceeding, especially in light of Delta’s eagerness and commitment to promptly institute New York-Sao Paulo-Montevideo service, Delta’s robust Brazil traffic results, and in light of the fact that the issue in the case merely involves reallocation of existing frequencies.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

American Airlines, Inc. / Allocation of Seven US-Brazil Frequencies

The New York Parties are very concerned with the order authorizing American Airlines to use temporarily the seven weekly frequencies allocated to it for New York-Rio de Janeiro, for service in the Miami-Rio de Janeiro market. The loss of this flight between John F. Kennedy International Airport (JFK) and Brazil will, we believe, seriously damage service to this very important South American market. We further believe the U.S. Department of Transportation could help ameliorate this critical situation by reconsidering the order as petitioned by Delta Air Lines as soon as possible.

By:  Port Authority, Bradley Rubinstein, 212-435-3623

Delta Air Lines, Inc. / Reallocation of US-Brazil Frequencies Held by American Airlines

Nonetheless, we do wish to state, for the record, the basis for our view that U.S.-Brazil frequencies may be moved from one city-pair to another. In any frequency allocation proceeding, the applicant is required to provide an illustrative proposal showing the city-pair market to be served and the schedules to be operated. In its 1996 application on OST-96-1065, American proposed New York-Rio de Janeiro service, but did not believe that its service would be strictly limited to that specific city-pair for all time. Indeed, the Department had explicitly stated that "U.S.-Brazil frequencies may be used in any U.S. -Brazil city-pair market"

American will resume New York-Rio de Janeiro nonstop service on October 1, 1999, using 215-seat B767-300ER aircraft. In these circumstances, there is no reason for further involvement by the Department with respect to these frequencies.

Counsel:  American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com

Delta Air Lines, Inc. / American Airlines, Inc. / Allocation of Seven US-Brazil Frequencies

The Department now has before it two competing applications for New York - Brazil service. Both applicants propose to begin service on October 1, 1999. American, by far the largest U.S.-Brazil frequency holder, proposes to re-institute service between JFK and Rio de Janeiro – American’s weakest U.S.- Brazil route, which it abandoned this spring in favor of Miami-Rio de Janeiro due to poor performance at JFK. Delta, by contrast, is the most frequency starved U.S. competitor to Brazil and proposes to offer its first ever New York-Brazil service on the critical JFK-Sao Paulo route, with continuing single-plane service to Montevideo, Uruguay. Delta submits that the public interest considerations of this case overwhelmingly favor awarding the long-term use of the frequencies to Delta. American’s contrived attempt to avoid the merits of a carrier selection case and to turn back the clock on its decision to abandon JFK-Rio de Janeiro service should be flatly rejected by the Department.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060, robert.cohn@shawpittman.com

Delta Air Lines, Inc. / American Airlines, Inc. / Seven U.S.-Brazil Frequencies

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060, robert.cohn@shawpittman.com

1999 U.S. Brazil Combination Service Case/ Delta Air Lines, Inc. and American Airlines, Inc.

 

Order 99-9-23 OST-96-1065 OST-99-6284	Issued September 30, 1999 Served September 30, 1999	Order on Reconsideration and Instituting a Proceeding  (With Evidence Request) HTML (With Evidence Request) Scanned Copy	Allocation of U.S. Brazil Frequencies Held by American Airlines
		Appendix A:  Evidence Request

By this order, we grant the separate petitions of Delta Air Lines, Inc., and American Airlines, Inc., for reconsideration of Order 99-7-1, and upon reconsideration, have decided (a) to institute the 1999 US.-Brazil Combination Service Case to consider allocation of seven weekly frequencies on a long-term basis for services in the U.S.-Brazil market, and (b) affirm our decision, with one modification, to authorize American to use the seven weekly frequencies until 90 days after completion of the long-term proceeding or July 1, 2000, whichever is earlier. We have now modified our pendente lite award to authorize American to use the frequencies in the New York-Rio de Janeiro market, effective October 1, 1999.

By:  Bradley Mims

Delta Air Lines, Inc. / Reallocation of US-Brazil Frequencies Held by American Airlines

In seeking renewal, American does not concede the legitimacy of the Department's action in placing American's frequencies in issue for reallocation. American is currently challenging that action in a petition for review filed in the United States Court of Appeals for the District of Columbia Circuit on February 25, 2000 (No.00-1068). American invokes the automatic extension provisions of the Administrative Procedure Act, 5 USC 558 (c), as implemented by 14 CFR Part 377. The current authority would expire on July 1, 2000, absent this renewal application, which is timely under Section 377.10(c) since it is filed more than 60 days in advance of the expiration date. American is providing important public benefits to the public by operating the only nonstop service between New York (JFK) and Rio de Janeiro. The pendente lite authority in issue should-be renewed until 90 days after completion of the 1999 U.S.-Brazil Combination Service Case (OST-99-6284)

Counsel:  American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com

Delta Air Lines, Inc. / American Airlines, Inc. / Allocation of Seven U.S.- Brazil Frequencies

Continental does not oppose American's application to renew its pendente lite authority to operate seven weekly nonstop frequencies between New York (JFK) and Rio de Janeiro as long as the Department grants Continental's earlier-filed motion for immediate action in Dockets OST-99-6284 and OST-00-6759 or renews Continentals pendente lite authority to operate its seventh weekly New York/Newark-Rio de Janeiro frequency at the same time or sooner.

Counsel:  Crowell Moring, Lorraine Halloway, 202.624.2500

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