OST-1996-1434 - United Air Lines, Inc. and Air Canada - Antitrust Immunity for Expanded Alliance Agreement

We have tentatively decided to grant approval of and antitrust immunity for the Alliance Agreement between United and Air Canada. We have, however, tentatively found it appropriate to condition our approval and to require supplemental information as more fully explained below. We propose to exclude from our approval and grant of antitrust immunity in this proceeding cooperative arrangements involving all-cargo services and cooperative arrangements involving service to third countries.

Appendix A – Conditions Governing the Antitrust Immunity

By: Charles Hunnicutt

July 8, 1997

Joint Response to Order 97-6-30

HTML | Star Alliance - A Brief History

As can be seen from the texts of the Star Alliance documents, the Star Alliance is not intended to play any direct role in the United/Air Canada alliance relating to corporate strategy, yield and capacity management, and pricing of transborder services, which are the focus of the United/Air Canada alliance itself. United's and Air Canada's decisions as to these matters, insofar as they relate to transborder services and to the extent they are not made by United or Air Canada acting independently, will be undertaken solely by United and Air Canada pursuant to the terms of their Alliance Expansion Agreement. Other Star Alliance members will not be involved in such decision making. There is no intention to integrate the members of the Star Alliance into a single corporate entity, or for the Star Alliance agreement to replace the United/Air Canada alliance agreements or any of the other bilateral or multilateral alliance agreements to which United is a party and which have been reviewed by the Department in conjunction with its granting United authority to code share and, in some cases, to cooperate under antitrust immunity with various carriers. Each member carrier of the Star Alliance will maintain its own separate corporate identity and will carry out its own corporate strategy.

Joint Motion for Confidential Treatment

The documents for which confidential treatment is requested are listed below:

(1) Memorandum of Intent Regarding Elements for a Multilateral Alliance, dated May 14, 1997.
(2) The Star Alliance License Agreement, dated as of November 1, 1996.
(3) Mutual Non-Disclosure and Confidentiality Agreement, dated as of October 1, 1996.
(4) Supplement No. 1 to Alliance Agreement (June 1997 draft).
(5) Star Alliance Customer Relations MCO Goodwill Compensation (draft).

Service List

Counsel: United and Ginsburg Feldman, Joel Burton, 202-637-9130 / Air Canada and Galland Kharasch, Anita Mosner, 202-342-5200

July 9, 1997

Supplemental Joint Motion for Confidential Treatment

In their Joint Motion, United and Air Canada sought confidential treatment of certain documents, including The Star Alliance License Agreement, dated as of November 7, 1996. Joint Motion at 2. That Agreement included three exhibits which were attached. The exhibits originally submitted with the Agreement were, however, inadvertently filed in incomplete form. United and Air Canada now file this Supplemental Joint Motion to correct those exhibits. Therefore, United and Air Canada hereby request that the exhibits originally attached to The Star Alliance License Agreement (STAR 000020-STAR 000022) be replaced by the following: (a) Exhibit A; (b) Exhibit B.; and (c) Exhibit C.

Counsel: United and Ginsburg Feldman, Joel Burton, 202-637-9130 / Air Canada and Galland Kharasch, Anita Mosner, 202-342-5200

Served July 11, 1997

Notice Granting Access to Documents

We will rule on the merits of the Rule 39 Motion by subsequent order. In the meantime, in order to afford interested parties prompt access to this information under conditions agreed to by the Joint Applicants and imposed by the Department under similar recent circumstances, we will grant immediate interim access to these materials to counsel and outside experts for interested parties who file or who have previously filed appropriate affidavits with the Department in advance. Moreover, we find it appropriate to grant interim access to any subsequent materials filed in this docket under a Rule 39 Motion to counsel and outside experts for interested parties who file or who have previously filed appropriate affidavits with the Department in advance, unless the party filing the motion objects.

By: Charles Hunnicutt

July 18, 1997

Re: Supplemental Affidavit of Amy E. Ralph

United and Air Canada also note that since the "prospective party" has not participated in this proceeding or even, apparently, decided whether to do so, neither Ms. Ralph nor Mr. Sohn would be able to discuss the documents with their client, in any event. They do not, in these circumstances, have any basis for seeking access to the documents. Such access is granted to counsel so that confidential documents may be addressed in pleadings filed with the Department, not to allow counsel to discuss those documents with clients to enable them to decide whether or not to participate.

Counsel: Ginsburg Feldman, Joel Burton, 202-637-9000 for United / Galland Kharasch, Anita Mosner, 202-342-5200 for Air Canada

July 21, 1997

Confidentiality Affidavits for Delta Air Lines’ Legal Counsel

Counsel: Shaw Pittman, Robert Cohn, 202-663-8000

July 24, 1997

Objections of American Airlines

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American Airlines, Inc. hereby objects to show-cause Order 97-6-30, June 26, 1997, by which the Department tentatively granted approval of and antitrust immunity for an alliance agreement between United Air Lines, Inc. and Air Canada. The Department should not proceed to a final order in this docket without imposing evidentiary requirements on United and Air Canada that are equivalent to what the Department has imposed on American and British Airways in OST-97-2058.

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

Objections of Delta Air Lines to Order to Show Cause

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The Department's tentative decision to grant antitrust immunity and provide United and Air Canada a competitive advantage over other U.S.-flag carriers until the bilateral phase-in restrictions on access to Toronto are eliminated would be a serious mistake and cannot be justified on any sound public policy basis.

Motion of Delta Air Lines for Confidential Treatment

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

July 25, 1997

Confidentiality Affidavit of John Varley, General Attorney for Delta Air Lines

Counsel: Shaw Pittman, Robert Cohn, 202-663-8000

July 30, 1997

Consolidated Joint Answer of United Air Lines and Air Canada

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No party has challenged the Department's findings and conclusions relating to the public benefits which underlie its decision to approve the expanded alliance. Rather, two competitors of United and Air Canada have chosen to use the occasion of the Department's issuance of a show cause order to seek to advance their own agendas. The Department should not allow the irrelevant and repetitive issues raised by these competitors to delay still further the offering of the unchallenged public benefits that the Department has recognized will flow from implementation of the expanded alliance. United and Air Canada urge that the Department issue an order making final its findings and conclusions in Order 97-6-30 without further delay.

Counsel: United and Ginsburg Feldman, Joel Burton, 202-637-9130 / Air Canada and Galland Kharasch, Anita Mosner, 202-342-5200

Order 97-9-21 | Issued and Served September 19, 1997

Final Order

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By this Order, we grant final approval and antitrust immunity for an Alliance Expansion Agreement (the "Alliance Agreement'') between United Air Lines, Inc. and its regional affiliates ("United") and Air Canada, Ltd. and its regional affiliates ("Air Canada") pursuant to 49 U.S.C. §§ 41308 and 41309. Our action is subject to the provisions that the antitrust immunity will not cover (1) the services relating to fares and capacity for particular categories of U.S. point-of-sale local passengers in the Chicago/San Francisco/Toronto markets, (2) operations involving all-cargo transportation, and (3) operations involving services to or from third countries, as fully described below. We direct the Joint Applicants to resubmit for renewal their alliance agreement five years from the date of the issuance of this Order. If the Joint Applicants choose to operate under a common name or brand, including the proposed "Star Alliance " brand, they must obtain advance approval from the Department before implementing the arrangement.

Appendix A

By: Charles Hunnicutt

OST-2005-22922 - Approval of and Antitrust Immunity for Alliance Expansion Agreements and an Amended Coordination Agreement
OST-1996-1434 - United and Air Canada - Antitrust Immunity

December 23, 2005

Motion to Consolidate and Amendment #1 - Bookmarked

Counsel: Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, bruce.rabinovitz@wilmerhale.com for Austrian, British Midland, Lufthansa, LOT, SAS, Swiss International, TAP and United / Silverberg Goldman, Michael Goldman for SAS / Condon & Forsyth, Evelyn Sahr for Swiss

OST-1996-1434 - Antitrust Immunity

December 23, 2005

Joint Motion to Amend Final Order Granting Approval of And Antitrust Immunity for Alliance Agreements - Bookmarked

By this motion, United Air Lines, Inc. and Air Canada and their respective affiliates request that, in light of the Open Skies air service agreement reached between the United States and Canada on November 10, 2005, the Department amend Order 97-9-21, in which it approved and granted antitrust immunity for alliance agreements between the Joint Movants pursuant to 49 U.S.C. § 41308 and 41309." Specifically, the Joint Movants request that the Department eliminate the condition contained in ordering paragraph 1(a) of that Order, which states that the approval and immunity shall not apply to operations involving all-cargo services or services to or from third countries. The Joint Movants request that the amended grant of immunity be issued as soon as possible, and made effective contemporaneously with the effectiveness of the Open Skies Agreement, which is expected to occur by September 2006.

Counsel: Air Canada - Garfinkle Wang, Anita Mosner, 703-294-5890, amosner@gcwconsulting.com / United - Wilmer Hale, Bruce Rabinovitz, 202-663-6960, bruce.rabinovitz@wilmerhale.com

OST-2005-22922 - Approval of and Antitrust Immunity for Alliance Expansion Agreements and an Amended Coordination Agreement
OST-1996-1434 - Approval of and Antitrust Immunity for Commercial Alliance Agreements

December 27, 2005

Motion of Air Canada for Confidential Treatment Under 14 CFR 302.12

On November 4, 2005, the Austrian Group; British Midland Airways Limited, doing business as bmi; Deutsche Lufthansa AG; Poiskie Linie Lotnicze LOT S.A.; TAP Air Portugal; and United Air Lines, Inc.; filed an application for approval of and immunity for commercial alliance agreements between United, LOT, TAP and Swiss, respectively, and to add LOT, TAP and Swiss to the larger STAR group which already enjoyed antitrust immunity for their various alliance activities. On Friday, December 23, 2005, the above-captioned airlines moved to amend their application for antitrust immunity so that Air Canada might become part of the larger STAR alliance grouping that has antitrust immunity. United and Air Canada also moved to modify their existing grant of antitrust immunity in order to remove the exclusion of all-cargo services and third country markets from their preexisting award of immunity that was made pursuant to Order 97-9-21. The impetus for these changes was the Open Skies Agreement between the United States and Canada which was signed on November 10, 2005, which is slated to take effect on or after September 1, 2006.

To support these requests, Air Canada is submitting to the Department detailed materials concerning competition in the relevant markets that applicants for similar authority previously have submitted. These documents contain confidential, proprietary and commercially sensitive information. Pursuant to Rule 12 of the Department's Rules of Practice (14 C.F.R. § 302.12), Air Canada requests that the Department withhold from public disclosure the documents that Air Canada is filing herewith under seal in the above‑captioned proceeding.

Counsel: Garfinkle Wang, Anita Mosner, 703-522-0900, ammosner@gwsmplc.com

January 10, 2006

Confidentiality Affidavit for Northwest - Paul Kunz

Counsel: Northwest, Megan Rosia, 202-289-6834, megan.rosia@nwa.com

February 17, 2006

Joint Answer of Star Alliance to Motion of American Airlines

American's motion is without merit and should be denied. The scope of the Joint Applicants' document production was consistent with that of past document productions in a long line of similar applications. The Amended Joint Application bears no resemblance to the SkyTeam application, either factually or in the legal issues raised, and should not be subject to additional document and data requests similar to those imposed on the SkyTeam applicants.

In the end, American's motion must he seen for what it really is: the latest gambit in a transparent, continuing effort to impede the legitimate advancement of competing alliances that, as the Department has consistently found, offer real public benefits. American has been unable to develop and maintain its own alliances; it apparently cannot agree with British Airways on whether to pursue immunity in the future.' It sees a commercial benefit from attempting to obstruct and delay the Joint Applicants' implementation of their alliance plans, and may be emboldened by its perceived success in opposing the SkyTeam application.

It is also no coincidence that American is raising opposition to the Amended Joint Application given the pending Open Skies agreements with both Canada and the EU. American is well aware that the unjustified denial or delay of the Amended Joint Application would be inconsistent with prior applications, and could prevent the implementation of the pending Open Skies agreements (and interfere with future efforts to secure Open Skies agreements) by calling into question the Department's commitment to its long-standing international aviation policy regarding Open Skies, and immunity. The Department should not allow American to abuse its administrative processes in this way. The Amended Joint Application should be processed in a timely way consistent with similar applications in the past. American's unjustified motion must be denied.

Counsel: Wilmer Cutler, Bruce Rabinovitz, 202-663-6960 for Austrian, British Midland, Lufthansa, LOT, SAS, Swiss International, TAP and United / Silverberg Goldman, Michael Goldman for SAS / Condon & Forsyth, Evelyn Sahr for Swiss

February 24, 2006

Contingent Motion for Leave to File and Joint Reply of Star Alliance

The Joint Applicants do not intend to engage competitors in an endless debate over whether they have filed sufficient documents and information for the Department to find the Amended Joint Application substantially complete. Certainly, Continental, Delta and Northwest (like American) have not made their requests over concern for the public interest or the interests of consumers. Rather, each carrier's motive is both cynical and transparent -- Delta and Northwest, bitter about the denial of their application to merge their respective immunized alliances, seek to soften the sting of that ruling by preventing the Joint Applicants from further integrating their alliance and by pressuring the Department into making the process as burdensome and protracted as possible. Continental looks to use this case as another opportunity to remind the Department of Continental's displeasure with its lack of access to Heathrow, and to entangle consideration of the Amended Joint Application with the pending U.S.-EU agreement and the proposed "actual control" policy statement.

The Department should not allow competitors to abuse its administrative processes in this way. For their part, as stated above, the Joint Applicants do not intend to engage in endless, repetitive debate with regard to the issues raised in American's motion and echoed in the answers of Continental, Delta and Northwest, which the Joint Applicants have fully addressed. Such repetitive exchanges add nothing of value to the record, and are intended only to delay and raise the costs of this proceeding. The Department should put an end to such efforts now, find the Amended Joint Application substantially complete and set a procedural schedule for the filing of answers and replies, which will afford all interested parties a full opportunity to address the merits of the Amended Joint Application.

Order 2006-4-25
OST-2005-22922 - Approval of and Antitrust Immunity for Alliance Expansion Agreements and an Amended Coordination Agreement
OST-1996-1434 - Approval of and Antitrust Immunity for Commercial Alliance Agreements -

Issued and Served April 27, 2006

Order Consolidating Proceedings and Requesting Additional Information

We agree that the proceedings pending in dockets 1434 and 22922 are closely related and, further, that consolidation serves the public interest of administrative efficiency. We hereby consolidate United's and Air Canada's request for expanded immunity into docket 22922, to be considered together with the Joint Applicants' request for new immunity with LOT, Swiss, and TAP.

Several parties - American, Continental, Delta, and Northwest -- dispute that the Joint Applicants' filings meet the substantially complete standard, and they each move separately to require the Joint Applicants to submit additional documents and data.

To the extent provided by the Attachment to this Order, we grant the Motion of American Airlines, Inc. to require submission of additional documents and data, submitted on February 8, 2006, the Answer of Continental Airlines, Inc., submitted on February 17, 2006, the Answer of Delta Air Lines, Inc., submitted on February 17, 2006, and the Answer of Northwest Airlines, Inc., submitted on February 17, 2006.

The Department directs the Joint Applicants to provide the Department with the additional data and evidentiary information set forth in the Attachment. This information should be filed in the consolidated docket, Docket OST-2005-22922, in accordance with Department rules. To the extent that the Joint Applicants deem it necessary, they may seek confidential treatment of the information as set forth in the Department's regulations. We emphasize that we do not seek duplicative filings by the Joint Applicants; to the extent that the Joint Applicants affirm that information sought in the Attachment has already been filed in the docket, they need only identify which documents satisfy the request.

By: Michael Reynolds

June 16, 2006

Motion of Air Canada For Confidential Treatment

On April 27, 2006, the Department issued Order 2006-4-25, which directed the Austrian Group, British Midland Airways Limited, doing business as bmi, Deutsche Lufthansa AG, Polskie Linie Lotnicze LOT S.A., TAP Air Portugal, United Air Lines, Inc., and Air Canada to submit certain additional information to the Department concerning their request for antitrust immunity for their various alliance activities. Specifically, the Department directed the Joint Applicants to respond to certain questions set forth in the Order, and to submit certain documents concerning their competitive plans and activities.

In response to this Order, Air Canada is submitting to the Department numerous documents concerning its relationships with the other Joint Applicants, as well as materials concerning competition in the relevant markets. These documents contain confidential, proprietary and commercially sensitive information. Pursuant to Rule 12 of the Department’s Rules of Practice, Air Canada requests that the Department withhold from public disclosure the documents that Air Canada is filing herewith under seal in the above-captioned proceeding.

Counsel: Garfinkle Wang, Anita Mosner, 703-294-5890

June 23, 2006

Scandinavian Airlines System Supplemental Information Response and Motion for Confidential Treatment of Documents - Bookmarked

SAS hereby requests the Department of Transportation withhold from public disclosure certain confidential, proprietary and commercially sensitive information being submitted concurrently under seal in the above-referenced proceeding in response to the Department's Order Consolidating Proceedings and Requesting Additional Information (Order 2006-4-25). SAS also requests that access to all such documents be limited to counsel and outside experts for interested parties who have filed an affidavit.

The Joint Applicants submitted to the Department on June 19, 2006 a Supplemental Information Response to the Clarification Questions contained in Order 2006-4-25, which SAS hereby incorporates by reference.

Counsel: Silverberg Goldman, Michael Goldman, 202-944-3305

July 17, 2006

Re: Additional Information Request

By Order 2006-7-15, the Department requested that the Joint Applicants in the above-captioned proceedings take certain further steps in their document production to support their request for approval of and antitrust immunity for their various alliance agreements. Specifically, the Department asked the Joint Applicants to check whether there might be further documents concerning Joint Alliance Committee meetings or other inter-carrier meetings that had not already been submitted in the docket.

Air Canada has performed a supplementary search to determine whether there might be further documents that might be responsive to the Department’s requests, and has found that there are no additional documents that are responsive to Order 2006-4-25.

Counsel: Garfinkle Wang, Anita Mosner

July 17, 2006

Re: Additional Information Request

In response to Order 2006-7-15, Scandinavian Airlines System is submitting in the enclosed sealed envelope five copies of English translations of certain documents originally filed with the Department in the above-referenced Dockets on June 23, 2006 This submission includes English translations of documents the Department specifically identified in Order 2006-7-15 (SK-0504-06, SK-0514-16, SK-0524, SK-0525-26 and SK-0534-35) as well as translations of other non-English documents originally filed with the Department on June 23, 2006 (SK-0529-30, SK-0536, SK-0539-40 and SK-0541). Each translation bears the Bates range numbers of the document it is a translation of in the upper right-hand corner.

SAS hereby incorporates by reference its June 23rd Rule 12 Motion for Confidential Treatment and requests that the enclosed documents be accorded confidential treatment.

Counsel: Silverberg Goldman, Michael Goldman

July 19, 2006

Response of Scandinavian Airlines System

In further response to Order 2006-7-15, specifically ordering paragraph 3 thereof, Scandinavian Airlines System states that it has no additional documents or information responsive to Order 2006-4-25 other than those submitted already by SAS or the other Joint Applicants.

Counsel: Silverberg Goldman, Michael Goldman

August 18, 2006

Joint Consolidated Reply of Star Alliance - Bookmarked

Neither American nor Continental has provided any valid reason for denying the Amended Joint Application. The record is clear that the Alliance Agreements satisfy the applicable standard for approval and antitrust immunity under the Department's established policy and criteria and that such approval will promote the public interest. Accordingly, since the Joint Applicants will not implement the Alliance Agreements without immunity, the Department should move expeditiously to approve the Amended Joint Application and grant the requested immunity.

Counsel: Wilmer Hale, Jonahan Moss, 202-663-6655, jonathan.moss@wilmerhale.com

August 18, 2006

Letter of Star Alliance Indicating Confidential Material

Enclosed are five copies of the Confidential Joint Consolidated Reply of Air Canada, the Austrian Group, British Midland Airways Limited, Deutsche Lufthansa AG, Polskie Linie Lotnicze LOT S.A., Scandinavian Airlines System, Swiss International Air Lines Ltd., TAP Air Portugal, and United Air Lines, Inc. The documents being submitted contain confidential business information and are being provided under seal in envelopes marked "Confidential Treatment Requested Under § 302.12" consistent with the Department's Rule 12 procedures. Air Canada, the Austrian Group, British Midland Airways Limited, Deutsche Lufthansa AG, Poiskie Linie Lotnicze LOT S.A., Scandinavian Airlines System, Swiss International Air Lines Ltd., TAP Air Portugal, and United Air Lines, Inc., hereby incorporate by reference their Motions for Confidential Treatment previously filed in this docket requesting confidential treatment for documents filed earlier in this proceeding.

Counsel: Wilmer Hale, Jonahan Moss, 202-663-6655, jonathan.moss@wilmerhale.com

August 18, 2006

Reply of Continental Airlines

While the interests of American/oneworld and United/Star may be benefited by creation of a Chicago-on-the-Thames at London Heathrow, domination of London Heathrow by two such powerful alliances would create all the harms American complains of in its answer, and then some, at London Heathrow. Since U.S. airlines such as Continental are now de jure excluded from operating at London Heathrow and would be de facto excluded from operating competitive flights at London Heathrow unless any open skies agreement covering London Heathrow provides competitive slots and facilities at London Heathrow on economically-viable terms for carriers such as Continental. If American has been forced to operate in the regulatory equivalent of a DC-3, however, that is because American has picked alliance partners in the world's most restricted markets, where they benefit more from the exclusion of competitors than from being the "best run" airlines as American claims for them. By selecting British Airways and the fortress hub at London Heathrow for the focus of its primary transatlantic alliance, American has consigned itself to the DC-3 era of regulation.

Since American has now made its ambitions plain and since United and British Midland have already sought antitrust immunity at London Heathrow, when the Department considers antitrust immunity for any alliance with a hub at London Heathrow it must consider the spectre of a Star/oneworid duopoly and all of the adverse impacts on consumers and competition such a prospect entails. Thus, as Continental's answer advocated, the Department must carve out from any grant of further immunity to the Star Alliance all services offered between the U.S. and London.

Continental urges the Department to disapprove, at the very least, antitrust immunity for the Star Alliance carriers for traffic between the U.S. and London and between the U.S. and Poland.

Counsel: Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.com

Order 2006-12-17
OST-2005-22922 - Approval of and Antitrust Immunity for Alliance Expansion Agreements and an Amended Coordination Agreement
OST-1996-1434 - Approval of and Antitrust Immunity for Commercial Alliance Agreements

Issued and Served December 19, 2006

Show Cause Order - Bookmarked

By this Order, the Department proposes to grant approval of, and antitrust immunity for, alliance agreements between and among Air Canada, Austrian, bmi, LOT, Lufthansa, SAS, Swiss, TAP, and United, subject to conditions. We are providing interested parties the opportunity to comment on our tentative findings before we reach a final decision. Parties have three weeks to submit comments and seven business days to submit reply comments.

By: Andrew Steinberg

OST-2006-25275 - 2007 US-China Combination and All-Cargo Frequency Allocation Proceeding
OST-2005-22922 - Approval of and Antitrust Immunity for Alliance Expansion Agreements and an Amended Coordination Agreement
OST-1996-1434 - Approval of and Antitrust Immunity for Commercial Alliance Agreements

February 7, 2007

Motion for Leave to File and Supplement to Objections of Northwest Airlines

Northwest Airlines, Inc. hereby (i) moves for leave to file this Supplement to its Objections in the 2007 U.S.-China service proceeding, and (ii) requests reexamination of transpacific competition issues, including, at minimum, the exclusion of China from the proposed grant of global antitrust immunity to United and Air Canada in the Star Alliance proceeding.

Substantial service and capacity will be added by Air Canada on the Toronto-Shanghai route, as well as new Beijing service at Vancouver. Altogether, Air Canada intends to add 50 percent more flights between North America and China. With its major hub at Toronto, and access to all of the largest and most important U.S. markets to China, Air Canada is a serious threat to Northwest’s one-stop U.S.-China service from Detroit. In addition, Air Canada’s new Vancouver-China services compete directly at all of the Western U.S. gateway cities Northwest serves via Narita. Because the Show Cause Order failed to award Northwest frequencies it requires to commence nonstop Detroit-Shanghai service without dismantling its western U.S.-China network, Northwest is powerless to respond to this substantial new foreign flag challenge.

In light of the significant new U.S.-China and transpacific competition issues raised by Air Canada’s announcement, Northwest requests (1) leave to file this Supplement; (2) that the Department revise the analysis in Order 2006-12-17 to include the competitive effects of the alliance on U.S.-China and other transpacific markets; and (3) urges that Order 2007-1-4 be amended to grant Northwest the frequencies it requires to provide competitive U.S.-China service against United and Air Canada via Detroit.

Counsel: Northwest, Alexander Van der Bellen, 202-842-4184, sascha.vanderbellen@nwa.com

February 9, 2007

Contingent Joint Answer and Motion for Leave to File

Northwest's Objection provides no basis for the Department to reverse its tentative decision to approve and grant antitrust immunity for alliance agreements between and among the Joint Applicants, and should be denied.

Stripped of its rhetorical window dressing, Northwest's claims are unsupported by any relevant evidence and utterly without merit. First, Northwest blows out of proportion the significance of Air Canada's increase in nonstop Canada‑China service, most of which is scheduled to operate for only a portion of the upcoming summer travel season. Indeed, it appears that once the summer season ends, Air Canada's service to China will revert to roughly the same number of nonstop frequencies it operates today (the only continuing increase being the introduction of three weekly frequencies on one route).

Second, the Department carefully considered the competitive impact of United's expanded cooperation with Air Canada in third-country markets and tentatively concluded "that no substantial reduction or elimination of competition will occur as a result of this transaction."' The Department's conclusion was based on three core facts: United and Air Canada have no U.S.-third-country nonstop service overlaps; Air Canada would not obtain any meaningful fifth- or sixth-freedom rights until the pending open skies agreement takes effect; and Air Canada has a de miniinis share of U.S.-third-country traffic.

Air Canada's planned (mostly seasonal) increase of Canada-China nonstop service will not change any of the findings on which the Department's conclusion was based. Air Canada's new service will not create any U.S.-third-country nonstop overlaps. And Northwest has not even attempted to demonstrate how or why these new services would allow Air Canada to carry more than the de minimis share of U.S.- China traffic the Department found it currently carries.

In the end, Northwest's filing should be seen for what it is -- a desperate, last-minute attempt to protect itself from competition and, at the same time, an expression of its unhappiness with the Department's decision in the 2007 US-China Combination and All-Cargo Frequency Allocation Proceeding (Docket OST-2006-25275).

Counsel: Wilmer Hale, Bruce Rabinovitz, 202-663-6960, bruce.rabinovitz@wilmerhale.com

Order 2007-2-16
OST-2005-22922 - Approval of and Antitrust Immunity for Alliance Expansion Agreements and an Amended Coordination Agreement
OST-1996-1434 - Approval of and Antitrust Immunity for Commercial Alliance Agreements

Issued and Served February 13, 2007

Final Order

We grant approval and antitrust immunity, as limited and discussed by Order 2006-12-17, Order 1996-5-27 (concerning the United/ Lufthansa alliance and limited carve-out conditions), Order 1997-9-21 (concerning U.S.-Canada markets and limited carve-out conditions), Order 2002-4-4 (concerning U.S.-UK open skies), and Order 2003-6-39 (concerning U.S.-UK open skies), to the alliance agreements between and among Air Canada, the Austrian Group, British Midland Airways Limited, Deutsche Lufthansa AG, Polskie Linie Lotnicze LOT S.A., Scandinavian Air Lines System, Swiss International Airlines, Ltd., TAP Air Portugal, and United Air Lines, Inc. in so far as the alliance agreements relate to foreign air transportation.

We condition our grant of approval and global immunity to Air Canada on the implementation of the Protocol to the Air Transport Agreement between the Government of the United States of America and the Government of Canada, initialed on November 10, 2005, providing for full open skies between the United States and Canada.

American believes that the public interest is not served by expanding Star’s antitrust immunity in the absence of a regulatory framework that allows for more inter-alliance competition. To the extent that American urges the Department to grant immunity for a future competing alliance, its comments are premature. No such case has been filed; we will consider any new case according to its particular facts and circumstances. To the extent that American indicates opposition to the present application, its comments are unsupported. American has not objected to any of the specific competitive or public interest findings upon which the tentative grant of approval and immunity is based.

By: Andrew Steinberg