OST-97-2161
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OST-97-2161
Order Confirming Notices of Action Taken
Order 97-6-26 | Issued June 25, 1997 | Served June 30, 1997
Order 97-7-31 | OST-97-2477 and OST-97-2481 | Undocketed | OST-96-1988 | OST-97-2161 and Undocketed | Undocketed | Issued July 29, 1997 | Served August 4, 1997
Order
Granting (In Part) Exemption and Statements of Authorization and Order to Show Cause
By this order we grant, in part, the captioned applications of American Airlines, Inc. (American), and Aero California S.A. de C.V. (Aero California), for exemption authority and statements of authorization to permit the carriers to engage in certain code-share services in various U.S.-Mexico markets. Additionally, this order proposes certain conditions to be imposed on all U. S.-Mexico code-share arrangements to permit, in certain instances, direct air carrier services to replace code-share services in a given city-pair market.
By: Charles Hunnicutt
OST-97-2477/2481 | Undocketed | OST-96-1988 | OST-97-2161 and Undocketed | Undocketed
Joint Comments of American Airlines and Aero California on
Order 97-7-31
Second, and even more importantly, a conditional grant of the application would unambiguously signal to the Mexican authorities that the Department favors, as the Order 97-7-31 states, the expansion of U.S.-Mexico service options through codeshare arrangements. In this connection, the Joint Applicants believe that the grant of the application subject to the issuance of designations and underlying economic authority could further the bilateral discussions between the U.S. and Mexico on codesharing arrangements and leave no question as to the intent of the Department to allow extensive codesharing services to be offered in the U.S.-Mexico market.
Counsel: Steptoe Johnson, David Coburn, 202-429-8063 | American, Carl Nelson, 202-496-5647
American Airlines, Inc. and Aero California, S.A. de C.V. / United Air Lines, Inc. and Compania Mexicana de Aviacion, S.A. de C.V. / Delta Air Lines, Inc. and Aerovias de Mexico, S.A. de C.V. (for exemptions, designations and statements of authorization, US-Mexico code-sharing)
OST-97-2477 | OST-97-2481 | OST-97-1988 | OST-97-2161 | Undocketed | August 19, 1997
United is aware of at least one U.S.-Mexico code share that involves two U.S. carriers. This is the code share operated by Alaska Airlines, Inc., and Northwest Airlines, Inc. (Order 96-12-8) That code share also has an impact on U.S. carrier designations to the extent that Northwest must be designated on certain U.S.-Mexico city pairs in order to hold out service in its own name. It would be unfair to impose the proposed condition only on U.S./Mexican carrier code shares while leaving the U.S./U.S. carrier code shares unconditioned. Indeed, the issue of imposing such a condition was originally raised by United in the context of the Alaska/Northwest code share. See Answer of United, dated May 9, 1996 in Docket OST-96-1332.
In these circumstances, United objects to issuance of a final order based on the tentative findings and conclusions in Order 97-7-31 with respect to the condition on U.S.-Mexico code shares unless the Department is prepared to impose the same condition on all U.S. carrier U.S.-Mexico code shares, including those involving two U.S. carriers. The Department should issue an amended order to show cause proposing to apply that condition to the code share of Alaska and Northwest as well as to any other outstanding and future U.S.-Mexico code shares involving two U.S. carriers.
Counsel: United Air Lines and Ginsburg Feldman, Joel Burton, 202 637 9130
OST-97-2477 | OST-97-2481 | OST-97-1988 | OST-97-2161 | Undocketed | August 25, 1997
Joint Answer of United Air Lines and Mexicana
If the Department decides to grant the relief requested by American and Aero California relating to the deferred portions of their code-share applications, it should grant the same relief to United and Mexicana with respect to the deferred portions of their code-share applications. The benefits recited by American and Aero California to be derived from the conditional grant of their deferred applications apply with equal weight to those of United and Mexicana.
Counsel: United and Ginsburg Feldman, Joel Burton, 202-637-9130 / Squire Sanders, Robert Papkin, 202-626-6601 for Mexicana
American
Airlines, Inc. / AeroCalifornia S.A. de C.V. / United Airlines, Inc. /
Compania
Mexicana de Aviacion, S.A. de C.V. | Delta Airlines, Inc. / Aerovias de Mexico, S.A. de
C.V. (US-Mexico Code-Sharing)
OST-97-2477 | OST-97-2481 | OST-97-1988 | OST-97-2161 | Undocketed | September 4, 1997
Consolidated Reply of Northwest Airlines, Inc.
and Motion for Leave to File
The Department should not authorize code-share operations involving Mexican carriers until all requisite designations and underlying economic authority have been secured. The Department also should continue to limit to 179 days all authorizations of code-share operations involving Mexican carriers. See Order 977-31 (granting United/Mexicana and American/Aero California authority to code-share in certain markets but limiting the effective periods to 179 days; Notice of Action Taken dated September 3, 1997 "limiting to 179 days Aeromexico's authority to code-share with Swissair).
Counsel: Megan Poldy, 202 842 3193
Order 97-9-38 | OST-97-2477 and OST-97-2481 | Undocketed | OST-96-1988 | OST-97-2161 and Undocketed | OST-96-1332 | Undocketed | Issued September 29, 1997 | Served October 3, 1997 | Posted October 2, 1997
Final Order and Order on Reconsideration
By this order we make final our tentative decision in Order 97-7-31, issued July 29, 1997, to condition all existing and future U.S.-Mexico code-share authorities to establish a rebuttable presumption in favor of replacing code-share services with direct air carrier services in a given city-pair market. Further, upon reconsideration, we affirm our decision in Order 97-7-31 to defer action on certain portions of the American/Aero California applications.
It has been our longstanding policy to grant authority only in cases where the route rights are available under the bilateral agreement between the United States and the country involved or where we have assurance from the country involved that it is prepared to approve the proposed operations on an extrabilateral basis. Furthermore, because of the limited-entry nature of the U.S.-Mexico market, along with the dormancy provisions attached to all U.S.-Mexico route authority, we have awarded U. S.-Mexico authority only in markets where carriers have firm plans for service. Consistent with these policies, we granted the applications of American and Aero California only in markets where the authority was available under the U.S.-Mexico aviation agreement and where Aero California held the requisite authority and corresponding Mexican Government designation. No party has presented any persuasive reason to deviate from those polices here.
By: Charles Hunnicutt
| OST-97-2161 | February 18, 1999 |  Application for Renewal of
Exemption Authority |
US-Mexico Exemption Renewal |
| Exhibit A: Renewal of Exemption Authority for Service between the Following City-Pairs | |||
| Service List |
Delta's original application in Docket OST-97-2161, filed February 27, 1997, included requests for exemption authority for the Miami-Cancun, New York-Cancun, and Dallas/Ft. Worth-Guadalajara (via Mexico City) routes, but the Department deferred action on these requests due to a lack of sufficient designations. In light of the Memorandum of Consultations signed by the United States and Mexico on January 29, 1999, which allows unrestricted beyond gateway code-share services and up to four code-share authorizations on U.S.-Mexico gateway-to-gateway routes, Delta respectfully requests that the Department grant these deferred authorities as soon as possible.
Order 97-6-26 also granted exemption authority to Delta for the Dallas/Ft. Worth-Ixtapa/Zihuatanejo route. By letter dated September 4, 1997, Delta notified the Department that it had discontinued service on this route. Thus, Delta is not herein seeking renewal of its Dallas/Ft. Worth-Ixtapa/Zihuatanejo exemption because the authority is dormant. The Department deferred action on Delta's request for Dallas/Ft. Worth-Guadalajara (via Mexico City) exemption authority. See Order 97-6-26.
Counsel: Delta and Shaw Pittman, Robert Cohn, 202-663-8060
| OST-97-2161 | March 5, 1999 | Answer of United Air
Lines |
Renewal of Exemption - US-Mexico Codeshare with Aeromexico |
The January 26, 1999 amendment to the U. S.-Mexico Air Transport Agreement should provide sufficient opportunities for the Department to grant all outstanding U. S.-Mexico transborder requests, including those of United and Delta. Because transborder code-share designations remain limited to four under the new agreement, however, the Department should approve United's long-outstanding application no later than it acts on any other U.S.-Mexico transborder code-share application. It would be both unfair and potentially prejudicial if the Department were to grant other outstanding requests before approving the United/Mexicana application, particularly where, as here, several of the applicants request authority for the same transborder city pairs. United would be competitively disadvantaged if the Department were to enable other competitors to introduce new services in the U. S.-Mexico market before the Department grants the pending United/Mexicana application. Resolution of the transborder code-share issues also paves the way for the Department to promptly approve the May 20, 1998 United/Mexicana Chicago-Toronto application for statement of authorization and the December 29, 1998 United/Air Canada U.S.-Mexico City application for statement of authorization which were both deferred as a result of the transborder code-share dispute.
Counsel: United and Kirkland Ellis, Jeffrey Manley, 202-879-5161
Delta Air Lines, Inc. and Aerovias de Mexico, S.A. de C.V. / Delta Air Lines, Inc.
| OST-99-5593 OST-97-3289 OST-98-4577 OST-97-2161 |
May 17, 1999 | Joint Motion for Leave to
Amend and Amendment to Applications |
US-Mexico Codesharing / US-Mexico-Beyond/Behind Gateway Service / US-Mexico Transborder Codeshare Routes |
| Service List |
Counsel: Delta and Shaw Pittman, Robert Cohn, 202-663-8060 / Verner Liipfert, William Evans, 202-371-6030 for Aeromexico
Delta Airlines, Inc. and Aerovias de Mexico, S.A. de C.V.
| OST-99-5593 OST-99-5573 OST-98-4577 OST-97-3289 OST-97-2161 49623 Undocketed |
May 24, 1999 | Re: Letter of Delta and Aeromexico in
Response to Staff's Request to Supplement Applications |
US-Mexico Codesharing |  HTML |
| Attachment: Codeshare Exclusivity Provisions Excerpted from Marketing Agreement between Aeromexico and Delta Air Lines |
Before turning to the specifics of the Delta/Aeromexico arrangement, Delta would like to reiterate its serious reservations regarding the Department's new policy of redrafting commercial agreements to eliminate exclusivity clauses. Proposed codeshare arrangements either benefit competition and the public interest and should be approved, or they are detrimental and should be denied. The Delta/Aeromexico codeshare arrangement has injected substantial new competition in the U.S.-Mexico marketplace since its approval in 1994, and there is no reason the Department's public interest evaluation of the relationship should be affected by the subsequent addition of an exclusivity clause. Placing limits on carriers' freedom of contract choices is undesirable because it diminishes the level of commitment that can be achieved between the parties, which is an important component in forming a comprehensive long term commercial relationship. Moreover, while striking exclusivity clauses unnecessarily limits the benefits that can be achieved through an alliance or codeshare agreement, this remedy has proved to be an ineffective means to addressing the Department's competitive concerns.
Counsel: Verner Liipfert, William Evans for Aeromexico / Shaw Pittman, Robert Cohn for Delta
Delta Air Lines, Inc. and Aerovias de Mexico, S.A. de C.V.
| OST-99-5593 OST-97-3289 OST-98-4577 OST-97-2161 |
Posted May 25, 1999 Served May 25, 1999 |
Notice to All Parties | US-Mexico Codesharing |
On May 17, 1999, and supplemented on May 24, 1999, Delta Air Lines, Inc. and Aerovias de Mexico, S.A. de C.V. (Aeromexico) filed applications for new and amended regulatory authorities to engage in codesharing operations in the U.S. -Mexico market. The applicants request the immediate grant of these authorities to permit them to exercise valuable new U.S.-Mexico code-share rights without delay. Under the Department's regulations, 14 C.F.R. Part 302, answers to the captioned applications would normally be due June 1, 1999, and replies to answers filed would be due June 10, 1999. So that we may be in a position expeditiously to complete our processing of the Delta/Aeromexico applications, we have decided to shorten the period for filing answers to the these applications to 2 p.m. EDT on May 28, 1999, and to shorten the period for replies to June 1, 1999.
By: Paul Gretch
Delta Air Lines, Inc. and Aerovias de Mexico, S.A. de C.V. / Delta Air Lines, Inc.
| OST-99-5593 OST-97-3289 OST-98-4577 OST-97-2161 |
May 27, 1999 | Joint Answer of United Air Lines and Mexicana | US-Mexico Codesharing / US-Mexico Beyond/Behing Gateway Service / US-Mexico Transborder Codeshare Routes |
On May 24, 1999, at the request of Department staff, Delta and Aeromexico supplemented their joint applications by providing a copy of the exclusivity clause relating to their marketing relationship, which was executed last year in conjunction with Delta's investment in Aeroperu. It is now clear that every major U.S. carrier-Mexican carrier code-share alliance operates within the purview of a contractual exclusivity clause, most of them in place for a number of years. These contractual provisions have provided the commitment and security needed for carriers to undertake the substantial investments involved in fully developing these relationships. And these investments have paid off in terms of public interest benefits. As anticipated when the code sharing was first authorized, these cooperative arrangements have greatly expanded competition in scores of U.S.-Mexico city-pairs. Consumers enjoy much greater service choice and convenience than existed a few short years ago. Moreover, with the support of code-share alliance members, including United/Mexicana and Delta/Aeromexico, the Department was able successfully to negotiate a substantially liberalized code-share agreement with Mexico in January 1999 to further expand code-share service in the U.S. -Mexico market. In view of these benefits, and consistent with the understandings between the parties and the U.S. and Mexican Governments, the Department should immediately approve the pending applications for expanded U.S. -Mexico code-share authority without interfering with the exclusivity arrangements agreed among the parties.
Counsel: United and Kirkland Ellis, Jeffrey Manley, 202-879-5161, jeffrey_manley@kirkland.com
Delta Air Lines, Inc. and Aerovias de Mexico, S.A. de C.V.
| OST-99-5593 OST-97-3289 OST-98-4577 OST-97-2161 |
May 28, 1999 | Joint Answer of American Airlines and Aero California | U.S. - Mexico (Codesharing) |
We understand that the Department's delay is due to policy concerns over exclusivity provisions that are present in each of the three U.S.-Mexico codesharing alliances. American and Aero California urge the Department to resolve this matter promptly, and to act favorably on all pending U.S.-Mexico codesharing applications, at the same time and with the same condition, if any, on exclusivity. Until the Department is prepared to act on all such applications, it should not grant piecemeal authorizations to Delta and Aeromexico.
Counsels: Steptoe & Johnson, LLP, David Coburn for Aero California, 202.429.8063, and Carl Nelson, Jr. for American, 202.496.5647, carl_nelson@amrcorp.com
| OST-99-5593 OST-97-3289 OST-98-4577 OST-97-2161 |
May 28, 1999 | Answer of Continental Airlines | U.S. - Mexico (Codesharing) |
Continental urges the Department to grant immediately the long-standing applications of Continental and other carriers for authority to offer code-share service on U.S. -Mexico routes. The late-filed Delta/Aeromexico request for the Department to add new city pairs, grant blanket authority beyond the gateways and delay other requests while Delta and Aeromexico argue about code-share exclusivity raises controversial issues which should not delay the approval of other applications.
Counsels: Crowell & Moring, LLP for Continental, R. Bruce Keiner, Jr., rbkeiner@cromor.com, and Thomas Newton Bolling, tbolling@cromor.com, 202.624.2500
| OST-99-5593 OST-97-3289 OST-98-4577 OST-97-2161 |
May 28, 1999 | Joint Answer of Delta and Aeromexico | U.S. - Mexico (Codesharing) |
Although Northwest asserts that the Department should defer action on the applications of Delta and Aeromexico, Northwest has provided no basis for the Department to delay approval of the Delta/Aeromexico requests, while acting immediately to approve the similar requests of other carriers. For these reasons, and the reasons; set forth in Delta and Aeromexico's supplement dated May 24, 1999, the Department should promptly approve all pending U.S.-Mexico codeshare applications, and should do so without imposing any exclusivity conditions.
Counsels: Verner Liipfert, William Evans for Aeromexico, 202.371.6030, and Shaw Pittman, Robert Cohn for Delta, 202.663.8060
| OST-99-5593 OST-97-3289 OST-98-4577 OST-97-2161 |
May 28, 1999 | Answer of Northwest Airlines | U.S. - Mexico (Codesharing) |
The Department should not allow Delta and Aeromexico to hinder Northwest's ability to begin its proposed U.S.-Mexico code-share services with Alaska and Continental expeditiously. Delta and Aeromexico have opted at the eleventh hour to request new authority from the Department for code-share exclusivity, blanket beyond-gateway authority and additional city pairs even though the Department stands ready now to allocate U.S.-Mexico code-share authority to all applicants. The Department will likely require considerable time and devote much attention to the complex and controversial issues associated with code-share exclusivity for Delta and Aeromexico. Northwest's applications for code-share authority with Alaska and Continental have been pending since February, and their alliance agreements have been filed with. the Department and reviewed. other applications for U.S.-Mexico code-share authority have been pending for lengthy periods of time.
Counsel: Megan Rae Poldy for Northwest, 202.842.3193
Delta Air Lines, Inc. and Aerovias de Mexico, S.A. de C.V.
| OST-99-5593 OST-99-5573 OST-98-4577 OST-97-3289 OST-97-2161 |
June 22, 1999 | Petition for Reconsideration of Delta Air Lines | Exemptions and Statements of Authorization for Reciprocal US-Mexico Codesharing Services (Exclusivity Provision) |
By failing to articulate a rational explanation for the imposition of an anti-exclusivity condition, and by retroactively nullifying the Delta-Aeromexico exclusive marketing agreement, the Department’s decision violates the arbitrary and capricious standard of the Administrative Procedure Act and constitutes an abuse of discretion.
Counsel: Delta and Shaw Pittman, Robert Cohn, 202-663-8060
| OST-97-2161 | August 18, 1999 | Notice of Action Taken | U.S.-Mexico |
Delta states that all of this authority was last granted in conjunction with a statement of authorization to allow Aeromexico to display Delta’s "DL" designator code on flights operated by Aeromexico in these markets. Delta seeks to integrate these exemption authorities with all of Delta’s existing certificate and exemption authority, to the extent permitted by applicable international agreements.
By: Paul Gretch
| Order 99-8-14 Undocketed OST-99-5593 OST-99-5573 OST-98-4577 OST-97-3289 OST-97-2161 OST-97-3237 OST-99-5582 |
Issued and Served August 18, 1999 | Order | US-Japan Code Sharing US-France Code Sharing US-Mexico Code Sharing |
We reject arguments that we should adopt a
laissez-faire approach to exclusive dealings between and among airlines in international air transportation. It is not in the public interest to ignore any feature of a code-share agreement that could interfere with competition or otherwise undermine the ability of consumers to benefit from the opportunities created by our aviation relationships. For that reason, we will continue to assess the merits of code-share exclusivity provisions on a case-by-case basis in light of the terms of the overall arrangement and of the special facts and circumstances affecting each market, such as its structure, the positions of the parties in those markets, and the nature of the bilateral aviation relationship governing it.By: Brad Mims
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