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OST-96-2083

Delta Air Lines, Inc. (Designation to Provide Third Country Code-Share, US-Egypt)

OST-97-2803 | August 14, 1997

Application

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Delta proposes to operate third-country code-share service to Cairo, Egypt, via Zurich, Switzerland in cooperation with its alliance partner, Swissair, Swiss Air Transport Company Ltd. ("Swissair").

Delta has been anxiously awaiting its opportunity to begin third country code-share service to Egypt, and Delta was instrumental in urging the Department to pursue an agreement with the Government of Egypt that would expressly provide for third-country code-share services. With that agreement now in place, the Department has the opportunity to inject Delta as the third major alliance competitor for service to Egypt.

• DL-1 Proposed Cairo-Zurich Code Share Service
• DL-2 Map
• DL-3 Nonstop connections to an from Cairo
• DL-4 Codeshare Connections Atlanta-Zurich
• DL-5 Codeshare Connections Cincinnati-Zurich
• DL-6 Codeshare Connections Boston-Zurich
• DL-7 Codeshare Connections Los Angleles-Zurich
• DL-8 Codeshare Connections New York-Zurich
• DL-9 Atlanta Hub is the Largest in Terms of Daily Departures
• DL-10 Atlanta Hub is the Largest in Terms of Nonstop Citypairs Served
• DL-11 Atlanta Hub is the Largest in Terms of Enplanements
• DL-12 Nonstop to Nonstop Connections to 75% of the Total Cairo-US Passengers
• DL-13 Atlanta Catchment Area will Capture over 98% of the Cairo-US Passengers
• DL-14 Concinnati Catchment Area will Capture Nearly 95% of the Cairo-US Passengers
• DL-15 New York/JFK Catchment Area will Capture 86% of the Cairo-US Passengers
• DL-16 Total Catchment Area will Capture Nearly 99% of the Cairo-US Passengers

Answers are due by August 21, 1997

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

US-Egypt Third Country Codeshare Opportunities / Applications of Continental Air Lines, Inc. and Delta Air Lines, Inc.

OST-96-2803 | OST-97-2822 | August 26, 1997

Consolidated Reply of Continental Airlines

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With only one designation available, the Department must, as Delta correctly suggests, give comparative consideration to both pending applications. Doing so is consistent with well-settled practice and will promote the public interest in expanding competition in the U.S.-Egypt market and among global alliances. Delta does not deny that Continental proposes more third-country service to/from Egypt than Delta does and that all of Continental's transatlantic service will be operated by Continental, while most of Delta's transatlantic service will be operated by Swissair. Another round of U.S.-France bilateral talks is scheduled for mid-October 1997. To the extent the Department is concerned that negotiation of a U.S.-France bilateral agreement will delay use of the code-share opportunity, moreover, the Department could award Delta a temporary designation on a short-term basis pending completion of negotiations with France and approval of the Continental Air France code-share arrangement.

American's opposition is clearly a red herring. The true beneficiary of a U.S.-Egypt code-share designation is Continental, since Air France already provides its own direct Egypt services. Continental will gain the right to sell U.S.-Egypt through services, and Continental will be operating the transatlantic flights involved. Moreover, as American knows, the French bilateral proposal provides for third-country codesharing by carriers of both sides, and Continental's application is contingent on successful negotiation of a new U.S.-France bilateral agreement.

Counsel: Crowell Moring, Lorraine Halloway, 202 624 2500

Reply of Delta Air Lines

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Continental as much as concedes that it would offer inferior service and competitive benefits than Delta. With nothing else to rely on, Continental tries to advance the novel argument that because it is not a major alliance carrier and offers only limited transatlantic service, it should receive priority for an award. This false logic would deny consumers the benefit of new alliance competition between the U.S. and Egypt as well as the substantially greater service options to be offered by Delta. Once a bilateral is in place that would support such services, Continental remains free to grow its transatlantic alliance aspirations with Air France or other transatlantic operators.

Counsel: Shaw Pittman, Robert Cohn, 202 663 8060

U.S.-Egypt Codeshare Services / Continental Airlines, Inc. / Delta Air Lines, Inc.

Order 97-9-16 | OST-97-2822 | OST-97-2803 | Issued September 16, 1997 | Served September 19, 1997

Order on Third-Country Code-Share Services

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We have decided to grant Delta's application to provide U.S.-Egypt third-country code-share services. Of the two applications before us. only Delta proposes services that currently can be exercised. The service proposed by Delta is fully consistent with the aviation agreements between the United States and Egypt and between the United States and Switzerland, the homeland of its code-share partner. Moreover, the arrangement between Delta and Swissair has been approved and, thus, their operations can be implemented as proposed.4 Furthermore, approval of Delta's application will expand the service options available to the traveling and shipping public, and numerous U.S. cities will receive new or improved service providing them greater access to Egypt.

The services proposed by Continental/Air France, on the other hand, cannot now be operated. There is currently no bilateral aviation agreement with France. Moreover, there is insufficient reciprocity with France to warrant approval of joint operations by Continental and Air France. Indeed, France has followed a consistent policy not to authorize new code-share operations pending conclusion of a new agreement between the two countries. Thus, as Continental is currently not in a position to implement its proposed code-share services, we conclude that it is not eligible at this time for award of the third-country code-share authority at issue. In view of these circumstances, we will dismiss its application without prejudiced

By: Patrick Murphy

Delta Air Lines, Inc.

By Order 97-9-16, served September 19, 1997, the Department designated Delta as one of three U.S. carriers authorized to provide scheduled foreign air transportation of persons, property and mail between the United States and Egypt under third-country codeshare arrangements. Absent renewal, the designation would expire on September 19, 1999. Pursuant to this authority, Delta currently provides third-country codeshare service to Cairo via Zurich.

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

American Airlines, Inc.; Continental Airlines, Inc. and Transbrasil S/A Linhas Aereas and Interbrasil Star; Continental Airlines, Inc.; Continental Airlines, Inc. and Hawaiian Airlines, Inc.; American Airlines, Inc.; Iberia Lineas Aereas de Espana, S.A., Air Nostrum, and Aviaco; United Parcel Service; United Air Lines, Inc., US Airways, Inc. and Allegheny Airlines, Inc.; United Air Lines, Inc., US Airways, Inc. and Allegheny Airlines, Inc.; America West Airlines, Inc.; Delta Air Lines, Inc.

OST-97-2081 - American Airlines, Inc., filed January 17, 1997. Exemption authority to operate scheduled combination services between the United States and several cities in Colombia under a code-sharing arrangement with Aerovias Nacionales de Colombia (AVIANCA). By letter dated March 2, 200 1, American withdrew the exemption application.

OST-01-9950 Continental Airlines, Inc., filed June 18, 2001. Exemption authority to operate scheduled combination services between the United States and several cities in Brazil, Argentina, and Canada under a code-sharing arrangement with Transbrasil S/A Linhas Aereas and Interbrasil Star. The City of Houston and the Greater Houston Partnership and United Air Lines filed pleadings. By letter dated August 17, 2001, Continental withdrew the exemption application.

OST-96-1648 Continental Airlines, Inc., filed October 18, 200 1. Renew for five years certificate authority (Route 733) authorizing scheduled combination services between the United States and the United Kingdom, excluding London's Heathrow and Gatwick airports. On October 23, 200 1, Continental withdrew the application because its certificate authority for Route 733 had in fact been granted for an indefinite duration.

OST-01-10705 Continental Airlines, Inc. and Hawaiian Airlines, Inc. filed September 25, 2001. Allocation of U.S.-France same-country code-share opportunity to display Continental's designator code on Hawaiian's flights between Honolulu and Papeete, Tahiti. On September 27, 2001, Continental and Hawaiian withdrew their joint application.

OST-97-2965 / OST-98-3626 / OST-98-3640 United Air Lines, Inc., filed May 20, 1998. Petition for review of staff action and request that the Department reverse the award of code-share authority to American Airlines and Iberia Lineas Aereas de Espana to the extent that it permitted code-share service between Madrid and Rome (See Notice of Action dated April 30, 1998, in Dockets OST-97-2965 and 98-3626, and Order 98-12-6). United stated that American's proposed service in this market was not consistent with the aviation agreement between the United States and Italy. American and Iberia filed a response. Subsequent to the petition, the United States and Italy signed an open-skies agreement, and U.S. carrier service, including American's service at issue here, is now covered by this more liberal arrangement. United's petition, therefore, is now moot.

OST-00-7633 United Parcel Service Co., filed July 12, 2000. Allocation of five (5) one-way weekly Russia overflight frequencies transiting Tashkent in order to operate freighter service over a Cologne, Germany - Mumbai, India - Singapore - Taipei, Taiwan routing. On July 21, 2000, UPS withdrew the application.

OST-00-8355/OST-00-8356 United Air Lines, Inc.; US Airways, Inc.; and Allegheny Airlines, Inc., filed November 17, 2000. Joint application for (a) approval of a transfer of the international certificate authority held by US Airways and Allegheny to United; and (b) an interim exemption to facilitate the transfer, pending final consummation of the merger of United, US Airways and Allegheny. Continental Airlines, Delta Air Lines, America West Airlines, American Airlines, the Communications Workers of America/AFL-CIO/CLC, and the US Airways Master Executive Council of the Air Line Pilots Association filed answers. On July 27, 2001, the Joint Applicants announced the termination of their merger agreement, and on July 30, 2001, the Joint Applicants filed ajoint motion to withdraw the applications. We grant the motion.

OST-00-7880 America West Airlines, Inc., filed August 31, 2000. Renew statement of authorization to code share with Eva Airways Corporation. On October 30, 1998, the Department granted the application of America West to display EVA's designator code on America West's domestic flights for the carriage of EVA's transpacific traffic (undocketed). The Department granted the application for an indefinite duration, subject to attached conditions. In these circumstances, the renewal application is moot.

OST-97-2803 Delta Air Lines, Inc., filed July 21, 1999. Renew authorization to provide third- country code-share service to Egypt. By Order 2000-10-14, the Department determined that Delta's authorization was available for allocation since Delta proposed to change its code-share partner from Swissair to Air France. Subsequently, by Order 2000-11-2, we selected Delta and Air France for the available authorization (Docket OST-2000-6982). Against this background, Delta's application to renew its authorization in Docket OST-97-2803 is now moot.

By:  Paul Gretch

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