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OST-1997-3073

Related Docket: Docket 48343. (OST-1995-552)

American Airlines, Inc. (Emergency Exemption, New York-Lima-Cuzco, Peru)

OST-97-3073 | October 31, 1997

Application for Emergency Exemption to Serve Cuzco

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The Government of Peru has requested American to initiate service on a New York (JFK)-Lima-Cuzco routing, and has granted authority (with associated frequencies) to permit American to operate these flights. American holds underlying route authority between New York and Lima in its certificate for Route 389, as amended by Order 92-6-21, June 14, 1992.

The Government of Peru urgently requires additional service to Cuzco on an emergency basis, in light of a significant reduction in domestic operations by Peruvian air carriers between Lima and Cuzco. Cuzco is the gateway to many of the principal tourist destinations in Peru. With the reduction in domestic flights to and from Cuzco, individual and group movements of tourists will be severely affected in the coming winter season, absent the grant of American's application. The Government of Peru has specifically requested that American's Cuzco service be operated from New York (JFK) via Lima. American will carry through-plane and international stopover traffic on the Lima-Cuzco segment, but will not carry local traffic.

• Attachment 1: Map
• Attachment 2: Schedule
• Attachment 3: Annual Operating Statistics

Answers are due by November 5, 1997

Service List

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

American Airlines, Inc. (Emergency Exemption, New York-Lima-Cuzco)

OST-97-3073 | November 3, 1997

Re: Objection of Continental Airlines to Request for Shortened Answer

Counsel: Continental and Crowell Moring, Bruce Keiner

Objection of Delta Air Lines to Request for Shortened Answer

Delta Air Lines, Inc., ("Delta") hereby objects to American's request for an accelerated answer date with respect to the above-captioned application. American has demonstrated no public interest basis for expedited consideration of its application. Delta will file an answer in opposition to American's application on November 17,1997, the answer date established by the Department's procedural regulations

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

American Airlines, Inc. (Emergency Exemption, New York-Lima-Cuzco)

OST-97-3073 | November 5, 1997

Answer of United Air Lines

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American does not explain what may have induced the Peruvian government to make American the "chosen instrument" of that country's aviation policy. If Peru were interested in additional U.S. carrier New York-Lima service, as well as service to Cuzco, the normal course would appear to be to invite any interested U.S. carrier to operate such service. United for its part is unaware of any such invitation having been extended. If Peru is interested in making only limited opportunities available to U.S. carriers, it is the U.S., not Peru, that should make the carrier selection and frequency allocation.

Counsel: United and Ginsburg Feldman, Joel Burton, 202-637-9130

American Airlines, Inc. (Emergency Exemption, Cuzco)

OST-97-3073 | Served November 6, 1997

Notice Shortening Answer Period

After consideration of American's request for a shortened answer period and the responses to that request, we have decided to modify the procedural schedule for responsive pleadings to American's application, and will require that answers to the application be filed no later than November 13, 1997, and that replies to answers be filed no later than November 14, 1997.

While we appreciate American's desire for prompt action on its application, the schedule it proposed would not have permitted interested parties to have the benefit of the current round of U. S.-Peru aviation negotiations (being held November 5-7 in Lima) in formulating their responses.

By: Paul Gretch

American Airlines, Inc. (Emergency Exemption, Cuzco)

OST-97-3073 | November 13, 1997

Answer of Continental Airlines

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The Department should investigate American's recent meetings with Peruvian officials and its donation of a helicopter to President Fujimori for use to support the operations of the Civil Aviation Airport Authority.

This is not the first time American has claimed that Peru was offering additional Peru frequencies available only to American. When Peru agreed to expand the frequencies available to U.S. carriers in 1994, American claimed the frequencies were "granted solely to allow American to substitute wide-body for narrow-body aircraft this winter" and admitted it had been selling the wide-body service although it lacked authority to do so. Because American operates one of its daily Miami frequencies with widebody aircraft, it appears to be violating the frequency limitations already, while Continental and United are complying with the frequency limitations. If Peru has indeed made an additional seven Miami narrowbody frequencies available, the Department should institute a proceeding for allocation of those frequencies rather than allowing American to continue operating beyond its own frequency limitations.

Counsel: Continental and Crowell Moring, Bruce Keiner, 202-624-2615

Answer of Delta Air Lines

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American's proposal to serve Cuzco is a classic case of "the tail wagging the dog." It is a transparent attempt to secure limited-entry frequencies to operate New York-Lima nonstop service and to increase Miami-Lima nonstop service, and the Department should not abet American's underhanded tactics. American's exemption request "to serve Cuzco" on an "emergency basis" ignores the fact that American today could add tag service to Cuzco by extending any one or all of its existing three daily U.S.-Lima flights. Indeed, Delta would not oppose American's application "to serve Cuzco" by extending an existing flight, so long as such service does not involve the grant of additional U.S.-Peru frequencies to American.

Motion to Consolidate of Delta Air Lines (OST-97-3124)

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American filed an application for exemption authority to allow it to begin nonstop service between New York and Lima, with continuing service to Cuzco, Peru. It has been reported that in addition to American's proposed New York-Lima-Cuzco service, American proposes to increase Miami-Lima service from two daily nonstop flights to three daily nonstop flights. Furthermore, American is using additional frequencies to operate widebody aircraft between Miami and Lima, over and above the two daily narrowbody frequencies it has been allocated by the Department on that route. American has been allocated twenty-one weekly narrowbody frequencies for combination services, all of which are currently utilized by American. American's current frequency allocation does not allow for the additional New York-Peru or the proposed Miami-Lima services, or the operation of Miami-Lima widebody aircraft without a commensurate reduction of American's existing services. Thus, American will be utilizing 17.5 more U.S.-Peru frequencies than it currently holds. Any additional frequencies over and above American's allocation of 21 weekly narrowbody frequencies should be consolidated for contemporaneous consideration in a carrier selection proceeding.

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

Supplement to Answer of United Air Lines

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United, along with other U.S. carriers serving Peru, was solicited by the Peruvian government with regard to its possible interest in serving other points in Peru outside of Lima. United understood that solicitation to involve only flights to such points outside Lima either nonstop from the U.S. or by extension of existing U.S.-Lima flights.

Counsel: United and Ginsburg Feldman, Joel Burton, 202-637-9130

American Airlines, Inc. (Emergency Exemption, Cuzco)

OST-97-3073 | November 14, 1997

Answer of American Airlines to Motion of Delta Air Lines to Consolidate (OST-97-3124)

American Airlines, Inc. hereby answers in opposition to the motion to consolidate submitted by Delta Air Lines, Inc. on November 13, 1997. The basis for American's opposition to Delta's motion is set forth in the attached reply submitted by American on November 14, 1997 in OST-97-3073, which is incorporated herein by reference. The Department should deny Delta's motion, and grant American's application for Cuzco authority forthwith.

Reply of American Airlines

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None of the opposing carriers has filed a competing application to serve Cuzco. American is seeking such authority at the invitation of the Government of Peru, which asked American to operate service on a New York (JFK)-Lima-Cuzco routing. Peru's request for Cuzco service was made in light of a threatened emergency situation during the coming winter season caused by the reduction in domestic operations of Peruvian air carriers between Lima and Cuzco, the gateway to many of the principal tourist destinations in Peru. In the absence of any competing Cuzco applications, the Department should grant American's request forthwith.

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

American Airlines, Inc. (Emergency Exemption, New York-Lima-Cuzco)

OST-97-3073 | November 17, 1997

Motion for Leave to File and Surreply of Delta Air Lines

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American's attempt to analogize its under-the-table maneuverings with Peru to the code-share arrangement between Delta and Air Lingus is absurd. Delta did not negotiate with the Government of Ireland, but rather with Air Lingus to establish a garden-variety code-share relationship. Both the United States Government and Ireland considered the Delta-Air Lingus application pursuant to the principles of reciprocity and comity. As such, Delta's arrangement with Air Lingus is no different than many of the code-share relationships involving American that were dependent upon the grant of extrabilateral authority. Moreover, the Delta code-share arrangement did not block other U.S. carrier services to Ireland; under the U.S.- Ireland bilateral agreement, U.S. carriers have substantial opportunities to operate additional U.S.-Ireland service. Thus, unlike the American situation, neither the Delta arrangement nor the other code-share arrangements cited by American involved the award of either frequencies or authority that were mutually exclusive to pending applications filed by other U.S. carriers. Here, by contrast, American negotiated directly with the Government of Peru to achieve an extraordinary allocation of additional U.S.-Peru nonstop frequencies in violation of applicable legal and procedural requirements.

Motion for Leave to File Reply of Delta Air Lines (OST-97-3124)

American's opposition to Delta's Motion to Consolidate is without merit. Delta hereby adopts and incorporates by reference, the Surreply it is concurrently filing in Docket OST-97-3073. American's proposal to utilize additional U.S.-Peru frequencies is mutually exclusive as a matter of law and fact to Delta's request for allocation of U.S.-Peru frequencies to permit it to operate Atlanta-Lima nonstop service. That mutual exclusivity requires the Department to consider the Delta and American proposals for additional U.S.-Peru service in a contemporaneous carrier-selection proceeding.

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

Delta Air Lines, Inc. (Atlanta-Lima, Peru) / American Airlines, Inc. (New York-Lima-Cuzco, Peru)

OST-97-3124 | OST-97-3073 | November 25, 1997

Answer of Continental Airlines, Inc. to Motion to Consolidate and Motion for Leave to File One Day Late

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Continental urges the Department to defer action on Delta's motion to consolidate unti] the Department determines how many additional U.S.-Peru frequencies are available for U.S. carriers and invites applications for any available frequencies from other U.S. carriers. Only then should the Department issue an order instituting a competitive carrier selection proceeding consolidating all applications for the frequencies. In the meantime, the Department should determine whether American's activities in Peru violate the Logan Acts and whether American is currently operating flights exceedingapplicable frequency limits.

Counsel: R. Bruce Keiner, Lorraine Halloway for Continental, 202.624.2500

American Airlines, Inc. (Emergency Exemption to Serve Cuzco, Peru)

Order 98-1-29 | OST-97-3073 | Issued and Served January 28, 1998

Order Granting Exemption

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By this order, we grant American Airlines, exemption authority for one year to serve the New York (JFK)-Cuzco, Peru, market via Lima, Peru

By:  Charles Hunnicutt

American Airlines, Inc.

American initiated New York-Cuzco service via Lima on April 13, 1998, but due to unfavorable economic conditions, service was suspended on September 30, 1998. American plans to resume service when economic conditions improve. In order to be in a position to do so, American requests renewal of the subject authority.

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

American Airlines, Inc.

American initiated New York-Cusco service via Lima on April 13, 1998, but due to unfavorable economic conditions, service was suspended on September 30, 1998. Absent a waiver, American's frequency allocation would revert to the Department on December 29, 1998.

American plans to resume service when economic conditions improve. In order to be in a position to do so, American applied for renewal of the subject authority in this docket on November 25, 1998, and by the present application seeks a waiver of the dormancy condition. American's request is similar to one submitted on December 1, 1998 by United Air Lines, Inc. in OST-95-576, seeking a waiver of the 90-day dormancy condition applicable to United's Lima-Santiago frequency allocation, which United is not presently using.

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

American Airlines, Inc.

Scheduled foreign air transportation of persons, property, and mail between New York, New York, and Cuzco, Peru, via Lima. American teas requested the authority for an indefinite duration.  Renew allocation of seven weekly U. S.-Peru combination frequencies to operate the above service.

By Order 98-1-29 the Department granted American Airlines seven weekly combination frequencies to provide service in the New York-Cuzco market. The frequencies are subject to the condition that they will expire automatically and revert to the Department for reallocation if they are not used for a period of 90 days. American suspended its New York-Cuzco service on September 30, 1998, and seeks a waiver of the 90-day dormancy condition until March 29, 1999. American states that it will resume service when economic conditions improve.

By:  Paul Gretch

American Airlines, Inc.

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

American Airlines, Inc.

By Order 98-1-29 the Department granted American Airlines seven weekly combination frequencies to provide service in the New York-Cuzco market. The frequencies are subject to the condition that they will expire automatically and revert to the Department for reallocation if they are not used for a period of 90 days. American suspended its New York-Cuzco service on September 30, 1998. On December 17, 1998, the Department granted American a waiver from the dormancy condition. Under the terms of that waiver American's frequency allocation would automatically expire if American didn't resume service by June 27, 1999. American seeks a further waiver from the 90-day dormancy condition so that the 90-day dormancy period would not begin until September 25, 1999.

By:  Paul Gretch

American Airlines, Inc.

American Airlines, Inc. hereby applies for a waiver of the 90-day dormancy condition applicable to its frequency allocation to serve between New York and Cuzco, Peru via Lima, as granted by Notice of Action Taken in this docket on June 22, 1999. Under that condition, the 90-day dormancy period began on September 24, 1999. American initiated New York-Cuzco service via Lima on April 13, 1998, but due to unfavorable economic conditions, suspended service on September 30, 1998. Absent a waiver, American's frequency allocation would expire on December 24, 1999. American plans to resume service when economic conditions improve. In order to be in a position to do so, American is seeking a waiver of the dormancy condition.

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

American Airlines, Inc.

By:  Paul Gretch

American Airlines, Inc.

American initiated New York-Cuzco service via Lima on April 13, 1998, but due to unfavorable economic conditions, suspended service on September 30, 1998. Absent a further waiver, American's frequency allocation would expire on September 24, 2000. American plans to resume service when economic conditions improve. In order to be in a position to do so, American is seeking a waiver of the dormancy condition.

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

American Airlines, Inc.

By:  Paul Gretch

American Airlines, Inc.

American plans to resume service when economic conditions improve. In order to be in a position to do so, American is seeking renewal of its exemption authority.

Counsel: American Airlines, Carl Nelson, 202.496.5647, carl_nelson@aa.com

American Airlines, Inc.

Scheduled foreign air transportation of persons, property, and mail between New York, New York, and Cuzco, Peru, via Lima. American has requested the authority for an indefinite duration.

By:  Paul Gretch

American Airlines, Inc.

American Airlines, Inc. hereby applies for a waiver of the 90-day dormancy condition applicable to its frequency allocation to serve between New York and Cuzco, Peru via Lima, granted by Notice of Action Taken in this docket on August 28, 2000. Under that Notice, the 90-day dormancy period began to run on March 24, 2001.

American initiated New York-Cuzco service via Lima on April 13, 1998, but due to unfavorable economic conditions, suspended service on September 30, 1998. Absent a further waiver, American's frequency allocation would expire on July 24, 2001. American plans to resume service when economic conditions improve. In order to be in a position to do so, American is seeking a waiver of the dormancy condition. American asks that the dormancy date applicable to its New York-Lima-Cuzco service be extended for an additional 180 days, i.e., through December 24, 2001. Under such a waiver, the 90-day dormancy period would begin to run again on that date.

Counsel:  American Airlines, Carl Nelson, 202.496.5647, carl_nelson@aa.com

American Airlines, Inc.

By:  Paul Gretch

American Airlines, Inc.

Hereby applies for renewal and amendment of its exemption, last renewed by Notice of Action Taken in this docket on October 31, 2000, authorizing foreign air transporta­tion of persons, property, and mail between New York and Cuzco, Peru via Lima. American requests that this exemption be amended to authorize operations between any point in the United States and any point in Peru, via any intermediate point and to any beyond point, consistent with third-country agreements. American further requests the right to integrate such authority with its certificates of public convenience and necessity and other exemptions.

An open skies regime between the U.S. and Peru took effect on April 17, 2002, when Peru acceded to the Multilateral Agreement on the Liberalization of International Air Transpor­tation. Accordingly, the Department should grant American's request for broad U.S.-Peru exemption authority. American is seeking broad U.S.-Peru certificate authority in its applica­tion for renewal and realignment of its certificate for Route 389, submitted on September 10, 1992 in Docket 48343.

Counsel:  American Airlines, Carl Nelson, 202.496.5647, carl.nelson@aa.com

American Airlines, Inc.

United views Peru's accession to the APEC Multilateral Open Skies Agreement as a very positive development in aviation relations between the United States and Peru, and welcomes the opportunity to develop new, innovative operations between the two countries. So long as United is concurrently granted authority that is comparable in breadth to the authority sought by American, United has no objection to issuance of the exemption amendment American seeks. Although neither American nor United have identified near term plans to utilize the expanded authority, the grant of broad authority will facilitate the development of flexible new services between the U.S. and Peru and position both American and United to introduce additional competitive service when market conditions warrant.

Counsel:  United and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanely@wilmer.com

American Airlines, Inc.

Scheduled foreign air transportation of persons, property, and mail between Los Angeles, California, and Nadi, Fiji. American plans to operate this service under a code-share arrangement with Air Pacific Limited.

By: Paul Gretch

OST-97-3073 - US-Peru

August 10, 2004

Application for Renewal of Exemption

Hereby applies for renewal of its exemption, last renewed by Notice of Action Taken in this docket on October 17, 2002, authorizing scheduled foreign air transportation of persons, property, and mail between the United States and Peru, with the right to integrate such authority with its certificates of public convenience and necessity and other exemptions. American is seeking broad U.S.-Peru certificate authority in its application for renewal and realignment of its certificate for Route 389, submitted on September 10, 1992 in Docket 48343. (OST-1995-552)

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com

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