OST-98-4755
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OST-98-4755
| Order 98-11-14 OST-98-4755 OST-98-4288 OST-98-4301 |
Issued and Served November 13, 1998 |  Order to Show Cause |
US-South Africa Third-Country Codeshare |  HTML |
By this order, we tentatively select Delta Air Lines to serve Johannesburg under its codeshare arrangement with Air France. In these circumstances, we find that Delta's proposal to provide more U.S. cities with more competitive code-share services than Continental is entitled to significant weight in the context of this proceeding. In this regard, the record shows that Delta would offer new competitive service in eight U. S.-South Africa markets--Atlanta, Cincinnati, Chicago, Boston, Los Angeles, New York, San Francisco and Washington. By contrast Continental would provide competitive service in only two markets--New York (Newark) and Houston. Therefore, Delta would provide competitive service in six more markets than would Continental. Furthermore, Delta would offer the first on-line U.S. carrier service to Johannesburg from Cincinnati, whereas Continental's proposal is limited to cities that now receive U.S. carrier service.
By: Patrick Murphy
| OST-98-4755 OST-98-4288 OST-98-4301 |
November 24, 1998 | Objections of Continental
Airlines |
US-South Africa Third-Country Codeshare |
The Department's tentative selection of Delta in this case delays Continental's ability to establish a foothold in Africa and to compete effectively with the other U.S. carriers, including Delta, which already have extensive operations on that continent. Delta has had code-share operations throughout Africa with other alliance partners for several years, while Continental only recently received authority to begin Africa code-share operations with Air France. Awarding Continental U.S.-South Africa code-share authority now and giving Delta the opportunity to apply again next year with one of its three primary European partners will give the public 11 U.S. gateways by two code-share partnerships after one year. The net gateway advantage of Delta's proposal during the first year does not outweigh the public benefits of having two vigorous new code-share partnerships competing between the U.S. and South Africa after one year. The Department should set aside its tentative findings and conclusions in favor of Continental's proposal.
Counsel: Continental and Crowell Moring, Bruce Keiner, 202-624-2500
| OST-98-4755 OST-98-4301 OST-98-4288 |
December 3, 1998 | Answer of Delta Air Lines |
US-South Africa |
Continental does not even attempt to refute the reasons supporting the Department's conclusion that Delta has the superior service proposal in this proceeding. Delta will offer on-line service from a total of eight U.S. gateways, including its major international gateway at JFK, its Atlanta hub (the largest hub in the world), its Cincinnati hub and five additional cities. Delta's eight-gateway proposal will provide far greater coverage to more cities in the United States than Continental's two gateway proposal. As a result, Delta will be able to offer more than twice as many (87 vs 35) same day nonstop-to-nonstop connections than Continental.
Counsel: Delta and Shaw Pittman, Robert Cohn, 202-663-8060
1998 US-South Africa Third-Country Codeshare Opportunities
| Order 99-1-5 OST-98-4755 |
Issued December 18, 1998 Served January 15, 1999 |
 Final Order |
Delta to Codeshare with Air France Serving Johannesburg |
As stated above, Continental has concentrated on two principal areas in opposing our tentative decision. First, Continental argues that we failed to give sufficient decisional weight to its proposed service from its Newark hub. In fact, we fully recognized the public benefits of Continental’s proposed service at Newark in our show-cause order. However, we tentativelymconcluded that this factor did not afford Continental a decisional advantage in the context of this proceeding and Continental has not now persuaded us otherwise. The fact is, both Continental and Delta proposed service from New York, with Continental serving from Newark and Delta from JFK. Both of these airports currently receive South Africa service from two other U.S. carriers. Although Newark is a hub for Continental, Delta also proposed service from two of its hubs, in addition to its service at JFK, as well as service to five other cities, including one community that does not now receive U.S. carrier on-line service. In these circumstances, while Continental’s service from its Newark hub is certainly a positive feature of its proposal, we do not find that it outweighs the combined attributes of Delta’s overall proposal. Second, Continental argues that its selection in this case would stimulate competition by facilitating service by two new hub networks and, thus, would produce greater public benefits than would the selection of Delta. We agree with Continental that maximizing the number of network services competing in the U.S.-South Africa market is an important public interest consideration. Indeed, we included that factor along with the important service factors noted above in tentatively determining that Delta was the better choice in this case. Like Continental, Delta would provide a competing network service to the existing services of Northwest and United, and its proposal presents the additional benefit of offering competing service at a number of communities that would not receive service under Continental’s proposal. Thus, we maintain our view that Delta’s proposal offers the best combination of service and competitive benefits and warrants its selection in this case.
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