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OST-99-5115

Canadian Airlines International Ltd.

On September 29, 1998, Canadian Airlines applied for six (6) exemption slots for service between Chicago, on the one hand, and Calgary, Toronto and Vancouver, on the other hand, under both the foreign transportation and new entrant exemptions of 49 U.S.C. § 41714. That application is currently pending and has not been ruled upon by the Department. However, Canadian Airlines' counsel has been advised by the Department that the Application only will be considered under the new entrant exemption because the U. S./Canada Bilateral Agreement states that Canadian airlines should seek slots through the "prevailing" system for slot allocations applicable to U.S. domestic operations. Canadian Airlines objects to the Department's oral decision not to consider its Application under the foreign air transportation exemption. Canadian seeks the exemption in order to provide transportation between Chicago and points in Canada. This transportation qualifies as "foreign" under the statute's definition and, in addition, Canadian is a carrier qualified to seek an exemption under 49 U.S.C. § 41714(b) inasmuch as the exemption applies to both U.S. citizen and non-U.S. citizen air carriers. The U.S./Canada Bilateral Agreement does not in any way preclude issuance of an exemption to Canadian under 49 U.S.C. § 41714(b). The Bilateral Agreement merely seeks to include Canadian carriers in the FAA 's domestic slot allocation process; it does not limit a Canadian carrier's ability to seek additional, exceptional service outside of that process. The DOT's exemption process falls outside of the FAA's "prevailing" system for slot allocation.

Counsel:  Condon Forsyth, Thomas Whalen, 202-289-0500

Canadian Airlines International Ltd.

OST-99-5115

March 3, 1999

Answer of America West Airlines HTML

High Density Rule - Chicago O'Hare

America West Airlines, Inc. hereby answers in opposition to the application submitted on February 16, 1999, by Canadian Airlines International Ltd. for an exemption from the High Density Rules of Part 93 of the Federal Aviation Regulations for slots at Chicago O'Hare International Airport ("O'Hare") for service to Edmonton, Calgary and Vancouver. America West opposes the application to the extent that Canadian Airlines requests slots under the new entrant exemption, which is expressly limited by statute to U.S. air carriers and which was designed and implemented for air transportation to U.S. cities in need of such service.

Counsel:  Baker Hostetler, Joanne Young

OST-99-5115

March 3, 1999

Answer of American Eagle HTML

High Density Rule - Chicago O'Hare

American Eagle continues to urge the Department to award exemption slots for service between O'Hare and Greenville/Spartanburg, and to do so promptly. The Department should not award slots to Canadian -- or to any other foreign carrier -- for service between O'Hare and non-U.S. points, if such an award would reduce the pool of slots available for U.S. cities.

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

OST-99-5115

March 3, 1999

Answer of United Air Lines HTML

High Density Rule - Chicago O'Hare

CAI does not now propose, nor has it offered to provide new low-fare competition in these markets. Indeed, it offers no particular low-fare competition on its existing Chicago service. CAl's September application at least had a passing reference to the possibility of lower fares, but its current application has dropped that pretenses CAI is not eligible for slots by exemption at O'Hare under either of the statutory provisions it seeks to invoke in this application In light of the ongoing efforts of the FAA to effectuate the provisions of the Bilateral by working to ensure that Canadian carriers are treated "similarly to domestic carriers," and that they are integrated into the prevailing system for domestic slot allocation, United respectfully suggests that the Department deny CAI's application

Counsel:  United and Kirkland Ellis, Jeffrey Manley, 202-879-5161, jeffrey_manely@kirkland.com

Canadian Airlines International Ltd.

Canadian Airlines International Ltd. hereby submits this Supplement to its Application for six (6) exemption slots at Chicago O'Hare International Airport to operate three (3) additional daily flights between Chicago O'Hare International Airport and Edmonton., Calgary and Vancouver commencing the start of the summer 1999 season (April 4, 1999). This Supplement consists of letters of support for the proposed service by the following: Honorable Ralph Klein, Premier of Alberta; Honorable Walter Paszkowski, Alberta Minister of Transportation and Utilities; and Mr. Scott Clements, President and CEO of Edmonton Regional Airports Authority

Counsel:  Condon Forsyth, Thomas Whalen, 202-289-0500

Canadian Airlines International, Ltd.

OST-99-5115

March 5, 1999

Answer of The Air Carrier Association of America HTML

High Density Rule - Chicago O'Hare

As noted by various parties, including the General Accounting Office, it is difficult if not impossible to purchase or even enter into long-term leases for slots. Large carriers control the high density airports, dampening the doors to some. but keeping the doors locked to most who wish to compete and to all new entrants.

Counsel:  ACA, Edward Faberman, 202-639-7502

Canadian Airlines International Ltd.

OST-99-5115

March 12, 1999

Motion for Leave to File and Reply of Canadian Airlines HTML

High Density Rule - Chicago O'Hare

Canadian's forecast for the Edmonton-Chicago route predicts, at a minimum, an average load factor of approximately 71 .5%. This estimate is conservative, not taking into account the fact that Chicago is the most ideal gateway for Edmonton traffic connecting through Chicago to the mid-west and all points south, east and west of Chicago. To this extent, introduction of Canadian's proposed service will enable U.S. and Canadian passengers to connect to fifty-three (53) markets in the winter and sixty-two (62) markets in the summer. Such drastic improvement in service clearly meets the exceptional circumstance criteria required for obtaining exemptions under the new entrant exception.   Further, Canadian Airlines' projected traffic forecasts for the Edmonton-Chicago service are 29 passengers per day in the winter and 46 passengers per day in the summery In addition, Canadian Airlines' projected traffic forecasts for passengers using Chicago as a gateway to other U.S. destinations are 311.5 passengers per day in winter and 350.15 passengers per day in summer. Accordingly, Canadian predicts that over 120,000 passengers will travel to or through Chicago from Edmonton each year.

Counsel:  Condon Forsythe, Thomas Whalen, 202-289-0500

Canadian Airlines International Ltd.

Hereby submits this Second Supplement to its Application for six (6) exemption slots at Chicago O'Hare International Airport to operate three (3) additional daily flights between Chicago O'Hare International Airport and Edmonton, Calgary and Vancouver commencing the start of the summer 1999 season (April 4, 1999). This Second Supplement consists of a letter of support for the proposed service by Mr. Bill Smith, Mayor of the City of Edmonton.

Counsel:  Condon Forsyth, Thomas Whalen, 202-289-0500

Canadian Airlines International, Ltd.

No other foreign carriers have been as favorably treated as Canadian carriers for purposes of slot allocations at HDR airports. The O'Hare slots allocated to Canadian carriers under the bilateral are worth millions of dollars. They were given to these carriers absolutely free of charge and can be sold or leased by those carriers at their fair market value. CAI could also seek slots from its alliance partner at O'Hare, American Airlines, as Air Canada has from United 6 Indeed, according to the current schedules, CAI has apparently acquired O'Hare slots for the new services it proposes to Edmonton, Calgary and Vancouver. Effective April 4, 1999, CAI is selling a daily nonstop roundtrip between Chicago and both Edmonton and Calgary.7 In addition, CAI is selling three daily nonstop roundtrips between Chicago and Vancouver' as well as a daily nonstop roundtrip in the Chicago-Toronto market.9 All of these flights are held out as operated by CAI, and their O'Hare arrivals and departures are scheduled within the slot-controlled hours for that airport.

Counsel:  United and Kirkland Ellis, Jeffrey Manley, 202-879-5161, jeffrey_manley@kirkland.com

Canadian Airlines International, Ltd.

Canadian Airlines is not, as United suggests, seeking "more than equal" or "doubly equal" treatment. It seeks only to avail itself of the exemption provisions available to carriers authorized to provide service to/from the United States. If the Department's intention was that Canadian carriers would no longer be entitled to slots under the exemption provisions, it was incumbent upon the Department to ensure that the language of the Bilateral Agreement specifically eliminated the option. The fact that the U.S. and Canada entered into an "Open Skies Agreement" should, at a minimum, place Canadian carriers on equal footing with other foreign carriers. Contrary to United's assertions Canadian Airlines never stated that it could not seek to obtain slots from its code-share partner American Airlines. Canadian Airlines is simply applying for exemption slots in the same manner as all other similarly-situated foreign carriers. Requiring Canadian Airlines (or any foreign air carrier) to lease slots from its code-share partner would be contrary to Department policy regarding code-share arrangements. The Department has determined that code-sharing should expand the level and quality of international air service for consumers.

Counsel:  Condon & Forsyth, Evelyn Sahr for Canadian Airlines Intl, 202.289.0500

Canadian Airlines International Ltd.

This Third Supplement is submitted to provide actual traffic data on flights between Chicago and Edmonton for the four months Canadian has operated the service. It is also submitted to further demonstrate that allocating slots to Canadian for Edmonton-O'Hare service is justified and, in fact, is the most effective and efficient use of the next available exemption slots to be awarded at O'Hare.

Counsel:  Condon Forsyth, Thomas Whalen for Canadian Airlines Intl., 202.289.0500

Canadian Airlines International Ltd.

As it has throughout the history of its applications for exemptions to which it is not entitled, Canadian has once again shifted ground. Having failed to persuade with its argument that it was eligible for slots for foreign air transportation, it now seeks to rely exclusively on an argument that it previously made in the alternative "only if necessary," Distilled to its most basic form, CAI's real argument is that it is entitled to an exemption slot now because it is "next in line," even though it already holds "prevailing system" slots, even though it offers no evidence of any real future need for slots not available via the prevailing system and even though it is not eligible to take a place in the "line" for new entrant exemption slots. Evidently, CAI has gotten in the habit of applying for exemption slots at O'Hare. However, its repeated applications have failed to b ring about a situation in which the Department either can or should grant the benefit it requests.

Counsel:  United and Kirkland Ellis, Jeffrey Manley, 202-879-5161, jeffrey_manley@kirkland.com

Canadian Airlines International Ltd.

Counsel:  Baker Hostetler, Joanne Young, 202.861.1532

Canadian Airlines International Ltd.

Throughout this entire application process (application, renewals, supplements and replies to answers filed in opposition), Canadian has taken and continues to take the position that It is entitled to slots under either the foreign transportation exemption provision (49 U.S.C. § 41714(b)) or the new entrant exemption provision (49 U.S.C. § 41714(c)). The fact that Canadian has been advised orally that the Department will not consider its Application under the foreign transportation exemption provision, does not mean, contrary to United's assertions, that Canadian has "conceded" or "backed down" from its position that the foreign transportation exemption provision applies to Canadian carriers. Since Canadian is a carrier seeking to provide foreign transportation between Canada and the U.S., it qualifies for exemption slots under 49 U.S.C. § 41714(b). Canadian, however, repeatedly has been advised by the Department that no Canadian carrier can avail itself of the foreign transportation exemption provision.

Counsel:  Condon Forsyth, Thomas Whalen, 202-289-0500

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