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OST-99-5527

American Airlines, Inc.

American Airlines, Inc. hereby applies for designation to provide scheduled foreign air transportation of persons, property, and mail between San Jose, California and London/Gatwick, United Kingdom. As shown in the attached exhibits, American proposes to institute daily nonstop service between San Jose and London/ Gatwick, using 207-seat B767-300ER aircraft, within 90 days of receiving necessary governmental approvals.   Under Bermuda 2, the London authority now being sought by American is extra-bilateral. The U.S. and the U.K. are presently exploring the basis for an open skies agreement to replace Bermuda 2, and American is confident that the two governments will soon reach such an accord. In the meantime, if the Department is able to secure extra-bilateral rights for additional U.S.-U.K. route opportunities, American's application for San Jose-London designation, as well as a recent application by US Airways, Inc. for extra-bilateral Pittsburgh-London exemption authority, should both be granted. But if the Department obtains only one extra-bilateral route opportunity, the Department would be required to conduct a carrier-selection proceeding. In such a proceeding, the Department should select American and San Jose for new service to London, for the reasons set forth in the accompanying answer of the City of San Jose and the San Jose International Airport to US Airways, application.

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

American Airlines, Inc.

Instead of focusing on requests by American and US Airways for extrabilateral route authority, the Department should be focusing on efforts to open U.S.London Heathrow routes without permitting an anticompetitive combination between British Airways and American, the two primary U.S.-London carriers today. But for the British Airways insistence on an agreement which permits an alliance between British Airways and American as the price for opening up Heathrow, the U.S. might well have negotiated a new U.S.-London Heathrow agreement successfully by now. It would be a miscarriage of justice if British Airways' U.S. partner were given priority for extra-bilateral route rights while other carriers, such as Continental, continue to be excluded from operating their own flights serving Heathrow. Ambitions of American and British Airways for new flights should be the Department's lowest priority.

Counsel:  Continental and Crowell Moring, Bruce Keiner, rbkeiner@cromor.com

American's application was filed on the heels of a similar application by US Airways for Pittsburgh-London authority. American, like US Airways, does not deny that the additional London authority requested is not available under the current U.S.-U.K. bilateral agreement. All available "rover" points have already been allocated and are being operated. Since there is no basis for approving American's request, in accordance with longstanding Department policy, the application should be dismissed.

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

Northwest is one of several U.S. carriers that are impaired by the restrictive effects of Bermuda II. Northwest is presently precluded from serving Heathrow Airport due to the restrictions in the bilateral agreement. Access to Heathrow, London's preferred airports is essential to Northwest in order for it to be competitive and meet the demands of its customers. The Department's objective in addressing the restrictive effects of Bermuda II should not be to open one or two routes to London on a piecemeal basis, as American suggests, but rather, to secure a broad agreement that will provide for significant new access to the United Kingdom, including meaningful access to London's Heathrow Airport, for multiple U.S. carriers from multiple U.S. points Unless and until a broad new bilateral agreement with the United Kingdom is reached the Department should follow its well-established precedent and policy and dismiss the application of American Airlines.

San Jose fully supports the U. S - Government's ongoing efforts to pursue an open skies agreement with the United Kingdom. Although the U.S. -London market is the largest United States intercontinental market, it remains subject to antiquated and unjustifiable restrictions which greatly limit U.S. access to London's major airports. The Bermuda II agreement has placed a cap on additional U.S.-London nonstop routes which has foreclosed badly needed nonstop service between San Jose and London, despite the substantial pent-up demand for such service. San Jose urges the Department aggressively to pursue a liberal open skies agreement that would permit new service based upon marketplace needs, not governmental determinations.

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

United's frustration at the state of U.S -U.K. bilateral aviation relations is certainly as great as that of any other U. S. carrier, and unfortunately it cannot adopt American's sanguine attitude toward negotiations with the United Kingdom. There is no indication that the U.S. and the U K. are any closer to concluding a liberal agreement than they were six months or even six years ago, nor is there any sign that the British will be more forthcoming than they have been in the past on moving towards open skies. Under these circumstances, the U S. negotiating position will not be advanced by piecemeal extrabilateral requests for which a price inevitably would need to be paid Such a piecemeal approach could directly reduce the incentive for the U.K. to move forward with wholesale liberalization.

Counsel:  Kirkland & Ellis, Jeffrey Manley for United, 202.879.5161

American Airlines, Inc.

American Airlines, Inc. hereby moves for leave to file the following reply to the answers submitted in this docket on April 20, 1999 by Continental Airlines, Inc., Delta Air Lines, Inc., Northwest Airlines, Inc., and United Air Lines, Inc. American's reply should be accepted in the interest of a complete! record for the Department's consideration. Each of' the answering carriers urges the Department to pursue a broad liberalized agreement with the United Kingdom, and to reject extrabilateral requests, such American's application here for designation between San Jose and London, and a previous application by US Airways, Inc. for exemption between Pittsburgh and London (OST-99-5428).   If, in advance of achieving an open skies agreement, the United States is able to secure extrabilateral authority for San Jose-London and Pittsburgh-London service, the pending applications by American and US Airways should both be granted. But if only one new extrabilateral opportunity can be achieved, the Department should select American for new service from San Jose, for all the reasons stated in the submissions by American and the City of San Jose and the San Jose International Airport in this docket and in OST-99-5428.

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

Termination of Dockets

Order 2008-2-36

Docket 43430 - Trans World Airlines - Certificate Authority
Docket 49564 - Trans World Airlines - New York-London Heathrow
Docket 49654 - American Airlines - Certificate Amendmet
Docket 49686 - Continental Airlines - Certificate Amendment
Docket 50218 - Delta Air Lines - Certificate Amendment
Docket DOT-OST-1996-1442 - Trans World Airlines - New York-London
Docket DOT-OST-1996-1668 - United Air Lines and Saudi Arabian Airlines - Renewal
Docket DOT-OST-1997-2089 - Laker Airways - UK-Florida Renewal
Docket DOT-OST-1997-2637 - Air Exel - Codeshare with Northwest Airlines
Docket DOT-OST-1998-4333 - Air Exel - Codeshare with Northwest Airlines
Docket DOT-OST-1998-4830 - Continental Airlines - Detroit-Cayman Islands
Docket DOT-OST-1998-4911 - American Airlines - US-Venezuela Codeshare with Aeropostal
Docket DOT-OST-1999-5078 - Air Exel - Codeshare with Northwest Airlines
Docket DOT-OST-1999-5527 - American Airlines - US-London Gatwick
Docket DOT-OST-2000-7089 - Trans World Airlines - US-Japan Renewal
Docket DOT-OST-2000-7606 - American Airlines - Codeshare with TACA Group Carriers
Docket DOT-OST-2000-7660 - Aeromexico and Delta Air Lines - Chicago-Morelia
Docket DOT-OST-2001-10617 - Aeromexico - Acapulco-New York
Docket DOT-OST-2002-11945 - Continental Airlines and Air Exel -US-Netherlands Codeshare
Docket DOT-OST-2002-13400 - Aeromexico - Mazatlan-San Diego Renewal
Docket DOT-OST-2003-15013 - Planet Airways - US-Bahamas
Docket DOT-OST-2003-15729 - America West Airlines - US-Costa Rica Renewal
Docket DOT-OST-2003-16741 - America West Airlines and Mesa Airlines - Los Angeles-Mazatlan
Docket DOT-OST-2003-16745 - America West Airlines and Mesa Airlines - Los Angeles-Mazatlan
Docket DOT-OST-2004-18002 - America West Airlines - Phoenix-Mexico Certificate
Docket DOT-OST-2004-18615 - America West Airlines - US-Jordan Certificate
Docket DOT-OST-2004-19453 - Aeromexico - Puerto Vallarta-San Diego
Docket DOT-OST-2005-21441 - Atlas Air and Polar Air Cargo - US-Ecuador All-Cargo

Issued February 28, 2008 | Served March 4, 2008

Order Terminating Proceedings

The Department has identified the following proceedings as moot, inactive, or pending Departmental action on the applicant’s request for withdrawal or dismissal. It is in the public interest for administrative management reasons to terminate the proceedings and close the corresponding dockets, and we will do so under authority assigned by the Department in its Regulations, 14 CFR §385.3 and §385.13.

By: Paul Gretch

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