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OST-99-6500

Alitalia-Linee Aeree Italiane- S.p.A.

As explained in the Joint Application, as part of their tripartite alliance, Alitalia, Northwest, and KLM intend to code-share on each others' services, and the three carriers today have filed a joint application for blanket statements of authorization in order to permit each carrier to place the designator codes of the other two carriers on its flights to and from the United States, Italy and the Netherlands, including services involving behind, beyond and intermediate points. Alitalia's instant request for exemption authority is intended to ensure that it holds the requisite underlying economic authority from the Department to incorporate all services (both its own operations and code-share services) that Alitalia may undertake in conjunction with Northwest and KLM.

Counsel:  Zuckert Scoutt, Richard Mathias, 202.298.8660

Alitalia-Linee Aeree Italiane S.p.A., KLM Royal Dutch Airlines and Northwest Airlines, Inc.

Northwest, KLM and Alitalia seek exemption authority and codeshare statements of authorization necessary to implement their alliance. The Joint Applicants state that the authority they are requesting is consistent with the U.S-Italy Open Skies Agreement. However, that agreement has not yet come into effect. Delta has its own application pending for broad U.S.-Italy exemption and codeshare authority (Docket OST-99-6170). Delta takes no position on whether any of the pending applications for U.S.-Italy authority should be granted in advance of the actual effectiveness of the U.S.-Italy open skies agreement. However, when and if the Department decides to act on any of the pending requests, Delta's exemption should be granted contemporaneously with the grant of exemption authority to any other carrier.

Counsel:  Shaw Pittman, Robert Cohn, 202.663.8078

Atitalia-Linee Aeree Italiane

Counsel:  Guerrieri Edmond, Robert Clayman, 202.624.7400

Alitalia-Linee Aeree Italiane-S.p.A. and KLM Royal Dutch Airlines, and Northwest Airlines, Inc.

Included in the list of points that Alitalia/KLM/Northwest seek to serve is Milan's Dominate Airport. Although Dominate is significantly closer to downtown Milan and thus preferred over Maleness Airport by international travelers, Dominate is scheduled to close to international traffic in a few months and be designated solely for Rome-Milan service. Until that time, United plans to offer online service to Dominate by code sharing with Lufthansa. At such time as Dominate is closed to flights, except for Rome-Milan, the Department must ensure that Alitalia/KLM/Northwest are not permitted to continue offering an online product to Dominate via connections in Rome while all other U.S. Carriers are foreclosed from doing so.

Counsel:  Kirkland Ellis, Jeffery Manley, 202.879.5200, jeffery_manley@kirkland.com

Alitalia-Linee Aeree Italiane

The International Association of Machinists and Aerospace Workers, AFL-CIO hereby withdraws its opposition to the request of Alitalia-Linee Aeree Italiane-S.p.A. for exemption authority to engage in scheduled foreign air transportation from points behind Italy via Italy and intermediate points to points in the United States and beyond, and withdraws all pleadings filed in the above-captioned matter.

Counsel:  Guerrieri Edmond, Robert Clayman, 202.624.7400

Alitalia-Linee Aeree Italiane S.p.A

Exemption from 49 U.S.C. 41301 to conduct scheduled foreign air transportation of persons, property and mail from points behind Italy, via Italy and intermediate points, to a point or points in the United States and beyond.  Delta Air Lines, Inc., and United Air Lines, Inc. filed answers stating that they do not oppose Alitalia's request, provided that their pending applications for authority to serve Italy are also granted. In addition, United urges the Department to condition the authority granted to Alitalia/KLM/Northwest so that they cannot offer monopoly online code-share service to Milan's Linate Airport that other U.S. carriers are precluded from offering because their European partners are barred from serving that airport.

By:  Paul Gretch

Atitalia-Linee Aeree Italiane- S.p.A. and KLM Royal Dutch Airlines, and Northwest Airlines, Inc.

United has raised a spurious objection to the applications and requests that the Department impose a restriction barring the alliance -partners from offering online code-share service via connections in Rome to Milan's Linate Airport. Citing the Italian Government's. policy phasing out international services at Linate Airport, United claims that, because it will not be able to serve Linate by code-sharing on Lufthansa's flights via German points, United and other U.S. carriers will not be able to compete "on the same U.S.-Italy routes." United does not mention that it already serves Milan's Malpensa Airport directly on a nonstop basis from the U.S. and, with open skies, will be able to do so from any point in the U.S. and via any intermediate point.

Since United's objection is only to Northwest being able to code-share on the Rome -Milan (Linate Airport) segment, and not to Alitalia's connecting service, it is difficult to believe that United foresees any serious competitive disadvantage. This objection seems to be nothing more than a by-product of a complaint made to Italy and the European Commission by Lufthansa about the Italian Government's policy to place all international services, including Alitalia's, at Milan's Malpensa Airport and to limit Linate Airport service to a few domestic Italian sectors. This policy has been thoroughly examined and approved by the European Commission. It is rational, economically sound, and environmentally necessary. Most importantly, it is nondiscriminatory. United itself can code-share on services to Linate Airport with another Italian carrier that does or may serve that airport. As a matter of fact, Lufthansa is already operating code-share service to several points in Italy with the Italian carrier, Air Dolomiti. Lufthansa, however, has chosen not to provide code-share service between Linate and Rome. The U.S. has similar policies, e.g., limiting Washington's Reagan National Airport and New York's LaGuardia Airport to only domestic flights. Foreign carriers are authorized to codeshare to these airports only on services operated by U.S. carriers using other U.S. points as gateways. These policies are not considered preferential or discriminatory if a foreign carrier does not have a U.S. alliance partner that serves Reagan National or LaGuardia airports.

In sum, United has provided no basis for the Department to impose a restriction preventing the holding out to the public, by means of code-sharing, the availability of a connecting service that will be operated in any event. The Department should approve the applications and enable the Alitalia/KLM/Northwest alliance to be fully competitive.

Counsel:  Zuckert Scoutt, Richard Mathias, 202.298.8660 and KLM, Paul Mifsud, 202.955.7993 and Northwest, Megan Rae Rosia, 202.842.3193

Atitalia-Linee Aeree Italiane- S.p.A. and KLM Royal Dutch Airlines and Northwest Airlines, Inc.

Alitalia/Northwest apparently feel they are in a position to be dismissive about concerns voiced by carriers that soon will be shut-out of Milan's Linate Airport, while Alitalia/Northwest position themselves to take advantage of monopoly U.S. passenger service to Linate. Alitalia/Northwest attempt to obfuscate the issue by noting that United already serves Milan's Malpensa Airport on a non-stop basis and that somehow this should be sufficient. The fact that United, Northwest, and all other U.S. carriers can now openly compete on nonstop routes to Italy as a price for the Alitalia/KLM/Northwest immunized alliance is beside the point. Northwest itself is launching daily nonstop Detroit-Milan Malpensa service on April 2, 1999, but that obviously does not nullify Northwest's desire to serve Linate, Milan's preferred airport. Many travelers prefer service to Linate because it is significantly closer to downtown Milan. Many U.S. travelers on overnight flights with morning business in Milan will prefer connecting service to Milan's Linate airport over nonstop or connecting service to Malpensa in order to avoid a morning transfer and train journey to downtown Milan. Northwest will soon be the only U.S. carrier in a position to offer online service to Linate, with no prospect of competition from other U.S. carrier alliances, whose Milan services will be restricted to the less convenient Malpensa airport.

Counsel:  Kirkland Ellis, Jeffery Manley, 202.879.5161

Atitalia-Linee Aeree Italiane- S.p.A. 

By this Application, Alitalia seeks a renewal of its existing exemption authority to conduct "scheduled foreign air transportation of persons, property and mail from points behind Italy, via Italy and intermediate points, to a point or points in the United States and beyond."

Counsel:  Zuckert Scoutt, Richard Mathias, 202.298.8660 

Alitalia-Linee Aeree Italiane- S.p.A. 

Renew exemption from 49 U.S.C. 41301 to conduct scheduled foreign air transportation of persons, property and mail from points behind Italy, via Italy and intermediate points, to a point or points in the United States and beyond.

By:  Paul Gretch 

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