OST-01-9632

OST-01-9632

Delta Air Lines, Inc.

OST-01-9632	May 8, 2001	Notice of Delta Air Lines Regarding Utilization of U.S.- France Frequencies and Request for a Dormancy Waiver	New York- Lyon and Boston- Paris
		Service List

Delta Air Lines, Inc. hereby notifies the Department that Delta plans to suspend New York-Lyon nonstop service effective September 1, 2001. Delta intends to use the frequencies previously allocated for the Lyon service to commence new nonstop service between Boston and Paris, effective April 1, 2002. Because U.S.-France frequencies are subject to the Department's standard 90 day dormancy condition, Delta further requests a waiver of that limitation to facilitate its service transition during the off-peak winter traffic season. To the extent necessary, Delta requests that the Department issue a confirming notice approving the new service plans, as the Department has done in other similar cases.

Delta's planned service changes are in the public interest. Based on the current needs of the marketplace, Delta has determined that the frequencies will create greater service and competitive benefits on the Boston-Paris route. The Department has routinely approved such frequency transfers as being consistent with the public interest, including, specifically, transfers of U.S.-France frequencies by other carriers.

Delta has worked diligently, in conjunction with the Lyon business community, to make the nonstop service between New York and Lyon a success. However, the route has not developed sufficiently to justify continuation of service, especially in light of the need for additional U.S. carrier service on the large and important Boston-Paris route. Therefore, Delta has made the difficult decision to terminate the Lyon service on September 1.

Counsel: Shaw Pittman, Alexander Van der Bellen, 202.663.8060

Delta Air Lines, Inc.

OST-01-9632	May 10, 2001	Answer of American Airlines	New York- Lyon and Boston- Paris
		Service List

As the Department has definitively ruled -- in a proceeding triggered by Delta -- a carrier holding specific limited-entry frequencies cannot move them from one city-pair to another without explicit authorization to do so. See 1999 U.S.-Brazil Combination Service Case, Order 99-9-23, September 30, 1999, p. 3 (American "is not entitled to move [its] frequencies to different markets without specific authorization because our original award was city-pair specific"). The Department's policy, as established in Order 99-9-23, must apply equally to all carriers. Under that policy, Delta cannot help itself to a transfer of limited-entry frequencies merely by submitting a "notice" of its intent to do so.

On May 1, 2001, the Department issued a Notice on United States-France Combination Services (OST-2001-9592), placing certain U.S.-France frequencies in issue for allocation, and inviting applications. Since Delta has announced the termination of its New York-Lyon service, effective September 1, 2001, those seven frequencies should be placed in issue in OST-2001-9592, and be made available to any interested carrier as of that date.

Delta, of course, is free to participate as an applicant in the allocation proceeding. What Delta is not free to do is simply announce that it intends to transfer its citypair specific limited-entry frequencies to another market, that is, from New York-Lyon to Boston-Paris, just as the Department ruled that American was not free to transfer its city-pair specific frequencies from New York-Rio de Janeiro to Miami-Rio de Janeiro. Delta's Notice is flatly contrary to the Department's policy as established in the Brazil proceeding by Order 99-9-23, and should be rejected by the Department as procedurally deficient.

Delta should be required to use the Department's well-established procedures in order to move restricted frequencies to another market, that is, file an application to do so. The proper procedures were in fact initiated by the Department's Notice last week in OST-2001-9592. It is unprincipled for Delta to try to introduce a novel "notice" procedure in this matter. Since there is no urgency in Delta's request, and since orderly procedures for the disposition of U.S.-France frequencies were recently established, Delta should be required to participate in that proceeding as an applicant. Delta should not be permitted to move its restricted U.S.-France frequencies by submitting a mere notice.

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

Delta Air Lines, Inc.

OST-01-9632	May 18, 2001	Answer by Massachusetts Port Authority	New York- Lyon and Boston- Paris
		Service List

France is an important trading partner of Massachusetts, in terms of both business activity and tourism. Among the states, Massachusetts is the second-largest air exporter of goods to France. France is the third-leading European destination of air exports from Massachusetts. Massachusetts maintains a tourism office in Paris to promote the State's visitor attractions.

As a result of the strong business and cultural ties between Massachusetts and France, and of the efforts to promote additional business and tourism, traffic on scheduled flights between Boston and Paris has grown significantly in recent years. Traffic more than tripled between 1996 and 2000, and is now served by three daily round-trip non-stop flights. Even with this increase in service, the average load factor for the year ending June 30, 2000 was 77 percent, indicating sufficient demand for even greater frequency.

Delta's plan would result in four daily round-trip flights between Boston and Paris. We agree that the new frequencies will create greater service and competitive benefits on the Boston-Paris route.

Counsel: Massport, Wesley Harper, 617.478.4152

Delta Air Lines, Inc.

OST-01-9632	May 21, 2001	Reply of Delta Air Lines	New York- Lyon and Boston- Paris
		Service List

Delta Air Lines, Inc. hereby replies to American's May 10, 2001 answer opposing Delta's Notice to transfer its New York - Lyon frequencies to the Boston-Paris route. American's answer is effectively mooted because there are more U.S.-France frequencies available for the Summer 2002 season than carriers seeking to use them.

Nonetheless, Delta is constrained to respond to American's erroneous assertion regarding the alleged deficiency of the Notice provided by Delta concerning its proposed utilization of the frequencies. The Department has approved the use of the same notice process in other similar cases, and Delta's Notice here is entirely appropriate. By contrast, American completely failed to give any notice, not once, but twice, in moving its provisionally-awarded New York - Rio de Janeiro frequencies without permission.

Delta's Notice is fully consistent with established precedents permitting carriers to move frequencies - including city-pair specific frequencies -- subject to Department notification. See, e.g., Notice of Action Taken dated September 28, 2000 confirming Delta's Notice of its intent to move city-pair specific Portland-Japan frequencies to New York and Los Angeles.

American's remarks concerning the recent Brazil frequency proceeding, which related to American's unauthorized alternative uses of New York-Rio de Janeiro frequencies without the required notification have no application to this case. Moreover, not only were American's New York - Rio de Janeiro frequencies city-pair specify - they were expressly subject to recall in a future allocation proceeding to reexamine the long-term needs of the U.S.-Brazil marketplace. See, Order 96-3-47 at 4. American received these particular frequencies on a default basis, because there were no other designated U.S. carriers able to use them.

At the time, American outnumbered its closest U.S. flag Brazil competitor by 49 frequencies to 28, and Department was very concerned about the market structure implications of allowing American to stockpile so many limited-entry frequencies at the expense of potential new competitors. Id. Here, no such concerns apply. There is a surplus of U.S.-France frequencies available to any U.S. carrier wanting to use them. Moreover, American and TWA LLC hold more U.S.-France frequencies than Delta, and American has determined to cease operating and return its Los Angeles-Paris frequencies to the pool.

Counsel: Shaw Pittman, Alexander Van der Bellen, 202.663.8060

Delta Air Lines, Inc.

OST-01-9632

Filed May 8, 2001
Issued May 29, 2001

Notice of Action Taken

New York- Lyon and Boston- Paris

By Order 99-9-10 the Department awarded Delta seven weekly combination frequencies for service in the New York-Lyon market. That award was subject to the condition that the frequency allocation would expire automatically and the frequencies would revert to the Department for reallocation if they are not used for a period of 90 days. Delta states that beginning September 1, 2001, it plans to terminate its New York-Lyon service and seeks to transfer these frequencies to the Boston-Paris market for services beginning April 1, 2002.1 Since the frequencies would not also be used for seven months, Delta seeks a waiver of the 90-day dormancy condition with respect to these frequencies to facilitate the service transition during the off-peak winter traffic season. Delta states that the New York-Lyon route has not developed sufficiently to justify continuation of the service.

By: Paul Gretch