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Delta Air Lines, Inc., Korean Air Lines Co., Ltd., Societe Air France, Alitalia- Linee Aeree Italiane- S.p.A., and Czech Airlines

The addition of KAL to the Delta/Air France/Alitalia/CSA immunized alliance group is an important step toward bringing enhanced competition and efficiency to the U.S.-Asia marketplace. Delta is a strong international competitor over the transatlantic and between the U.S. and Latin America. However, Delta has a very limited presence in Asia. At present, Delta serves just a single transpacific route: Atlanta-Tokyo.

The global competitive benefits of the Delta/KAL alliance are further enhanced by their proposed joint immunized relationship with Air France, Alitalia and CSA. While the focus of the Delta/KAL relationship is on transpacific traffic, the joint participation of European partners will facilitate the creation of an alliance with true global reach and capabilities. KAL fills an important gap by enabling Delta and its partners to offer alliance customers comprehensive access to destinations across Asia - a region where none of the existing alliance partners has a significant presence.

Counsel:  Korean and Zuckert Scoutt, William Callaway, 202.973.7906, Delta and Shaw Pittman, Robert Cohn, 202.663.8060, Air France and Silverberg Goldman, 202.944.3305, Czech and Mendelsohn O'Keefe, 202.775.0680, and Alitalia and Zuckert Scoutt, Richard Mathias, 202.298.8660

Counsel:  Korean and Zuckert Scoutt, William Callaway, 202.973.7906, Delta and Shaw Pittman, Robert Cohn, 202.663.8060, Air France and Silverberg Goldman, 202.944.3305, Czech and Mendelsohn O'Keefe, 202.775.0680, and Alitalia and Zuckert Scoutt, Richard Mathias, 202.298.8660

Index

Delta Air Lines, Inc., Korean Air Lines Co., Ltd., Societe Air France, Alitalia- Linee Aeree Italiane- S.p.A., and Czech Airlines

As an initial matter, in order to afford interested parties prompt access to the documents conditions agreed to by Delta and imposed by the Department under similar recent circumstances, we will grant immediate interim access to all documents covered by the Rule 12 Motion to counsel and outside experts for interested parties who file appropriate affidavits with the Department in advance. Moreover, consistent with earlier determinations, at the Dockets facility, Parties will be permitted to make copies of the exhibits for use by persons who have filed confidentiality affidavits. We also find it appropriate to grant interim access to any subsequent materials that may be filed in this case under a Rule 12 Motion to counsel and outside experts for interested parties who file appropriate affidavits with the Department in advance, unless the party filing the motion objects.

By:  Read Van de Water

Delta Air Lines, Inc., Korean Air Lines Co., Ltd., Societe Air France, Alitalia- Linee Aeree Italiane- S.p.A., and Czech Airlines

Counsel:  Zuckert Scoutt, William Callaway, 202.298.8660, wcallaway@zsrlaw.com

Delta Air Lines, Inc., Korean Air Lines Co., Ltd., Societe Air France, Alitalia-Linee Aeree Italiane-S.p.A., and Czech Airlines

Correspondence of Delta Air Lines, Inc. acknowledging that Korean Air Lines has filed its corporate documents, along with a Motion for Confidential Treatment and that the Counsel for Air France, Alitalia and CSA have advised that they have no further documents responsive to the production description contained in Exhibit JA-14 of the Joint Application. Accordingly, Delta and the other Joint Applicants request that the record be deemed complete.

Counsel:  Shaw Pittman, Alexander Van der Bellen

Counsel:  Wilmer Cutler, Jeffery Manley, 202.663.6670, jmanley@wilmer.com

Delta Air Lines, Inc., Korean Air Lines Co., Ltd., Societe Air France, Alitalia- Linee Aeree Italiane- S.p.A., and Czech Airlines

We will rule on the merits of the Rule 12 Motions by subsequent order. By Notice dated March 21, 2002, we granted immediate interim access to all documents covered by Delta's Motion, or to any subsequent materials that may be filed confidentially in this proceeding, to counsel and outside experts for interested parties, consistent with conditions agreed to by the Joint Applicants and imposed by the Department in similar recent cases. At the same time, we suspended the procedural schedule of this case, pending a determination of completeness. We have now finished our initial review. We find that the application is now substantially complete, as supplemented by the evidentiary material already filed in Docket OST-2001­10429. We will require that answers to the application be filed no later than 21 calendar days from the issue date of this Notice, anti that replies be filed no later than 7 business days after the last day for filing an answer.

By:  Read Van de Water

Delta Air Lines, Inc., Korean Air Lines Co., Ltd., Societe Air France, AlitaliLinee Aeree Italiane-S.p.A, and Czech Airlines

Delta and KAL have applied for approval of and antitrust immunity for Alliance Agreements under 49 U.S.C. §§ 41308 and 41309, whereby they will plan and coordinate service over their respective route networks as if there had been an operational merger between the partners. We find that the arrangement should be approved and granted antitrust immunity, to the extent provided below. Our examination of their proposal leads us to find that the proposed alliance will enhance competition overall and allow the airlines to provide better service and enable them to operate more efficiently. We also find that it is unlikely that the arrangement - subject to the conditions included here - will substantially reduce competition in any relevant market. Finally, our actions here will allow the Joint Applicants to maximize fully the various pro-competitive and pro-consumer benefits associated with integrated alliances that we foresaw resulting from the fundamental liberalization of air services under the U.S.-Republic of Korea open-skies accord.

We find that the Alliance Agreements should not diminish competition in the U.S.-Far East market. During the 12 months ended June 2001, Delta's nonstop passenger market share was about 2.4 percent. The proposed Delta-KAL partnership had a nonstop passenger market share of about 8.2 percent. In contrast, the Star Alliance partners (United Air Lines-All Nippon Airways-Singapore Airlines-Thai Airways) nonstop passenger market share was about 24 percent; the Northwest Airlines-Malaysian Airline immunized alliance had a nonstop passenger market share of about 17 percent; Japan Airlines had about a 15 percent nonstop passenger market share; the oneworld alliance partners (American Airlines-Cathay Pacific) had about a 5.7 percent nonstop passenger market share; and Continental Airlines/Continental Micronesia had about a 6.9 percent nonstop passenger market share.

As we have previously determined, the U.S.-Far East market is thus highly competitive in terms of service. American Airlines, Continental Airlines, Delta, Northwest Airlines, and United Air Lines provide scheduled passenger service in this market from their hubs, either individually or in conjunction with an existing alliance. The market is also served by more than fifteen foreign airlines, principally from hubs in their homelands.

By:  Read Van de Water

Delta Air Lines, Inc., Korean Air Lines Co., Ltd., Societe Air France, Alitalia-Linee Aeree Italiane-S.p.A. and Czech Airlines

Counsel:  Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com 

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