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American Airlines, Inc.

Requesting the allocation of 5.0 additional U.S.-Ecuador weekly frequencies, to operate one daily widebody flight between Miami and Guayaquil (requiring 10.5), and two daily narrowbody flights between Miami and Quito (requiring 14).

Counsel:  American, Carl Nelson, 202.496.5647, carl.nelson@aa.com 

American Airlines, Inc.

So far as Northwest is aware, the United States and Ecuador have not yet concluded a definitive agreement that would allow any U.S. carrier, including American, to use the 10.5 frequencies that are now limited to Los Angeles flights at other U.S. cities for Ecuador flights. Thus, American's application is premature. Moreover, even if such an agreement were negotiated and signed, Northwest's understanding of the bilateral situation is that Ecuador has agreed so far only to extend the agreement, as revised, until June 30, 2002, a mere eleven weeks from now. Until Ecuador has agreed to long-term use of these frequencies at U.S. cities other than Los Angeles, American's application should not receive expedited consideration. Under these circumstances, instituting long-term allocation proceedings would be inappropriate even if there were an immediate need for service.

American is already operating a daily wide body flight between Miami and Guayaquil under the terms of a September 2001 diplomatic note between the United States and Ecuador that permits this service. American is also already operating 13 of the 14 weekly Miami-Quito flights that American's application proposes. Thus, there is no immediate need for additional service which would justify taking regulatory action to allow American to operate a single additional weekly flight pursuant to the terms of a U.S.-Ecuador agreement that does not even exist and would terminate in 11 weeks.

The prospects for a long-term liberalized agreement, including codeshare rights for U.S. carriers such as Northwest, would be undermined if Ecuador believes that the United States is satisfied with continuing the status quo. Approval of American's application, particularly on an expedited basis, to use a small number of frequencies to operate one additional weekly flight for a mere eleven weeks would send a harmful signal to Ecuador that the United States does not truly expect change in the bilateral relationship. The agreement now under consideration by the United States and Ecuador fails to include codeshare rights for U.S. carriers such as Northwest, which could begin codeshare service with their partners to compete with the services offered directly by other carriers, including American. Instead of expediting action on American's application, the Department should remedy this deficiency in the bilateral relationship between the United States and Ecuador in the current negotiations as part of an agreement extending beyond June 30, 2002. Codesharing has become an integral component of U.S. international aviation policy, and codesharing should be a part of the U.S.-Ecuador agreement as soon as possible, before American is allocated even more frequencies for its own Ecuador flights over the short term.

Counsel:  Northwest, Megan Rae Rosia, 202.84.3193, megan.rosia@nwa.com

American Airlines, Inc.

Northwest was the only party to answer American's request. No competing applications for U.S.-Ecuador frequency allocation were submitted by any carrier. Indeed, grant of American's application will leave ample frequencies in the unallocated pool. Nonetheless, Northwest contends that American's request should be denied because the U.S. and Ecuador have not reached agreement on codesharing services. Northwest's oppo­sition on that basis is without merit. The Government of Ecuador has unilaterally agreed to increase the number of frequencies available to U.S. carriers. It would be contrary to the public interest for the Department to decline this generous offer by Ecuador. Demanding codeshare rights for Northwest -- when Ecuador is not seeking any new opportunities for its carriers -- would place at risk valuable rights now being made available to American and other U.S. carriers wishing to serve the U.S.-Ecuador market with their own air­craft. While American is certainly not opposed to codesharing opportunities for Northwest, Northwest should appreciate the fact that the U.S. has little, if any, negotiating leverage when Ecuador is asking for nothing in return.

Counsel:  American, Carl Nelson, 202-496-5647, carl.nelson@aa.com

American Airlines, Inc.

American Airlines, Inc. hereby amends its application of March 28, 2002 so as to request the allocation of 1.5 additional U.S.-Ecuador weekly frequencies, rather than 5.0 frequencies as initially sought. Because an answer has been filed (by Northwest Airlines, Inc. on April 12, 2002), American requests leave to amend under 14 CFR 302.5(a). Pursuant to minutes of a bilateral meeting, dated May 30, 2002 (Attachment), the Governments of the United States and Ecuador agreed, ad referendum, on the text of a diplomatic note to extend application of the U.S.-Ecuador Air Transport Agree­ment of 1986, with certain modifications. The parties further stated their intention immediately to permit operations consis­tent with the terms of the draft note on the basis of comity and reciprocity. These modifications include elimination of paragraph (3) of Section III of Annex 1 of the 1986 Agreement, which previously distinguished between widebody and narrow-body aircraft and, required 1.5 frequencies for each widebody flight, and one frequency for each narrow-body flight. Hence­forth, one frequency will be required for each roundtrip, without regard to equipment size. Accordingly, American needs a total of 21 weekly frequencies to operate its pattern of one daily widebody flight between Miami and Guayaquil, and two daily narrow-body flights between Miami and Quito.

The modifications also increased the number of frequencies available at the Miami gateway from 19.5 to 23. American presently holds 19.5 U.S.-Ecuador weekly frequencies, granted by Order 92-4-17, April 7, 1992, for a one-year term. On September 10, 1992, we filed a timely renewal application in Docket 48343, which remains pending. With the allocation of 1.5 additional weekly frequencies, American will hold the 21 weekly frequencies required to operate three daily roundtrips in the U.S.-Ecuador market, using either widebody or narrowbody aircraft.

Counsel:  American, Carl Nelson, 202.496.5647, carl.nelson@aa.com

American Airlines, Inc.

Allocation of 1.5 additional U.S.-Ecuador frequencies to: Enable the applicant to provide 21 Miami frequencies in conjunction with its existing 19.5 frequencies so as to offer one daily widebody flight between Miami and Guayaquil and two daily narrow-body flights between Miami and Quito.

By:  Paul Gretch

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