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American Airlines, Inc. and British Airways Plc

American and its affiliates request a statement of authorization, and BA and its affiliates request any necessary underlying exemption authority (including the right to inte­grate such authority with existing foreign air carrier permit and exemptions), in order for American and its affiliates to display the "BA*" designator code in conjunction with foreign air transportation of persons, property, and mail on flights operated by American (or its affiliates) (1) between points in the United States, (2) between points in the United States and regional airports (non-London) in the United Kingdom (either nonstop or via intermediate points in third countries), except on gateway route segments on which both American and British Airways are designated and operating service with their own aircraft; and (3) between points in the United States and points in third countries (either nonstop or via intermediate points in third countries).

British Airways and its affiliates request a state­ment of authorization, and American and its affiliates request any necessary underlying exemption authority (including the right to integrate such authority with their existing certifi­cates and exemptions), in order for British Airways and its affiliates to display the "AA*" designator code in conjunction with foreign air transportation of persons, property, and mail on flights operated by British Airways (or its affiliates) (1) between points in the United Kingdom, (2) between regional airports (non-London) in the United Kingdom and the United States (either nonstop or via intermediate points in third countries), except on gateway route segments on which both American and British Airways are designated and operating service with their own aircraft; and (3) between points in the United Kingdom and points in third countries (either nonstop or via intermediate points).

Counsel:  British Airways, Paul Jasinski, 347-418-4250, paul.jasinski@bausa.com / American, Carl Nelson, 202-496-5647, carl.nelson@aa.com

Continental plans to submit a consolidated response to the joint American and British Airways application for statements of authorization and exemption authority on the December 3, 2002, answer date for the exemption requests since the requests for statements of authorization and related exemption authority raise the same issues.

Counsel:  Crowell Moring, Thomas Bolling, 202-624-2500, tbolling@crowell.com   

Delta Air Lines, Inc. intends to answer the above-captioned Joint Application for codeshare and exemption authority on the December 3, 2002 answer date for exemptions.

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

American and British Airways have applied for blanket worldwide codeshare authority which would strengthen their own positions as the largest U.S. and U.K. airlines, respectively, at London Heathrow while continuing to preclude other U.S. airlines, such as Continental, from operating any flights whatever at London Heathrow. American and British Airways have applied twice before for broad codeshare authority as part of their plan to entrench themselves at London Heathrow before any new entry is permitted, and the Department and interested parties must be given the opportunity to evaluate this American/British Airways application in light of other agreements between the two airlines through their oneworld alliance and all the terms of their codeshare agreements. Before any action is taken on this application, the Department must require American and British Airways to provide, on a confidential basis, unredacted copies of all agreements between them regarding their proposed codesharing and both their bilateral American/British Airways and oneworld marketing, frequent flyer, lounge access and cooperative facilities agreements. Once such information has been provided, the Department must provide interested parties ample time to review the confidential information submitted and offer supplemental comments on the requests for codeshare authority in this proceeding.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500

The Joint Application must be evaluated in the context and against the backdrop of the unique and highly restrictive nature of the U.S.-U.K. bilateral regime and the U.S.-London Heathrow marketplace. Service to London Heathrow - the largest and most important U.S.-Europe market - remains off limits to Delta and other U.S. competitors despite countless attempts by the United States Government to secure service opportunities for additional U.S. carriers. The closed nature of the U.S. - Heathrow market and the resulting competitive shortcomings in the U.S.-U.K. market are unique circumstances which have significant negative public interest implications for this regulatory decision. In deciding on whether to approve the instant codeshare application under Bermuda II, it is incumbent on the Department to consider the repeated failed attempts to secure a liberalized agreement, the existing competitive environment and the effects of the proposed cooperative arrangements on that environment.

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

Northwest asks the Department to require American and British Airways to make unredacted copies of all agreements relevant to the Joint Application available for review and comment by confidential affiants of interested parties. Once unredacted versions of the relevant agreements have been made available, interested parties should have at least 21 days to review and comment on them. The Department must consider carefully the policy implications of approving the Joint Application and the adverse impact that such an approval could have on the longstanding U.S. policy objective to secure competitively meaningful access to London Heathrow for all U.S. carriers.

If the Department approves this extensive cooperation, British Airways will have indirectly achieved one of the principal aims of its twice-proposed alliance with American: greater access to the U.S. domestic market through the network of a U.S. partner that is currently one of its primary transatlantic competitors. And British Airways will have achieved that goal while avoiding exposure to effective competition from U.S. carriers that would result from a new, fully-liberalized open skies agreement between the U.S. and the U.K. With a codesharing arrangement in hand, British Airways will have no incentive to support liberalization of U.S.-U.K. markets.

Counsel: Northwest, Andrea Fisher, 202 842-3193

American and BA are once again bringing before the Department a request for approval of their now thrice-rejected alliance. In this instance, they are seeking the right to offer extensive code-share service beyond their London gateways of Heathrow and Gatwick, as well as beyond their U.S. gateways served from Heathrow and Gatwick.^-!' Three times before the Department has dismissed similar applications because of the competitive issues raised by allowing American and BA to cooperate on their services at Heathrow airport where effective competition by other carriers and alliances is foreclosed by entry limits imposed under the U.S./U.K. bilateral air services agreement ("Bermuda 2").

Counsel:  United and Wilmer Cutler, jeffrey manley, 202-663-6670, jmanley@wilmer.com / BMI and Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com 

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

It would constitute an unprincipled breach of a bilateral obligation for the U.S. to insist on additional amendments to the U.S.-U.K. agreement as the price for honoring the 1995 MOC. The MOC explicitly provides for the codesharing rights that American and British Airways are seeking. There is no basis for the Department to deny implementation of the MOC at the behest of competing carriers that wish to see a different aviation regime in place between the U.S. and the U.K.  The United States has clear bilateral obligations under the 1995 MOC, and cannot disregard those obligations without being in breach of the specific U.S.-U.K. provisions at issue here, or without undermining the general credibility of the United States in honoring its agreements with other nations.

Counsel:  American, Carl Nelson, 202-496-5647, carl.nelson@aa.com / Boros Garofalo, Don Hainbach, 202-822-9070, dhainbach@bgairlaw.com

Counsel:  Steptoe Johnson, Richard Taylor, 202 429-6459

By:  Mr. Javaid

We are enclosing a letter to Secretary Mineta signed by 88 United States Representatives in support of the Ameri­can/British Airways codeshare application. We request that this letter be placed in the captioned docket.

Counsel:  American, Carl Nelson, 202-496-5647

Based on our preliminary review of the application and comments, we have determined that additional information is necessary to complete the application in order to assess the competitive implications of the proposed arrangements. Therefore, we direct the joint applicants to provide the Department with the additional data and evidentiary information set forth in the attachment to this letter. This information should be filed in the application docket, Docket OST-2002-13861 and served on all parties to the application. To the extent that the carriers deem it necessary, they may seek confidential treatment of the information as set forth in the Department's regulations.  Upon our determination that the application is complete, we will establish a procedural schedule for comments and such other responsive pleadings as may be necessary to act on this application.

By:  Paul Gretch and Randall Bennett

American and British Airways urge expedited approval of their codesharing application, so that the public may begin to enjoy the benefits of enhanced services and increased com­petition at the earliest possible date.

Counsel:  American, Carl Nelson, 202-496-5647, carl.nelson@aa.com/ British Airways, Paul Jasinski, 347-418-4250, paul.jasinski@busa.com 

American and British Airways are separately submit­ting confidential information in response to the Department's evidence request of January 16, 2003. The confidential documents are identified and described in the attached indexes. We request that access to these documents be limited to counsel and outside experts for interested parties.

Counsel:  American, Carl Nelson, 202-496-5647, carl.nelson@aa.com/ British Airways, Paul Jasinski, 347-418-4250, paul.jasinski@busa.com

As an initial matter, we find that the application is now substantially complete and that we can proceed to establish a procedural schedule for comments to the application. In this regard, we will require that answers to the application be filed no later than March 21, 2003, and that replies be filed no later than March 25, 2003.

In order to provide all interested parties sufficient time to analyze adequately and comment fully on all material in the public and non-public record, under conditions agreed to by the joint applicants and imposed by the Department in comparable circumstances, we will grant immediate interim access to all documents covered by the joint applicants’ motion for confidential treatment under §302.12 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 documents for use by persons who have filed confidentiality affidavits.  Notice dated January 21, 2003, p.1, Docket OST-2003-14202 (Asiana-United request for approval of and antitrust immunity for an Alliance Agreement); and Notice dated March 21, 2002, p.1, Docket OST-2002-11842 (Delta-KAL-Air France-Alitalia-CSA request for approval of and antitrust immunity for Alliance Agreements).

By:  Read C. Van de Water

Counsel:  Crowell Moring, Thomas Bolling, Lorraine Halloway, Bruce Keiner

Counsel: Bruce Rabinovitz, Jeffrey Manley, Cathleen Peterson, Caryn Carvin, Kenneth Hines

Counsel: Alexander Van der Bellen, Jonathan Echmalian

Counsel:  Wilmer Cutler, Jeffrey Manley

Counsel:  Rachel Trinder, Jol Silversmith

Counsel:  John. J. Varley, J. Scott McClain, James A. Coblin, Robert E. Cohn, Alexander Van der Bellen and Jonathan Echmalian

Counsel:  Squire Sanders, Elizabeth Collins, Charles Donley, Marshall Sinick

Counsel:  American, Carl Nelson, Greg Sivinski

Counsel:  American, George Nicoud

Counsel:  Daryl Libow, Don Hainbach, Paul Jasinski, James Blaney

Counsel:  Megan Rae Rosia

American and British Airways are asking the Department to grant them blanket, worldwide codesharing authority for flights operated between London and points throughout the world except for transatlantic flights serving the U.S., between the British Airways U.S. gateways and points throughout American's vast network and on transatlantic routes operated by either carrier, but not both, between points in the U.S. and regional airports in the U.K. American and British Airways seek this authority despite the closed skies at London Heathrow airport which preclude flights operated by Continental and U.S. airlines other than American, the world's largest airline, and United, the world's second largest airline. The proposed codeshare alliance between British Airways, the primary U.K. airline and the carrier with by far the largest operations at London Heathrow, and American, the primary U.S. carrier at London Heathrow, would fortify their predominant positions at London Heathrow, reduce incentives for reaching an agreement to open London Heathrow to new competition and jeopardize the competition which would otherwise become available when and if London Heathrow is opened to additional U.S.-flag airlines.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500

Approval of reciprocal AA/BA codesharing will satisfy the strategic objective of the Joint Applicants and enable the two largest U.S.-Heathrow operators to substantially expand their network services at London Heathrow. It will also accommodate the British Government's desire to avoid the pursuit a liberalization policy with the United States. However, it will harm the public interest and significantly erode prospects for future liberalization.

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

The Department cannot overlook the fact that approval of this codesharing agreement will benefit American financially aid that American clearly needs as it seeks to weather perhaps the worst crisis that it and the U.S. airline industry have ever faced. The proposed American/BA reciprocal codesharing will allow American to serve new foreign destinations without incurring new aircraft operating costs, and bring in badly needed new revenue from the carriage of BA passengers on its U.S. domestic flights. This is "bottom line" financial self-help that American needs in these critical times.

Counsel:  Silverberg Goldman, Michael Goldman, 202-944-3305, mgoldman@sgbdc.com 

The Joint Application is a principal component in British Airways' strategic campaign to further entrench itself at London's Heathrow Airport and isolate itself from competition by U.S. carriers. British Airways and American were presented with the opportunity to implement a comprehensive alliance last year, when the Department tentatively approved their joint application for antitrust immunity. The carriers withdrew their antitrust immunity application because they objected to the Department's proposed conditions. They now seek once again, and for the fourth time, to secure broad-reaching codesharing authority. The Department must carefully consider the serious public interest implications that an approval of the Joint Application would have for U.S. aviation policy and the longstanding objective to provide U.S. carriers with critical and competitively meaningful access to the restricted London Heathrow Airport, Europe's most important gateway.

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

It would be a serious mistake for the Department to approve this code share that will allow the two largest U.S.-Heathrow carriers to solidify their dominant position in that market absent a liberalization of the U.S./U.K. agreement. Given the position taken by American/BA in opposition to the Heathrow access conditions that the Department imposed on approval of antitrust immunity for their alliance, any approval of the unlimited behind/beyond code sharing such as is now proposed will eliminate any incentive for these carriers to move forward with liberalization of the U.S./U.K. agreement.

Counsel:  United and Wilmer Cutler, Jeffrey Manley, jmanley@wilmer.com / bmi and Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com 

This second round of answers -- which follow the initial answers filed by these same opposing carriers on December 4, 2002 -- presents nothing new, apart from a few scattered and inconsequential citations to the confidential background documents the applicants submitted on February 28, 2003 in response to the Department's evidence request. The opposing carriers essentially make only two arguments. First, they incorrectly assert that the codesharing authority sought is not authorized under the current U.S.-U.K. bilateral agreement. Second, they intentionally confuse the straightforward and pro-competitive behind-and-beyond code­sharing contemplated by the AA/BA agreement with an applica­tion for antitrust immunity, and urge that approval should be withheld in the absence of open skies at Heathrow. However, the application does not raise issues presented by an ATI request, and therefore does not trigger the Department's policy requiring open skies in exchange for ATI.

The opponents' arguments are more noteworthy for what they do not say. It is not surprising that none of the answers attempts any analysis of the effects of the proposed AA/BA codesharing agreement. Continental, Delta, Northwest, and United/bmi all enjoy extensive codesharing authority with their own international alliance partners. Indeed, Continental, Delta, and Northwest are currently pursuing a vast three-way worldwide codesharing and marketing alliance among themselves. The opposing carriers know full well that the behind-and-beyond codesharing for which approval is sought is pro-competitive and in the public inter­est. Their opposition to AA/BA should be seen for what it is -- an attempt to impede the added competition they will face.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com / British Airways, Paul Jasinski, 347-418-4250, paul.jasinski@bausa.com 

While approval of codesharing for American and British Airways at London Heathrow doubtless would add even more to the financial benefits American and British Airways have received for years from the unique bilateral provisions precluding entry by other airlines at London Heathrow, that same approval would make it even harder for airlines such as Continental to compete for U.S.-London and other U.S.-Europe traffic at a time when all transatlantic carriers are suffering mightily from precipitous declines in demand. Absent comparable relief for other carriers - through effective access to slots, facilities and routes at London Heathrow - the Department should not seriously consider rewarding American and British Airways further for their ability to keep other airlines and cities from securing effective London Heathrow access. Dallas/Fort Worth can achieve its legitimate objectives - access to London Heathrow and codesharing for its hub carrier - by joining efforts to secure true open skies at London Heathrow. Until London Heathrow is opened, the Department should deny the American/British Airways codeshare application.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500, rbkeiner@cromor.com

The Houston Parties share the concerns expressed by other parties in this proceeding that if the Department were to grant this application, the U.K. Government would have fewer incentives to open London Heathrow to additional competition, and to replace the obsolete Bermuda II bilateral agreement with a n Open Skies agreement. The Houston Parties value the enormous efforts made by the Department in recent years to bring about an Open Skies agreement with the United Kingdom and to open up access to Heathrow, and any decision taken by the Department in this proceeding should be consistent with that ultimate goal.

Cities such as Houston continue to be at a serious disadvantage in comparison with cities that enjoy non-stop access to Heathrow. This disadvantage affects not only the air services that are operated from Houston's George Bush Intercontinental Airport; it also impacts the Houston community's ability to fully realize its global economic potential. Heathrow is a premier European airport and the premier U.K. airport. The importance of the U.S.-U.K. market in general, and of Heathrow in particular, to Houston's ability to maintain and enhance its position as a world-class city simply cannot be overstated.

Counsel: Leftwich Douglas, Rebecca Taylor, 202-434-9100, rltaylor@ldpllc.com  

American and British Airways (the principal carrier of our loyal ally in the Iraq war) request for authority is quite reasonable and wholly in conforming with DOT procedure. The opposition is the same group that would oppose anything American and British Airways proposed to do jointly. They have raised nothing which would justify denial of such authority.

The services proposed by American and British Airways will provide a more efficient use of capacity in the marketplace, and additional options for the traveling and shipping public. Moreover, as a result of 9/11 and now the Iraq war, American needs the strengthening involved. As one of American's major hubs, this is vital to St. Louis. American and British Airways will price their codeshare services individually and independently, and these services will clearly enhance competition in the marketplace. In addition, and very importantly, the proposed services will further enhance competition in transatlantic markets, as well as between the oneworld alliance, in which American and British Airways are members, and the Star and SkyTeam alliances.

Counsel: Steptoe Johnson, Richard Taylor, 202-429-6459

By: Leftwich & Douglas, Rebecca Taylor

By this order, we tentatively grant the joint application of American Airlines, Inc. and British Airways Plc for the necessary regulatory authorities to conduct certain reciprocal code-share services. We will give interested parties until April 16, 2003, to file objections to our tentative findings and conclusions, and until April 21, 2003, to file answers to any objections.

We tentatively find that the code-share authority American and British Airways seek in this proceeding is encompassed by the U.S.-U.K. Agreement, as modified by the 1995 Memorandum of Consultations between the United States and the United Kingdom. As several commenters point out, the 1995 MOC has not yet formally entered into force. However, since the time that MOC was reached, both the United States and the United Kingdom have consistently applied its terms in considering code-sharing applications by carriers of the other Party. Given this consistent practice on the part of the Parties to the MOC, we tentatively find that there is no basis for a finding that, in this proceeding, the provisions of the 1995 MOC should not be observed. We further tentatively find that the MOC covers transactions of the type for which approval is sought here.

By:  Read C. Van de Water

Although the Department relies heavily on the applicants' argument that their current codeshare application is more limited in scope than their previous application for antitrust immunity and codeshare authority, the Department must recognize that American and British Airways have significantly greater ambitions than the application itself suggests. When the Department considered limited codesharing between United and British Midland, it recognized that even limited codesharing between smaller London Heathrow incumbents could "translate into adverse effects on competition" (Order 2000-5-29 at 5). Clearly, codesharing between American and British Airways at London Heathrow could have far more adverse impacts upon potential entry by new competitors at London Heathrow and current U.S.-London competition than United-British Midland codesharing.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500

The timing of the last AA/BA codeshare-only request, during the throws of bilateral negotiations at the end of 1999, illustrates that BA and its government consider codesharing an important liberalization agenda item. While Delta objects to the tentative decision, if approval of the codeshare is made final, the Department should retain the limited two-year duration of the approval and make clear that any renewal will be contingent on achieving a liberalizing agreement with the U.K Government removing the harmful competitive access restrictions of Bermuda II.  The Show Cause Order should be reversed. The Department's tentative decision fails to adequately consider the closed nature of the U.S.-Heathrow market and the unique competitive shortcomings of the U.S.-U.K. market that have negative public interest implications and compel denial of this code share.

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

In awarding code-share authority to American/BA, the Department has used a new authorization format that is much broader than that used for any previous code shares, including those involving carriers from countries with which the U.S. has open skies agreements. The American/BA authority is also much broader and more flexible than that which the Department has awarded to United and bmi. The Department has awarded American and BA, and their affiliates, both blanket exemption authority to serve any point behind or beyond their gateways as well as a blanket statement of authorization such as that which was previously refused to United and bmi.

Counsel:  United and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com / bmi and Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com

By: Hans Ephraimson

The slender objections submitted by Continental, Delta, and United/bmi -- their third opportunity to object -­provide nothing new, and certainly no basis for the Department to overturn its tentative decision in Order 2003-4-7. Indeed, United/bmi now "have no objection to the decision to approve the [AA/BA] application," but instead challenge certain subsid­iary findings and the format of the authorization. And as noted above, Northwest did not object at all.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com / British Airways and Garofalo Goerlich, Don Hainbach, dhainbach@ggh-airlaw.com 

April 18, 2003

Re: Handwritten Comments of Edith Horger

By: Edith Horger

Order 03-5-33
OST-02-13861 - US-UK Reciprocal Codeshare

Issued and Served May 30, 2003

Final Order | Word

By this order, we make final, with certain modifications, our tentative findings and conclusions set forth in Order 2003-4-7, and grant the joint application of American Airlines, Inc., British Airways Plc, and certain of their affiliates, for the necessary regulatory authorities to conduct a number of reciprocal code-share services, subject to conditions.

In granting this authority to the joint applicants, we are modifying the initial list of points over which American and British Airways may code share, to conform to the amended list provided by the joint applicants in their April 21 Answer to Objections. That list of points is attached as Appendix 1. We have taken note of the concerns of United/bmi, and find that the modified list does not include any points where there are bilateral restrictions or that represent limited-entry markets where authority to serve a point or points should be subject to carrier-selection procedures. We will, of course, retain the 30-day notice requirement for any additional codeshare points the joint applicants may wish to add in the future, consistent with our usual practice in granting code-share authority of this type.

In addition, we are adding a clarification to our grant of authority for the joint applicants to conduct code-share operations in which British Airways would place its code on American flights between British Airways' U.S. gateways and other points, to underscore the fact that British Airways may carry local traffic, under its code, over these segments only to the extent provided for in the U.S.-U.K. Air Services Agreement."

Since American has not yet conducted safety audits of British Airways Plc's affiliates British Airways CitiExpress Limited and British Airways CitiExpress (Isle of Man) Limited, we will limit the authority of those affiliates to carrying, in foreign air transportation, codeshare traffic of British Airways Plc only. We will defer action on the application to the extent that British Airways CitiExpress Limited and British Airways CitiExpress (Isle of Man) Limited seek to carry code-share traffic of American.

By: Read C. Van de Water

June 20, 2003

Codeshare Notice of British Airways

British Airways hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and Baghdad, Iraq, and between London and Basra, Iraq.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3976, dhainbach@ggh-airlaw.com

June 30, 2003

Codeshare Notice of British Airways

British Airways hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and Tel Aviv, Israel.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3970, dhainbach@ggh-airlaw.com

July 10, 2003

Notice of Additional Codeshare

British Airways hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and Accra, Ghana.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3976, dhainbach@ggh-airlaw.com for British Airways

July 29, 2003

Affidavit on Behalf of American Airlines

In response to the Department's Procedural Notice issued in this docket on March 12, 2003 (p. 2), I hereby state that American Airlines did not obtain copies of the confidential materials submitted in this proceeding by British Airways.

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

July 30, 2003

Affidavit for British Airways

Pursuant to the Department's March 12, 2003 Notice in Docket OST-200213861, I hereby state that British Airways did not obtain copies of the confidential materials submitted by the other applicant in this proceeding.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3970

July 31, 2003

Affidavits of Jol Silversmith and Rachel Trinder

By: Jol Silversmith and Rachel Trinder

August 1, 2003

Affidavit of Jeffrey Manley, counsel for United Air Lines

By: Jeffrey Manley

August 4, 2003

Notice of British Airways of Additional Codeshare

Pursuant to Order 2003-5-33 (Appendix 4 paragraph (b)), British Airways hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and Johannesburg, South Africa and between London and Cape Town, South Africa.

British Airways and American intend to implement this code share service no earlier than thirty days from the date of this notice and subject to receipt by American of all necessary U.S. Government approvals.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3976, dhainbach@ggh-airlaw.com

August 6, 2003

Affidavit of Rebecca Taylor, counsel for the City of Houston and the Greater Houston Partnership

By: Rebecca Taylor

September 12, 2003

30-Day Notice of American Airlines

Effective no sooner than 30 days from the date of this notice, the "BA*" code will be displayed on flights operated by American or American between Miami and Providenciales, Turks and Caicos Islands.

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

September 12, 2003

Re: Notice of British Airways - London-Budapest

British Airways hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and Budapest, Hungary.

Counsel: Garofalo Goerlich Hainbach, Don Hainbach, 202-776-3970

November 17, 2003

Re: Notice of Additional Codeshare (London-Kiev)

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3976, dhainbach@ggw-airlaw.com

December 12, 2003

Re: British Airways Codeshare Notice

Pursuant to Order 2003-5-33 (Appendix 4 paragraph (b)), British Airways hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and Kuwait, between London and Pristina, Kosovo, and between London and Nairobi, Kenya.

Counsel: Boros & Garofalo, Don Hainbach, 202-776-3976, dhainbach@gch-airlaw.com

January 14, 2004

30-Day Notice of American Airlines

Effective no sooner than 30 days from the date of this notice, the “BA” code will be displayed on flights operated by American Eagle between Chicago and Evansville, Indiana.

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

January 16, 2004

Re: Notice of British Airways (London-Dublin)

British Airways hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and Dublin,  Ireland.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3976, dhainbach@ggh-airlaw.com

January 29, 2004

30-Day Notice of American Airlines (Miami-Montego Bay, Jamaica)

Effective no sooner than 30 days from the date of this notice, the "BA*I' code will be displayed on flights operated by American between Miami and Montego Bay, Jamaica.

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

January 29, 2004

Re: Notice of British Airways

Hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and: Lamaca, Cyprus; Belgrade, Serbia; Lusaka, Zambia; Riga, Latvia; Islamabad, Pakistan; Sofia, Bulgaria; Riyadh, Saudi Arabia; Jeddah, Saudi Arabia; Dhaka, Bangladesh; Turin, Italy.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3970

March 2, 2004

30-Day Notice of American Airlines

Effective May 15, 2004, the BA code will be displayed on flights operated by American between Boston, Massachusetts and Manchester, United Kingdom.

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

Supplemented November 18, 2002 | Issued August 12, 2004

Notice of Action Taken

By Order 2003-5-33 we finalized, with certain modifications, our tentative findings and conclusions in show-cause Order 2003-4-7, and granted the joint application of American Airlines, Inc., British Airways Plc, and certain of their affiliates, for the necessary regulatory authorities to conduct a number of reciprocal code-share services, subject to conditions. We deferred action on that portion of the request that would have allowed two of British Airways’ affiliates, British Airways CitiExpress Limited and British Airways CitiExpress (Isle of Man), to display the code, and carry the traffic of American Airlines on their otherwise authorized flights, because at that time American had not yet conducted safety audits of those British Airways affiliates under the Department’s Code-Share Safety Program, and made its audit reports available to the Federal Aviation Administration for review (Order 2003-5-33 at 10).

The FAA has advised us that British Airways has now completed its safety audit of British Airways CitiExpress Limited; that the FAA has reviewed American’s audit report; and that the FAA has no objection to our acting on the outstanding portion of the application as it pertains to that carrier. (The FAA advice did not extend to British Airways CitiExpress (Isle of Man).)

We will continue to defer action on the application as it pertains to the request of the other British Airways affiliate, British Airways CitiExpress (Isle of Man), to display American's code, as we have no information that American has conducted the necessary safety audit of that carrier.

By: Paul Gretch

Supplemented November 18, 2002 | Issued August 12, 2004

Notice of Action Taken - Corrected Copy

By: Paul Gretch

September 8, 2004

30-Day Notice of American Airlines

American Airlines, Inc., under condition (b) of Order 2003-5-33, May 30, 2003, Appendix 4, hereby gives notice of additional codesharing services to be operated with British Airways Plc.

Effective no sooner than 30 days from the date of this notice, the "BA*" code will be displayed on flights operated by American or its affiliate American Eagle Airlines, Inc. between (1) New York (JFK) and Halifax, Nova Scotia, and (2) Miami and Curacao.

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

September 8, 2004

Notice of Additional Codeshare

Pursuant to Order 2003-5-33 (Appendix 4 paragraph (b)) British Airways hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and:

• Tripoli, Libya
• Algiers, Algeria

British Airways and American intend to implement this code share service no earlier than thirty days from the date of this notice and subject to compliance with all applicable U.S. Government requirements.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3976, dhainbach@ggh-airlaw.com

January 4, 2005

Notice of American Airlines of Cessation of Certain Codesharing Services

Hereby gives notice of cessation of codesharing services to Palm Springs, California, effective April 3, 2005.

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

January 7, 2005

Re: Notice of Cessation of Certain Codeshare Services

American Airlines, Inc. hereby amends the notice it submitted in this docket on January 4, 2005, to state that codesharing services between Los Angeles and Palm Springs will cease effective April 3, 2005.

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

March 23, 2005

Joint Application for Renewal of Statements of Authorization and Related Exemptions

American Airlines, Inc. and British Airways Plc, hereby jointly apply for renewal of their statements of authorization under 14 CFR Part 212 and related exemptions under 49 USC 40109 to engage in certain reciprocal codesharing services, as granted by Order 2003-5-33, May 30, 2003, and amended by Notice of Action Taken (Corrected) in this docket on August 12, 2004.

American and British Airways use the subject authority to engage in certain reciprocal codesharing services (AA* on BA-operated flights and BA* on American-operated flights) consistent with the terms and conditions of Order 2003-5-33.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3970, dhainbach@ggh-airlaw.com for British / Carl Nelson, 202-496-4246, carl.nelson@aa.com for American

April 1, 2005

Re: Continental Airlines Intends to Submit a Response

On March 23, 2005, American and British Airways submitted a joint renewal application in Docket OST‑2002‑13861 for statements of authorization and exemptions to engage in reciprocal codeshare services. Continental plans to submit a consolidated response within the time period for answering exemption applications since the applications for statements of authorization and exemptions raise the same issues.

Counsel: Crowell & Moring, Bruce Keiner, 202-624-2615

April 6, 2005

30-Day Notice of American Airlines

Effective no sooner than 30 days from the date of this notice, the “BA" code will be displayed on flights operated by American or American Eagle Airlines, Inc. between Dallas/Ft. Worth and Savannah.

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

April 7, 2005

Answer of Continental Airlines

The U.K. continues to preclude any U.S. airlines other than American' and United from operating flights at London Heathrow, providing American, by far the largest U.S. airline at London Heathrow, and British Airways, by far the largest U.K. airline at London Heathrow, with a protected operating environment at the expense of consumers and new entrants such as Continental. Unless and until the U.K. opens London Heathrow to effective competition by Continental and other carriers, Continental objects to the renewal of American and British Airways codesharing authority.

The Department should not again disregard the serious adverse consequences of approving codesharing by British Airways and American at London Heathrow. If the Department decides to allow British Airways and American to codeshare via U.K. airports other than London Heathrow, however, it should deny their request for renewal of the blanket exemption authority which gave American and British Airways a significant competitive advantage over other codeshare partners, including U.S. airlines codesharing with foreign carriers from open-skies countries, for some 20 months. Providing American and British Airways with the benefit of blanket codesharing authority that should be reserved for carriers from open-skies countries would exacerbate the adverse consequences suffered by other airlines which would result from renewal of any British Airways/American authority. When the Department granted the British Airways/American applications it granted an exemption permitting American to institute codeshare service anywhere throughout the world, including points that were neither open skies nor already authorized in American certificates or exemptions, simply by providing notice, a far more liberal authorization than other codeshare partners held.

Counsel: Continental and Crowell & Moring, Bruce Keiner, 202-624-2615

April 7, 2005

Answer of United Air Lines

Part of the relief sought by American and BA relates to the blanket exemptions and statements of authorization that were issued to two BA regional carriers: British Airways CitiExpress Limited and British Airways CitiExpress (Isle of Man). In awarding blanket exemptions and statements of authorization to these two carriers, the Department did not require them to file the detailed evidence relating to their ownership, homeland authority, financial fitness, insurance, etc., that it usually requires for foreign regional carriers that wish to offer code‑share services for U.S. carriers between points outside the U.S.

Absent an explanation, one can only speculate as to why these two carriers were exempted from the Department's burdensome evidentiary requirements. Was it because they were wholly owned subsidiaries of BA? In that case carriers such as Lufthansa CityLine should also have been relieved of this burden. See Notice of Action Taken dated July 15, 2003 (Docket OST-2003-15485). Was it because they were applying as part of BA's own application? In that case, Iberia subsidiary commuters should also have been exempt. See Notice of Action Taken dated April 30, 1998 (Docket OST-98-3640). Was it because of special provisions of the U.S./U.K. bilateral Air Services Agreement relating to reciprocal acceptance of fitness determinations?

Counsel: United and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com

April 8, 2005

Re: British Airways Codeshare Notice

British Airways hereby notifies the Department that it intends to place American’s designator code on flights operated by British Airways between London and: Basel, Switzerland

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3970, dhainbach@ggh-airlaw.com for British Airways

April 18, 2005

Joint Reply of American Airlines and British Airways - Bookmarked

Continental's opposition is mostly a re-hash of what Continental said in response to the AA/BA initial application submitted in 2002. In arguing against renewal, Continental cites two "real-world results" that have occurred since 2003 - the first is that the oneworld carriers achieved a profit in 2004, while the Star and SkyTeam carriers lost $2.2 billion and $7 billion, respectively and the second is that there is no open Skies agreement between the U.S. and the U.K. Neither of these arguments provides any basis to deny renewal.

As acknowledged by United, the U.S.‑U.K. Air Services Agreement provides for reciprocal recognition of fitness determinations. The United States and the United Kingdom have both honored that portion of the agreement since it was adopted in 1989. The Department's authorization granted to British Airways CitiExpress Limited is consistent with U.S. bilateral obligations as well as with DOT authorizations granted to other U.K. carriers. There is no basis for challenging such authorizations here in the context of this renewal application.

Counsel: British Airways and Garofalo Goerlich, Don Hainbach, 202-776-3970, dhainbach@ggh-airlaw.com / American, Carl Nelson, 202-496-5647, carl.nelson@aa.com

April 25, 2005

30-Day Notice of American Airlines

Effective no sooner than 30 days from the date of this notice, BA code will be displayed on flights operated by American or American Eagle Airlines, Inc. between Miami and Curacao, Netherlands Antilles.

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

April 26, 2005

30-Day Notice of American Airlines

In reviewing the docket, we found that the subject notice - which we submitted electronically to the DMS on September 8, 2004 - was entered in another docket, OST-2002-13061 As shown by the attached, we served the notice by email on the Departments staff and on interested parties on September 8, 2004.

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

December 20, 2005

Re: Codeshare Notice of British Airways

British Airways hereby notifies the Department that it intends to place American's designator code on flights operated by British Airways between London and:

Chennai, India / Bangalore, India

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3976, dhainbach@ggh-airlaw.com

March 15, 2007

Codeshare Agreement with American No Longer in Effect

Pursuant to Order 2003-5-33, British Airways hereby notifies the Department that the codeshare agreement between BA Connect Limited (previously British Airways CityExpress Limited) and American Airlines in no longer in effect.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3976, dhainbach@ggh-airlaw.com

August 14, 2008

Joint Application to Amend Order 2003-5-33 to Authorize Blanket Open-Skies Codesharing

American and British Airways hereby jointly apply to amend their existing statements of Authorization so as to allow blanket open skies codesharing.

American requests a statement of authorization to display the BA* code in conjunction with foreign air transportation of persons, property, and mail on flights operated by American or American Eagle between (1) points in the United States; (2) points in the U.S. and points in the EU (either nonstop or via intermediate points in third countries); (3) points in the U.S. and points in third countries; and (4) points in the EU and points in third countries.

British Airways requests a statement of authorization to display the AA* code in conjunction with foreign air transportation of persons, property, and mail on flights operated by British Airways between (1) points in the EU; (2) points in the EU and points in the U.S. (either nonstop or via intermediate points in third countries); (3) points in the EU and points in third countries; and (4) points in the U.S. and points in third countries.

American holds the necessary underlying route authority in its open skies certificate for Route 835, issued by Order 2007-4-2, April 1, 2007. British Airways similarly holds the necessary underlying route authority in its open skies permit, issued by Order 2007-10-1, October 2, 2007. BA European Ltd t/a Open Skies holds open skies permit and exemption authority granted by Order 2008-8-8, August 12, 2008.

Counsel: Carl Nelson, 202-496-5647 for American / Garofalo Goerlich, Don Hainbach, 202-776-3970

OST-2008-0252 - oneworld Alliance - Antitrust Immunity
OST-2002-13861 - American and British Airways - Statements of Authorization and Related Exemption Authority (Reciprocal Codesharing) US-UK

August 25, 2008

Motion of Virgin Atlantic to Consolidate Proceedings and to Suspend Answer Date

In Docket OST-2008-0252, American, BA, Finnair, Iberia, and Royal Jordanian seek approval of and antitrust immunity for certain of their alliance agreements. In Docket OST-2002-13861, American and SA have applied for broad codesharing authority. As will be explained below, the competitive issues raised by the two Applications are so closely interrelated that the Department should consider them in a single, consolidated proceeding. Consolidation is warranted to ensure full vetting of all relevant issues in an efficient and reasoned manner and is fully consistent with prior DOT precedent and practice.

The codesharing application filed by American and BA would authorize the carriers to display each other's codes on all bilaterally-authorized routes, including the highly-concentrated and access-constrained U.S.-London Heathrow market, in which the carriers hold a highly dominant position. In order for the Department to authorize American and BA to codeshare on these access-constrained routes, the Department will have to determine that the proposal will not be injurious to competition-a question that is squarely at issue in the ATI proceeding. As will be explained below, this codeshare application raises competitive issues that are inextricably linked to the issues in the ATI case, such as whether competing carriers have the tools and opportunity to offer meaningful competition to the American/BA combine and whether the Department (if it were to decide to approve the application) should seek to impose conditions on its approval to ensure a level competitive playing field.

In the docketed ATI proceeding, American, BA, and their partners have undertaken to argue why their link-up would not be detrimental to competition, and Virgin Atlantic fully intends to participate in that proceeding and offer compelling evidence that this proposed arrangement indeed poses a profound threat to competition and that the opportunities for competitive entry in the relevant markets are not nearly as robust as the Joint Applicants claim. Virgin Atlantic strongly believes that the Department simply cannot view the contemplated codeshare arrangement in isolation, given the enormous degree of overlap between the competitive issues raised by these Applications. Moreover, Virgin Atlantic believes that many of the materials that American and BA have submitted in the ATI docket will be critical and relevant to the Department's analysis of the codeshare request.

Virgin Atlantic also urges the Department to suspend the answer date in the codeshare docket, OST-2002-13861, which pursuant to 14 C.F.R. § 212.10(e)(1) would otherwise be August 26, 2008. The Department should not require interested parties to file answers to the codeshare application in advance of a full opportunity to carefully review the Joint Applicants' lengthy ATI application and the materials (including the confidential materials) that support it. The parties simply must have the opportunity to review the voluminous confidential documents, which address issues that are highly relevant to the codesharing application as well, and determine their relevance to the competitive issues triggered by the instant codesharing request before filing thorough and reasoned answers.

Counsel: Holland & Knight, Anita Mosner, 202-419-2604

OST-2008-0252 - Antitrust Immunity
OST-2002-13861 - Statements of Authorization and Related Exemption Authority (Reciprocal Codesharing) US-UK

September 3, 2008

Joint Applicant's Response to Virgin Atlantic Motion to Consolidate Proceedings

The Joint Applicants have no objection to Virgin Atlantic's August 25, 2008 motion seeking consolidation of the two dockets captioned above. As the Joint Application in OST-2008-0252 itself states, antitrust immunity is necessary to create the commercial incentives for full behind/beyond and transatlantic codesharing, so there is no need to rule on the codeshare application before the Joint Application. If Virgin Atlantic had asked the Joint Applicants to stipulate to consolidation they would have done so in advance.

However, while the Joint Applicants do not oppose the relief requested, we strongly object to Virgin Atlantic's erroneous and unsupported allegations about the lack of competitiveness of overlap city-pairs.

The claim that American and British Airways have "combined market shares that range from 50% to 100%" is also overstated. MIDT data shows that more than 95% of all customers on the six American/British Airways nonstop overlap routes will continue to enjoy nonstop competition to Heathrow after the proposed alliance is approved. The highest current combined booking share (79.3%) is on the smallest route - Dallas/Fort Worth-London - where more than one in five passengers fly the competition (MIDT, July 2008).

While Virgin Atlantic may hope to return to the days when Bermuda II protected Heathrow incumbents - including Virgin - from competition, oneworld is moving forward to ensure that the consumer benefits of U.S.-EU Open Skies continue to expand.

Counsel: Jeffrey Ogar, 817-967-3478 for American / Garofalo Goerlich, Don Hainbach, 202-776-3970 for British Airways / Steptoe & Johnson, William Karas, 202-429-6223 for Iberia / Sami Sarelius, 358-9-818-4070 for Finnair / Condon & Forsyth, Michael Holland, 212-490-9100 for Royal Jordanian

OST-2008-0252 - Antitrust Immunity
OST-2002-13861 - Statements of Authorization and Related Exemption Authority (Reciprocal Codesharing) US-UK

September 4, 2008

Motion of Virgin Atlantic to Amend Notice Providing Access to Documents

In the Motion which requested confidential treatment for those materials, the Joint Applicants requested that the Department limit access to such materials "to counsel and outside experts" who file confidentiality affidavits in accordance with the Department's Rule 12 procedures. On August 19, 2008, the Department issued a Notice Providing Access to Documents in Docket OST-2008-0252. Virgin Atlantic hereby moves the Department to slightly amend its Notice, so that a technical expert on its Government Affairs team may be permitted to review such materials, and have the opportunity to participate meaningfully in the case.

Virgin Atlantic wishes to note from the outset that it does not in principle object to the protection of the Joint Applicants' confidential materials from public disclosure. Virgin Atlantic also appreciates the desire of the Joint Applicants to protect their confidential business information. However, the Department's ruling on access to this information-confining access of carrier parties to counsel and outside experts-is unduly narrow, and unreasonably constrains the ability of the government affairs team at Virgin Atlantic to comment on the instant applications.

Counsel: Holland & Knight, Anita Mosner, 202-419-2604

OST-2008-0252 - oneworld Alliance - Antitrust Immunity
OST-2002-13861 - American and British Airways - Statements of Authorization and Related Exemption Authority (Reciprocal Codesharing) US-UK

October 3, 2008

Joint Applicants' Motion to Strike Confidentiality Affidavits Submitted by Air France

The Joint Applicants hereby move to strike two of the four confidentiality affidavits submitted by Air France on October 1, 2008. The affidavit of Jean-Michel Barthelemy states that he is "presently serving as Vice-President European and International Affairs and acting as a lawyer within Societe Air France." The affidavit of Laurent Timsit states that he is "presently serving as Deputy Vice President European and International Affairs and acting as a lawyer within Societe Air France."

Neither of these two affiants states that he is in fact a lawyer, in contrast to the accompanying affidavits of Beryl Baldous and Manal Maila, both of whom assert "I am a lawyer."

We sent an email inquiry to Air France seeking clarification, and received a response from Manal Maila stating that "these two individuals are my superiors and act as lawyers as they are in charge of Regulatory Affairs within Air France and in particular of competition issues." Based on the affidavits themselves and the quoted response to our email, it is apparent that Messrs. Barthelemy and Timsit are not lawyers. They are therefore ineligible to submit affidavits under the Department's well-established policy that only lawyers and outside experts may view confidential material.

Because Messrs. Barthelemy and Timsit may be under the misapprehension that they are entitled to review confidential materials even though they are not lawyers, and in order to minimize competitive harm, the Department should immediately direct Air France to withhold our confidential documents (or any discussion about their content) from these two individuals pending a ruling on our motion to strike.

Counsel: Bruce Wark, 817-967-3478 for American / Garofalo Goerlich, Don Hainbach, 202-776-3970 for British Airways / Steptoe & Johnson, William Karas, 202-429-6223 for Iberia / Sami Sarelius, 358-9-818-4070 for Finnair / Condon & Forsyth, Michael Holland, 212-490-9100 for Royal Jordanian

Order 2008-10-2

Issued and Served October 3, 2008

Order Striking Affidavits of Air France

Today, October 3, 2008, American Airlines filed a motion to strike two affidavits submitted by Air France employees in the above-captioned case. American argues that the two affiants seeking access to the confidential record are not lawyers, in contravention of Department policy.

We have reviewed the affidavits and determined that they do not provide sufficient information to justify access to the confidential record under the Department’s August 19th Notice Granting Access to Documents. The affiants have not, at a minimum, stated that they are counsel for Air France who are licensed to practice law. We hereby strike the affidavits of Jean-Michel Barthelemy, dated September 25, 2008, and Laurent Timsit, also dated September 25, 2008. We must take this action immediately without awaiting a response from Air France due to the risk of unauthorized disclosure of commercially sensitive information. The individuals listed above are not authorized to access or discuss the confidential record based upon the affidavits filed to date.

By: Susan McDermott

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