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Continental Airlines, Inc.

As a result of the war in Iraq, air traffic has declined precipitously from levels which were already substantially reduced from previous years, and airlines have been forced to reduce their flight operations substantially to ensure their survival. Like other major U.S. network carriers, Continental is reducing its schedule significantly, and it has regretfully furloughed thousands of its employees since September 11, 2001. Moreover, Continental's executive officer group has been reduced by more than 25 percent and Continental expects to reduce its workforce by another 1,200 employees in 2003. Reductions of international passenger traffic have been particularly acute, and Continental and other airlines are being forced to suspend a number of international flights temporarily. Under these circumstances, carriers should be permitted to reduce their schedules based on an evaluation of economic circumstances and traffic conditions on particular routes without jeopardizing their ability to re-institute flights on limited‑entry routes for which they have been selected by the Department based on long‑term service and market considerations.

Continental urges the Department to grant relief through December 31, 2003, with the normal 90-day dormancy periods to commence January 1, 2004, so airlines can evaluate the global economic and traffic situation in light of further developments related to the Iraq war and plan ahead to re-institute operations at the appropriate time rather than feeling constrained to re-institute flights prematurely during the weak winter traffic season. Should the war end rapidly without significant adverse economic or terrorism consequences, the airlines will remain free to re-institute service promptly. Continental would not object to reasonable advance reporting requirements requiring airlines to notify the Department by November 15, 2003 what dormancies will continue beyond December 31, 2003, or to the temporary award of authority to other airlines during the dormancy period.

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

Continental Airlines, Inc. / Continental Airlines, Inc., Delta Air Lines, Inc. and Northwest Airlines, Inc.

As a result of growing economic problems, as emphasized by the arguments made by Continental, the Department should immediately suspend consideration of the Continental, Delta, and Northwest Request for Alliance Approval. Considering the perilous economic times facing the entire industry, it would not be in the public interest to allow three of the nation's largest carriers to combine certain operations while they seek economic relief from other requirements. Certainly, the economic problems cited by Continental apply to all carrier operations and future economic survival.

Counsel:  ACAA, Edward Faberman, 202-639-7502, epfaberman@uhlaw.com

Continental Airlines, Inc.

The relief sought is similar to the dormancy waiver issued by the Department following the terrorist attacks on September 11, 2001. See Order 2001-11-15, November 12, 2001. Current conditions in the aviation industry call for such relief once again.

Continental has requested a blanket waiver until December 31, 2003, with a 90-day dormancy period thereafter. American urges that a blanket waiver be granted through March 31, 2004, followed by a 90-day dormancy period. A waiver only until December 31, 2003, the middle of the low winter traffic season, would be insufficient, even with a 90-day dormancy period to follow. Many summer season routes do not begin precisely on March 31, but start on May 1 or even June 1. Granting a blanket waiver until March 31, followed by a 90-day dormancy period, would far better take into account the reali­ties of summer season scheduling.

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

United agrees with Continental that capacity reductions are needed to reflect reduced demand and should be permitted during the present war emergency without regard to dormancy conditions. Those conditions were designed to maximize use of operating rights in market circumstances where carriers would be expected to be seeking opportunities to expand services. In present and reasonably foreseeable circumstances, it is highly unlikely that any U.S. carriers would seek to expand international services. Even if they did, Continental's proposed waiver would allow unused conditional operating rights to be exercised by another carrier under temporary authorities during the dormancy period.

Unfortunately, Continental's proposal is inconsistent with the procedures for establishing the restart date in the previously granted blanket dormancy waiver proceeding. If the Department were to adopt Continental's relief as proposed, the carriers would have to restart their services under the Department's procedures on January 1, 2004 -- in the middle of the winter -- or risk loss of authority due to dormancy conditions.

United urges that the same dates be adopted here to avoid having the waiver end in the depths of low demand during the winter traffic season. Were the waiver scheduled to end in the low-demand winter season, many if not most carriers would be required to file, and the Department staff to review, waiver extension applications to avoid the need to restart international services when they were least needed. An April 1, 2004, date for restart of service is consistent both with the substance of Continental's request and the Department's decision in the previous blanket dormancy waiver.

United believes that a more reasonable result would be to allow carriers a 90-day period from April 1, 2004, to restart services suspended pursuant to the blanket waiver. That would allow carriers to schedule the restart of services after summer demand has begun to build in May and June. United will not, however, relitigate that highly contentious issue in this proceeding. Any carrier seeking to extend its waiver could request authority to do so on or after February 15, 2004, when it would report which services will not be restarted on April 1, 2004.

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

Continental Airlines, Inc.

Continental shares the concerns raised by American and United and supports the American and United requests that the dormancy waiver period be extended through March 31, 2004, and American's request that a 90-day dormancy period commence on April 1, 2004, allowing carriers to reinstitute services during summer peak periods.

Continental recognizes, as United has noted, that Continental is seeking different relief than the Department's previous blanket dormancy waiver provided, since that waiver did not provide a 90-day start-up period after termination of the blanket waiver. Continental and American have urged the Department to change its position in granting the requested waivers.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.com

Continental Airlines, Inc.

Northwest Airlines, Inc. hereby submits this Reply in the matter of the Application of Continental for a temporary blanket waiver of dormancy conditions. Northwest joins Continental, American and United in urging the Department to grant all air carriers a blanket waiver of all dormancy conditions applicable to frequency allocations and other operating authority, including codesharing and overflight authority, through March 31, 2004. To the extent required, Northwest seeks leave to submit this reply.

Under these extraordinary circumstances, carriers should be permitted to reduce their schedules based upon an evaluation of economic conditions and passenger demand without jeopardizing their ability to reinstate flights on limited-entry routes. The Department found that similar blanket relief to the airlines was in the public interest as a result of service reductions after the events of September 11, 2001. (See Order 2001-11-15). Northwest asks the Department to grant the requested blanket dormancy waivers through March 31, 2004, with the normal 90-day dormancy periods to commence April 1, 2004, so airlines can plan ahead to reinstate operations during the next peak summer season.

Counsel:  Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com

US Passenger Air Carriers / Continental Airlines, Inc.

Issued April 23, 2003 | Served April 25, 2003

Order 03-4-18
OST-03-15021 - Waiver of the Dormancy Conditions on Limited-Entry Route Authority
OST-03-14777 - Continental Airlines - Temporary Blanket Waiver of Dormancy Conditions

Order Granting Temporary Waivers | Word

We have decided to grant U.S. passenger air carriers holding limited-entry international route authority temporary blanket relief from the dormancy conditions on those authorities, subject to certain conditions, described below. As the carriers have noted in their pleadings in connection with the requested waiver, U.S. airlines have found it necessary to reduce various international flight operations because of significant declines in traffic, and particularly international traffic, in the wake of the Iraq war. The carriers assert, and we agree, that in the current environment, they should not be obligated to reach decisions on restoring such services based on the “use-it-or-lose-it” constraints associated with a dormancy condition. Given these circumstances, we find that temporary blanket relief from the dormancy conditions is warranted and in the public interest, and will serve to afford the carriers needed flexibility to resume their international services on a phased-in basis, without risk that they will lose their route awards for nonuse. All of the parties filing comments support the award of temporary relief.

By: Read C. Van de Water

May 1, 2003

OST-03-15021 - Waiver of the Dormancy Conditions on Limited-Entry Route Authority
OST-03-14777 - Continental Airlines - Temporary Blankey Waiver of Dormancy Conditions

Joint Petition for Reconsideration of Order 2003-4-18

Arrow Air, Inc., Atlas Air, Inc., Evergreen International Airlines, Inc. and Polar Air Cargo, Inc., all holders of limited-entry all-cargo international route authority subject to dormancy conditions, hereby petition for reconsideration of Order 2003-4-18 and urge the Department, on reconsideration, to extend the same relief granted in the referenced order to the all-cargo operations of all U.S. passenger and all-cargo carriers.

Counsel: Lawrence Wasko, 202-331-0599, ldwasko@erols.com for Arrow/ Thomas Lydon, 202-466-2929, tom.lydon@evergreenaviation.com for Evergreen/ Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmer.com for Polar/ Russel Pommer, 202-354-3843, rpommer@atlastair.com for Atlas

May 12, 2003

OST-03-15021 - Waiver of the Dormancy Conditions on Limited-Entry Route Authority
OST-03-14777 - Continental Airlines - Temporary Blanket Waiver of Dormancy Conditions

Answer of Northwest Airlines to Joint Petition for Reconsideration of Order 2003-4-18 | Word

Hereby submits this Answer in opposition to the Joint Petition of Arrow Air, Inc., Atlas Air, Inc., Evergreen International Airlines, Inc. and Polar Air Cargo, Inc. for reconsideration of Order 2003-4-18. The Order grants a blanket waiver through March 31, 2004 of all dormancy conditions attached to operating authorities held by U.S. passenger carriers for U.S. passenger operations in limited-entry international markets. The Joint Petitioners are asking the Department to reconsider the Order and extend the same dormancy relief to limited-entry allcargo operations of all U.S. carriers. Because the Joint Petitioners have not demonstrated that the same conditions cited in the Department's Order 2003-4-18 support extension of a blanket waiver relating to all-cargo operations, Northwest believes the Department should deny the Joint Petitioners' request.

Counsel: Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com

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