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OST-2004-19790 - American Airlines and United Air Lines against Alitalia and Government of Italy
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American Airlines, Inc. and United Air Lines, Inc. against Alitalia-Linee Aeree Italiane S.p.A. and the Government of Italy OST-2004-19790 - Joint Complaint of American and United Under Section 2(b) of the International Air Transportation Fair Competitive Practices Act November 24, 2004 Joint Complaint of American Airlines and United Air Lines The Government of Italy is in violation of its obligations under the Air Transport Agreement between the United States and Italy, as amended, by failing to authorize the joint complainants to engage in third-country codesharing with their respective European airline partners, via European intermediate points, between the United States and Milan's Linate airport. Italy's failure to authorize U.S. carriers to engage in codesharing services at Linate with third-country carriers is a clear violation of Article 9 of the U.S.-Italy Air Transport Agreement, as amended, which states that "[e]ach Party shall allow a fair and equal opportunity for the designated airlines of both Parties to compete in the international air transportation covered by this Agreement." Alitalia itself serves the U.S.-Linate market with one-stop connections via Rome operated with its own aircraft (AZ/AZ). Alitalia also offers on-line service between Linate and the U.S. with its own flights from Linate to a European gateway such as Rome or Paris connecting to codeshare flights to the U.S. operated by Delta or Air France (AZ/AZ*). And Alitalia engages in Linate-U.S. service by displaying the Air France code on the Alitalia-operated Linate-Paris segment connecting to Air France-operated transatlantic segments (AF*/AF). See Attachment 1. Yet the joint complainants have been denied the right to serve Linate with their European codeshare partners, placing them at a substantial disadvantage in competing for U.S.-Italy traffic. Counsel: Carl Nelson, 202-496-5647, carl.nelson@aa.com for American / Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
Order 2004-11-18 Issued and Served November 30, 2004 Order Instituting Proceeding | Word In order to develop the record for our consideration of this matter, we invite interested persons to answer the Joint Complaint of American Airlines and United Air Lines in Docket OST-2004-19790 by December 8, 2004.3 Answers filed should include all data, evidence, and argumentsupon which the respondents rely to support their positions, and should cover all substantive andprocedural issues that they wish the Department to consider. Replies to any answers should befiled no later than five calendar days thereafter. By: Karan Bhatia
December 2, 2004 Motion of Alitalia-Linee Aeree Italiane for Extension of Answer Date Alitalia-Linee Aeree Italiane-S.p.A. requests an extension of the date set by the Department’s Order 2004-11-18 for interested persons to answer the Joint Complaint. The Department set the date at December 8, 2004, and Alitalia requests a two week extension to December 22, 2004. In support of this motion, Alitalia submits as follows. The extension is necessary in order to enable Alitalia to consult with the Government of Italy and prepare coordinated responses to the Joint Complaint. Although the governmental decree on air service at Linate Airport has been in effect for several years, the Joint Complaint was not filed until the day before the Thanksgiving holiday period. The Department’s instituting order followed almost immediately thereafter and allows only six business days for the respondents to consult, prepare, and file in response. That is clearly insufficient time and such extraordinary expedition is not required by any urgent circumstances. Counsel: Zuckert Scoutt, Richard Mathias, 202-298-8660, rdmathias@zsrlaw.com
December 3, 2004 By Order 2004-11-18, the Department initiated a proceeding on the Joint Complaint of American Airlines, Inc. and United Air Lines, Inc. against Alitalia-Linee Aeree Italiane, S.p.A. and the Government of Italy, filed November 24, 2004. The order calls for answers to the Joint Complaint to be filed by December 8, 2004, and replies thereto five calendar days thereafter. On December 2, 2004, Alitalia filed a motion for a two-week extension of the answer date (i.e., to December 22, 2004). In support of its motion, Alitalia states that the extension is necessary in order to enable Alitalia to consult with the Government of Italy and to prepare coordinated responses to the Joint Complaint. Under the Department’s regulations (14 CFR 302.11), answers to the motion would be due December 13, 2004 (five calendar days after the date specified for answers in the Department’s order). In order to act upon the motion prior to the answer date specified in the Department’s order, we have determined to shorten the answer period for the Alitalia motion in Docket OST-2004-19790 to December 6, 2004. Therefore, acting under authority assigned in 14 CFR 385.3, we will shorten the answer period to the Alitalia motion and will require that answers to the Alitalia motion be filed no later than December 6, 2004. By: Paul Gretch
December 6, 2004 Answer of American Airlines and United Air Lines to Motion for Extension of Time If the Department, over our strong objections, were to grant a two‑week extension to Alitalia resulting in an answer date of December 22, American and United would need an extension of the reply date to January 7, 2005 due to staff absences during the holiday period. While such a cascading delay would obviously suit Alitalia, that outcome would be inconsistent with the statutory deadlines under IATFCPA. Accordingly, the Department should not grant a two‑week extension but should require answers on December 15 and replies on December 20. In its motion, Alitalia asserts that "[t]he Alitalia third-country codesharing services on Air France between Linate Airport and the United States via Charles de Gaulle Airport were displayed only due to an error". As shown in the attached CRS displays pulled on December 6, however, the "error" has not been corrected, even though Alitalia has been aware of it since at least October 5, 2004, when United cited the Alitalia/Air France codeshare in its answer in OST-2004-19210, which was served on Alitalia. The fact that this "error" remains in place more than two months after the matter was raised in OST‑2004‑19210 is indicative of the delaying tactics in which Alitalia is engaging. The pleadings by United, American, and US Airways in that docket also discussed the other issues on which the instant IATFCPA complaint is based. Counsel: Carl Nelson, 202-496-5647, carl.nelson@aa.com for American / Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com for United
Posted and Served December 7, 2004 On December 6, 2004, American and United filed a joint answer to the motion for extension of time, strongly opposing a two-week extension but stating they would agree to an extension for one week, making the answer date December 15 and the reply date December 20. They note that their joint complaint was filed November 24 and was served by hand on the Embassy of Italy and by email on counsel for Alitalia, and they argue that a December 15 answer date will allow three full weeks from the date of filing, thus providing ample time for answer since, they maintain, the background of the dispute is well known to both the Government of Italy and Alitalia. We have decided to grant Alitalia’s motion in part. Section 41310(d)(1) of 49 U.S.C. provides that the Department approve, deny, dismiss, or set a complaint for hearing or institute other procedures proposing remedial action, within 60 days after receipt of a complaint. Given the deadlines of the statute, we have decided to grant an extension for the filing of answers to the complaint for one week (i.e. to December 15, 2004) and for the filing of any replies to answers to December 20, 2004. We believe that this partial grant of the requested extension addresses the needs of all parties, taking into account the circumstances presented, and that no party will be prejudiced by our action. By: Paul Gretch
December 15, 2004 Answer of Alitalia-Linee to the Joint Complaint The Italian Government's regulation of March 3, 2000, as amended, which restricts access to Milan's Linate Airport to point‑to‑point intra‑European Union operations by carriers of EU member states, is a valid component of a legitimate airports systems policy for control and development of Milan's multiple airports. Italy established the regulation in order to control environmental and congestion problems at Linate and to further the development of Milan's Malpensa Airport as the intercontinental gateway. The airports policy was developed in coordination with the European Commission, which deemed it fair and transparent and, therefore, approved it as a legitimate regulation of a multiple airport system. Similar restrictions precluding U.S. and all other non‑European carrier service to Linate had existed for years, and the U.S. was well‑aware of the U.S. carriers' inability to serve Linate when it entered into the current air services agreement with Italy. The interpretation of the clause in that agreement providing carriers of each country with a "fair and equal opportunity to compete" is informed by this context. Under the U.S.-Italy agreement, U.S. carriers may operate an intra-EU flight to/from Italy only as part of a through-service on an intercontinental basis. At Linate, however, through-service on an intercontinental basis is not permitted under Italy's regulation. Non-EU carriers do not qualify for authority to operate independent, point-to-point intra-EU flights, the only kind of service that is allowed at Linate. (Such authority would involve cabotage or seventh freedom traffic rights for point-to-point service independent of an intercontinental through-service.) Counsel: Zuckert Scoutt, Richard Mathias, 202-298-8660, rdmathias@zsrlaw.com
December 15, 2004 Supporting Comments of US Airways US Airways strongly supports the fundamental proposition that U.S. carriers should be able to engage in third-country code-sharing with their European airline partners, via intermediate European points, between the United States and Milan's Linate Airport. The "Open Skies" Agreement between the United States and Italy explicitly provides for such authority, and principles of fundamental fairness and a level playing field likewise support this proposition. Indeed, Alitalia offers on-line connecting code-sharing service (i) between the United States and Linate Airport with its European and U.S. partners, and (ii) between Italy and Reagan Washington National Airport, the District of Columbia's close-in airport, even though nonstop transatlantic flights to the Nation's Capitol are not permitted to use DCA. US Airways supports the U.S. Government's efforts to ensure the availability of hard earned bilateral rights for U.S. carriers. US Airways looks forward to the resolution of this issue so that it might have the opportunity to expand its presence in Italy further with third‑country code‑sharing to Milan's Linate Airport. See, e.g., www.alitalia.com listing service in timetables between Milan Malpensa and Reagan National over Boston and Atlanta airports through codeshare flights with Delta, and between Rome and Reagan National over New York‑JFK and Atlanta airports through codeshare flights with Delta. Counsel: US Airways, Howard Kass, 703-872-5230, howard_kass@usairways.com
December 15, 2004 Re: Unofficial Translation of the Government of Italy's Response The undeniable right, envisioned under the current bilateral agreement, of Unites States companies to serve every point in Italy stands to signify, based on international standards and practice, the city concerned but not the individual airports of that city. In short, United States companies do have the right to operate to Milan at the gateway airport open to international traffic, but not on those, airports opened only to specific types of traffic, as it happens in similar situations at the global level, where there are airports opened only to specific services as: national, regional, local, cross-border or coastal navigation. By: Armando Varricchio
December 20, 2004 Joint Reply of American Airlines and United Air Lines Alitalia attempts to justify the discriminatory refusal of the Government of Italy to permit U.S. carriers such as American and United to offer services to passengers between the US. and Milan's Linate Airport by code sharing on flights operated by their EU partner carriers that are consistent with Italy's Linate Airport restrictions. What Alitalia offers are feeble rationalizations for a discriminatory policy aimed at giving Alitalia a competitive advantage in selling services to Milan: In the final analysis, none of Alitalia's rationalizations offer any justification for a refusal to allow U.S. carrier code-share service to Linate in competition with service offerings by Alitalia and other EU carriers. The U.S./Italy Air Services Agreement guarantees the right of U.S. carriers to offer this service, and the GOI's refusal to allow it violates that agreement. Such discriminatory treatment in violation of the ASA should be remedied by granting the Joint Complaint filed by American and United and immediately imposing the sanctions proposed in that Joint Complaint. Counsel: United and Wilmer Cutler, Jeffrey Manley, 202-663-6670 / American, Carl Nelson, 202-496-5647
December 27, 2004 Reply of Air France to Joint Complaint and Motion for Leave to File Air France's sole interest at this stage of the proceeding is to comment on one of the sanctions proposed by Complainants that would impact directly on Air France services were the Department to find a bilateral violation by Italy. Specifically, Complainants ask the Department to prohibit Alitalia from displaying the code of another carrier (such as Air France) on its intra-European flights serving Linate when used by that other carrier to hold out US-Linate service. Air France and Alitalia currently engage in reciprocal codesharing on the Paris (CDG)-Linate route, which would be prohibited under the proposed sanction. Were the Department to adopt a sanction in this proceeding that would deny Air France's right to offer CDG‑Linate services by placing its code on Alitalia CDG‑Linate flights, Air France would be compelled to seek redress. Air France would insist that the Government of France invoke its dispute settlement rights under Article 14 of the US‑France Open Skies Agreement. Air France is confident that recourse to such relief will not be necessary. Counsel: Silverberg Goldman, Michael Goldman
January 5, 2005 Contingent Joint Response of American Airlines and United Air Lines and Motion for Leave to File Air France seems to think that American and United should be satisfied if Alitalia simply ceases to use one form of third‑country code share to serve the U.S.-Linate market. What American and United are seeking is not, however, cessation of U.S.‑Linate service by Alitalia, Air France or any other carriers. What is sought is, rather, that U.S. carriers such as American and United be allowed to offer online competition for U.S.‑Linate traffic by code sharing on authorized services operating between EU gateways and Linate, code‑share competition that is expressly authorized by the U.S.‑Italy Open Skies Agreement. Only if the GOT continues discriminatorily to prohibit such service by American and United should the proposed sanctions be applied. Air France should more properly petition the GOT to eliminate the discriminatory implementation of its Linate Airport policy than whine to DOT about how an IATCPA remedy enacted for that purpose will inconvenience Air France. Air France apparently has either misunderstood or chosen to misunderstand the remedy proposed by American and United. Air France, like British Airways and Lufthansa, will continue to be able to offer online service between the U.S. and Linate by making connections between its own flights. What Air France will not be allowed to do is use its code sharing on Alitalia's services to/from Linate to construct online services to or from the U.S., just as American and United are precluded from doing with British Airways and Lufthansa, respectively Counsel: Carl Nelson, 202-496-5647, carl.nelson@aa.com for American / Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
Order 2005-1-16 Issued and Served January 21, 2005 We extend through February 22, 2005, the period for taking action on the Joint Complaint of American Airlines, Inc. and United Air Lines, Inc. We grant the motions for leave to file otherwise unauthorized documents submitted by Société Air France and jointly by American Airlines, Inc. and United Air Lines, Inc. We will serve this order on the Joint Complainants, all parties served with the Joint Complaint; the Ambassador of Italy in Washington, D.C.; the U.S. Department of State; the Assistant U.S. Trade Representative; the U.S. Department of Commerce ; and the Air Transport Association. By: Karan Bhatia
Order 2005-2-13 Issued an Served February 22, 2005 We extend through March 24,2005, the period for taking action on the Joint Complaint of American Airlines, Inc. and United Air Lines, Inc. Since the filing by the Joint Complainants, there have been intergovernmental contacts concerning the issues raised, including consultations on February 17, 2005, in Washington, D.C., between representatives of the governments of the United States and Italy. As a consequence of these consultations, both sides are considering next steps toward achieving a satisfactory resolution of the matters raised. In these circumstances, we believe that the public interest is best served by extending for 30 days the deadline for action on the joint complaint. By: Karan Bhatia
Order 2005-3-32 Issued and Served March 24, 2005 We extend through April 23, 2005, the period for taking action on the Joint Complaint of American Airlines, Inc. and United Air Lines, Inc.; and We will serve this order on the Joint Complainants, all parties served with the Joint Complaint; the Ambassador of Italy in Washington, D.C.; the U.S. Department of State; the Assistant U.S. Trade Representative; the U.S. Department of Commerce; and the Air Transport Association. By: Karan Bhatia
Order 2005-4-20 Issued and Served April 22, 2005 We extend through May 23, 2005, the period for taking action on the Joint Complaint of American Airlines and United Air Lines. By: Karan Bhatia
April 28, 2005 Joint Limited Waiver of American Airlines and United Air Lines of Statutory Deadline At the request of the Department, American Airlines, Inc and United Air Lines, Inc. hereby jointly agree to a limited waiver of the 180‑day statutory deadline contained in the International Air Transportation Fair Competitive Practices Act, as amended, 49 U.S.C. § 41310(d), for the Department to take final action on the parties' complaint in the above‑captioned action. The statutory deadline expires on May 23, 2005. To facilitate continued Department efforts to resolve the issues underlying the complaint through further negotiations, the complainants offer to waive the deadline until August 21, 2005. While the complainants are willing to accommodate the Department's request for a waiver, they are unwilling to wait beyond August 21, 2005 for final action on their complaint and will agree to no further waivers. The Italian government has deprived the complainants of their commercial right to code share to Linate that is guaranteed by the U.S.-Italy open skies agreement. If negotiations do not result in the governmental approvals required to implement this right, the joint complainants expect the Department, at the expiration of the limited waiver period, to issue an order finding that Italy has violated the bilateral agreement and imposing the sanctions necessary to address the Italian government's clear violation of the complainants' rights under the U.S.-Italy agreement. Counsel: American Airlines, Carl Nelson, 202-496-5647, carl.nelson@aa.com / United Air Lines, Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
Order 2005-5-9 Issued and Served May 19, 2005 On April 28, 2005, the Joint Complainants filed for a limited waiver of the statutory deadline until August 21, 2005. They state that they are willing to accept a waiver to facilitate continued Department efforts to resolve the issues underlying the complaint through further negotiations, but that they are unwilling to wait beyond August 21, 2005, for final action on their complaint. Efforts are continuing to achieve a satisfactory resolution of the matters raised in the pending complaint. In the circumstances presented, we believe the public interest is best served by granting the requested waiver and deferring the deadline for action on the complaint until August 21, 2005. By: Karan Bhatia
July 15, 2005 Joint Statement of American Airlines and United Air Lines The purpose of this statement is to confirm that the joint complainants will agree to no further extensions of the statutory deadline. The efforts to resolve this issue through US‑EU negotiations assumed that those negotiations would be concluded quickly. That assumption has turned out to be inaccurate and the joint complainants are no longer willing to suffer further delay while the US and EU negotiate about broader issues. In addition to the sanction proposed in the joint complaint, American and United urge that Alitalia be precluded from marketing any services under the AZ designator code that originate or terminate at either Reagan Washington National or New York LaGuardia Airports. These airports, like Milan Linate, offer close‑in services compared to the international airports serving Washington and New York. Counsel: United and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmer.hale.com / American, Carl Nelson, 202-496-5647, carl.nelson@aa.com
Order 2005-7-22 Issued and Served July 25, 2005 We have now established, through diplomatic exchanges with the Italian Government, that plans are under way to eliminate the second form of asserted Alitalia advantage. Once these plans are implemented, Alitalia will no longer be holding out Linate originating one‑stop connecting through service via Rome. This leaves only one remaining area of asserted Alitalia unfair advantage, specifically the display of Air France's code on the Alitalia‑operated Linate‑Paris flights that passengers can use to connect with Air France‑operated transatlantic service to the United States. We see this issue as raising broader implications than those centered exclusively on the U.S.‑Italy relationship. These flights are not operated under the U.S.‑Italy Agreement and plainly involve the rights inter se of carriers operating under other air services regimes. Furthermore, the specific relief that the Joint Complainants have requested would potentially involve agreements between the United States and other third countries. In weighing whether the record before us compels findings and relief in favor of the Joint Complainants, we must certainly consider whether the potential policy consequences of our action would ultimately advance the overall public interest, including the public interest in maintaining positive aviation relations with third‑party governments. In the circumstances before us, we cannot conclude at this time that finding for the Joint Complainants here on the remaining issue and according them the relief they seek would serve the public interest. By: Karan Bhatia
August 15, 2005 Joint Petition for Reconsideration of Order 2005-7-22 American Airlines, Inc. and United Air Lines, Inc., pursuant to 14 CFR §302.14, hereby petition the Department to reconsider certain of its findings and conclusions in Order 2005-7-22, issued on July 26, 2005, in the captioned proceeding. Specifically, American and United request the Department to clarify its findings that the actions of the Government of Italy complained against are violations of the bilateral open skies Air Transport Agreement of 1970 between the U.S, and Italy, as amended, and that the Department will continue to negotiate with the Government of Italy directly as well as with European Union to achieve a resolution of this dispute. The fact that there have been undertakings to limit to some degree Alitalia's participation in U.S.-Linate traffic does not eliminate Italy's violation of the U.S.-Italy agreement by precluding U.S. carriers from exercising their agreed code-share rights to Linate while allowing other EU carriers to market services to U.S.-Linate passengers. Counsel: American - American, Carl Nelson, 202-496-5647, carl.nelson@aa.com |
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