Continental Airlines, Inc.

OST-2005-20150 - Exemption - Houston-Cali

January 21, 2005

Application of Continental Airlines

Continental applies for allocation of seven weekly Colombia combination frequencies to institute daily nonstop Houston‑Cali B‑737 service effective June 9, 2005

Continental's proposal to introduce nonstop U.S.-flag Cali service to consumers in Houston and Cali and to offer connecting service between Call and points throughout the United States served through Continental's Houston hub will complement its current Houston and New York/Newark-Bogota service and expand its presence in Colombia, where it competes with carriers that have greater presences there. American currently operates the only U.S.-flag nonstop flights between Cali and any point in the United States at Miami, and Continental's proposed Houston flights will provide the first inter-gateway competition for American's flights at Miami as well as competition for connecting service between the U.S. and Cali offered by Delta and its codeshare partner, Avianca, via Atlanta and Bogota. Since Continental currently holds authority to operate Houston-Cali service on its certificate for Route 645, most recently issued by Order 2001-12-8, Continental requires only seven additional U.S.-Colombia combination frequencies to institute its proposed service.

Seven frequencies awarded to Continental for New York/Newark/Cali/Medellin service became dormant on April 1, 2003, since Continental was unable to institute that service because of continuing dramatically reduced demand, skyrocketing fuel costs, terrorist threats and potential warfare. Those frequencies remain available, and Continental believes it can now use them effectively to provide nonstop Houston‑Cali service.

Continental currently holds Medellin authority on its certificate for Route 800, issued by Order 2001-5-26, and would offer such service pursuant to the route integration authority in that certificate

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

February 7, 2005

Answer of The City of Houston and The Greater Houston Partnership

The City of Houston and the Greater Houston Partnership respectfully submit this answer in support of the application of Continental Airlines, Inc. for an allocation of seven weekly U.S.-Colombia frequencies, with which Continental would operate daily service between Houston and Cali. In December 1993, Continental introduced the first daily nonstop service between Houston and Bogota. This service has been an outstanding success, due to both local demand and the effectiveness of Continental’s Houston hub at drawing behind-gateway traffic from underserved regions of the United States. The Houston Parties therefore welcome Continental’s proposal to expand its Colombia services to Cali, as well as its request for authority to alternatively use the frequencies for services to Medellin.

Counsel: Leftwich & Ludaway, Nicole Mason, 202-434-9100, ncmason@leftwichlaw.com

Filed January 21, 2005 | Issued February 22, 2005

Notice of Action Taken | Word

Continental seeks seven additional U.S.-Colombia frequencies to institute daily nonstop round-trip Houston-Cali service on June 9, 2005. Continental further requests the flexibility to use the frequencies awarded here to serve Houston-Medellin. Finally, Continental requests the flexibility to operate four of the requested seven frequencies on a seasonal basis. If Continental does not begin service with all of the allocated frequencies by June 23, 2005, each unused frequency will automatically revert to the Department for reallocation

Continental holds underlying Houston-Cali route authority by virtue of the certificate we awarded it in Order 2001-12-8. For the underlying Houston-Medellin route authority, Continental relies on the route integration authority that we awarded it by Order 2001-5-26.

While Continental states that it will begin service June 9, 2005, we will extend the startup date slightly beyond that date to provide a reasonable opportunity for full introduction of the new service proposed without the risk of losing frequencies. Should Continental need an extension beyond June 23, it will need to request such extension formally.

By: Paul Gretch

April 8, 2005

Application for a Temporary Waiver

Continental had hoped to start Houston‑Call service by June 23, 2005, but, despite its best efforts, Continental will need additional time to introduce its planned service. Cali is a new airport station for Continental. Call's airport needs additional time to provide Continental with the additional B‑737 capable jetbridge that is required for Continental's planned service. In addition, airport construction necessary for Continental's service has been delayed beyond Continental's control, although Continental continues to expedite completion of this construction as soon as possible. Under such circumstances, Continental should be allowed sufficient time necessary to introduce its planned service and to provide the important public benefits of Continental's daily nonstop B‑737 service between Houston and Call, particularly as Continental has consistently used its best efforts to institute this service on time.

Counsel: Continental, Thomas Newton Bolling, thomas.bolling@coair.com

Filed April 8, 2005 | Issued April 27, 2005

Notice of Action Taken

While Continental states that it will begin service no later than August 15, 2005, we will extend the startup date slightly beyond that date to provide a reasonable opportunity for fill introduction of the new service proposed without the risk of losing frequencies. Should Continental need an extension beyond August 25, 2005, it will need to request such extension formally.

If Continental does not begin service with all of the allocated frequencies by August 25, 2005, each unused frequency will automatically revert to the Department for reallocation.

By: Paul Gretch