American Airlines, Inc.

OST-2005-20247 - Broad Exemption - US-Points Worldwide Third Country Codeshare and Route Integration Authority

January 26, 2005

Application for Broad Exemption Authority for codesharing Services

American Airlines, Inc., under 49 USC 40109, hereby applies for broad exemption authority to provide scheduled foreign air transportation of persons, property, and mail between the United States and points worldwide on a third-country codeshare basis pursuant to blanket codesharing statements of authorization approved by the Department. American further requests route integration authority to combine the requested exemption with its existing certificates and exemptions authority, to the extent permitted by international agreements.

American's application is similar to recent requests by Continental Airlines, Inc. (OST-2005-20122) / Delta Air Lines, Inc. (OST-2005-20145), and United Air Lines, Inc. (OST-2004-19148). All four applications should be granted in the public interest of reducing unnecessary administrative burdens.

American holds blanket statements of authorization (subject to 30-day notice) to engage in broad reciprocal codesharing with British Airways, Cathay Pacific, Finnair, Japan Airlines, Lan Airlines, Mexicana, SN Brussels, and Swiss. By Order 2003-5-33, May 30, 2003, the Department granted American broad exemption authority for codesharing with British Airways.' By this application, American requests similar broad exemption authority for codesharing with the its other foreign carrier codeshare partners named above.

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

OST-2005-20247 - Broad Exemption Authority for Codesharing Services

February 10, 2005

Answer of Continental Airlines

The Department should not grant unrestricted codeshare exemption authority to American for codesharing with its partners from Hong Kong, Japan and Mexico as well as the U.K., lest it firmly establish the principle that blanket codesharing authority will continue to be granted freely to U.S. airlines for codesharing with partners from restrictive countries that have refused to enter into open-skies agreements. The Department should instead grant such broad exemption authority only for codesharing by U.S. carriers with partners from open- skies countries and terminate authority held by American and United for codesharing with partners from non-open-skies countries. Such a policy would reward U.S. carriers for codesharing with partners from open-skies countries, provide additional flexibility for codeshare relationships pursuant to open-skies agreements and encourage carriers from restrictive countries to seek open skies with the U.S.

The same unfair advantage was extended to United and bmi, another U.K. carrier, by Notice of Action Taken, Docket OST-03-15758, December 3, 2003.

Delta's application in Docket OST-05-20145, while somewhat ambiguous, appears to request open-ended codeshare authority with any of its future partners. If the Department grants such authority to Delta, it should also grant such authority to Continental and other carriers.

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

February 22, 2005

Reply of American Airlines

There is no compelling reason to limit broad exemption relief to codeshare arrangements with carriers of open-skies countries. Contrary to Continental's assertion of "unfair advantage," the issue at hand is purely procedural. In the interest of reducing unnecessary administrative burdens on the Department and on the carriers, broad exemption authority subject to applicable bilateral agreements - should be automatically conferred with all codeshare authorizations that are granted subject to 30-day notice. That avoids the opening and processing of separate dockets for parallel exemptions, which are granted as a matter of routine, and is consistent with the Department's current regulatory review to "improve its rules to make them more effective and less costly or burdensome," 70 Fed. Reg. 3761, January 26, 2005 (OST-2005-20112).

The Department has already authorized broad exemption authority for codesharing to American/British Airways and United/British Midland (Order 2003-5-33, May 30, 2003); United/Lufthansa (OST-2004-19148, January 24, 2005) ; Northwest/KLM (OST-2003-15191, January 11, 2005); and US Airways/Lufthansa (OST-2003-15496, January 11, 2005). And as noted above, Continental, Delta, and United are each seeking broad exemption authority for other codeshare partners.

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

February 22, 2005

Reply of United Air Lines

If Continental had any valid basis for its position that such exemptions should be limited to code shares involving carriers from open skies countries, it should have sought reconsideration of the American/BA order where such authority was originally sought and granted. Indeed, rather than seeking denial of that authority on reconsideration, Continental filed a "me too" application for comparable authority in connection with its code share with Virgin Atlantic. The Department granted that authority. (Notice of Action Taken, dated August 22, 2003, in Docket OST-97-2880).

Continental's attempt to have the Department selectively reconsider and reverse the actions it took with respect to American/BA and United/bmi is out of time and should be dismissed. The Department has already considered and reconsidered the propriety of granting such blanket exemption authority for code sharing involving non- open-skies countries and their carriers. In any event, Continental is in a very poor position to claim that broad discretionary DOT authority should not be granted with respect to code sharing relationships between carriers of the U.S. and the U.K.

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