American Airlines, Inc.

OST-2005-20747 - US-Brazil Frequencies - Miami-Rio de Janeiro

March 23, 2005

Application for Allocation of Five Weekly US-Brazil Frequencies

American Airlines, Inc. hereby requests allocation of five weekly U.S.-Brazil frequencies in order to operate additional Miami-Rio de Janeiro service during the 2005/2006 peak winter travel period.

By show-cause Order 2005-3-10, February 16, 2005, the Department tentatively allocated seven weekly U.S.-Brazil frequencies to Delta Air Lines, Inc., consisting of two frequencies from the unallocated pool and five of the 14 dormant frequencies held by United Air Lines, Inc. When that order is finalized, there will be no U.S.-Brazil frequencies in the unallocated pool, and United will hold nine dormant frequencies. By this application, American seeks five of United's nine dormant frequencies.

Because American's proposed service will operate for a three-and-a-half month period, we are not asking for permanent allocation of frequencies. At the end of American's service period, the five frequencies should be placed in the unallocated pool, where they will be available to any carrier that presents firm service plans for their use, whether on a permanent or temporary basis.

Counsel: American Carl Nelson, 202-496-4246, carl.nelson@aa.com

OST-2005-20747 - Allocation of Five Weekly US-Brazil Frequencies - Miami-Rio de Janeiro

April 4, 2005

Answer of United Air Lines

While Delta, in Docket OST-04-19161, has refused to accept a temporary reallocation of these frequencies, American's application expresses an intention to use temporarily five frequencies for seasonal services between Miami and Rio de Janeiro. As was the case with Delta, United would have no objection to the reallocation of five of United's seven temporarily unused U.S.-Brazil frequencies for the seasonal service which American proposes to operate between December 15, 2005 and April 2, 2006. American has not, however, applied for the same frequencies sought by Delta but has assumed, contrary to United's position, that the Department will reallocate them to Delta.

While United would not object to a temporary reallocation if American were to amend its application, it does strongly object to American's proposal that "at the end of American's service period, [United'sI five frequencies should be placed in the unallocated pool, where they will be available to any carrier that presents firm service plans for their use, whether on a permanent or temporary basis." There is no precedent for treating unconditioned frequencies in the manner proposed by American. Indeed, the case cited by American involved U.S.-Japan frequencies that were allocated to Delta subject to a 90-day dormancy condition. Except for a short period in 2001, Delta never used those frequencies, which had been allocated to it in 1998. 1998 U.S.-Japan Combination Service Proceeding, Order 98-5-17 (Docket OST-98-3419). Instead, Delta sought serial waivers of the dormancy condition. Dockets OST-98-3419, OST-01-10781, OST-01-11065, and OST-02-11706. After several such waivers, the Department denied a further waiver and allowed the frequencies to revert to the Department consistent with the terms of the dormancy condition which had been applied to them since their initial allocation. Delta had no plans to use the frequencies but wished to retain them to "facilitate Delta's ability to serve the New York-Tokyo market when economic circumstances permit."

In a previous instance involving temporary reallocations of unconditioned U.S.-Brazil frequencies, the Department provided that they revert to the original holder at the end of the temporary reallocation period, in the Matter of Allocation of Frequencies Under the United States-Brazil Air Transport Services Agreement, Order 95-3-52 (temporarily reallocation of unconditional frequencies to be followed by reversion to original holder so long as latter had firm plan to use them)

Counsel: United and Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, bruce.rabinovitz@wilmerhale.com

OST-2004-19161 - Delta Air Lines - Allocation of Seven Weekly US-Brazil Frequencies
OST-2005-20747 - American Airlines - Allocation of Five Weekly US-Brazil Combination Frequencies

April 6, 2005

Response of Metropolitan Washington Airports Authority in Support of United Airlines' Use of Its Brazil Frequencies to Add New Service to Washington

As discussed more fully in the Authority's February 25, 2005 reply to Order 2005-2-10 in Docket OST-2004-19161, there is a clear demand for new South American service from the Washington region, with recent load factors in excess of 80% on Brazil flights. At the same time, the Washington community's diverse Latino population has grown more than 90% in the last decade alone, and includes significant South American populations. Burgeoning tourism and trade activity continues to add to demand.

In supporting United's new service, the Authority necessarily opposes any permanent reallocation of the United frequencies needed for that service. Withdrawal of the needed frequencies from United would deprive Washington of a concrete opportunity for enhanced service to a key South American marketplace, undermine the emerging role of Dulles as an anchor for a comprehensive network of competing, convenient United and Star Alliance services to Latin and South America, as well as diminish the consumer and business benefits offered by the new service. In this regard, the Authority continues to urge in Docket OST-2004-19161 that Delta be permitted to utilize United's Brazil frequencies on a temporary basis only.

Counsel: MWAA, Edward Faggen, 703-417-8615, Edward.Faggen@mwaa.com

OST-2004-19161 - Delta Air Lines - US-Brazil
OST-2005-20747 - American Airlines - US-Brazil

April 5, 2005

Re: Corrected Service List to United Air Lines' April 4, 2005 Pleadings

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670

OST-2005-20747- Allocation of Five Weekly US-Brazil Combination Frequencies - Miami-Rio de Janeiro

April 19, 2005

Reply and Motion for Leave to File One Day Late

American is not interested at this time in an award of two frequencies. However, American urges the Department to issue an order that would (1) place United's two dormant frequencies in the unallocated pool, and (2) impose a start‑up condition on United's proposed use of seven frequencies for Washington‑Sao Paulo service providing that those seven frequencies will automatically revert to the unallocated pool if United fails to implement its proposed service on or before October 31, 2005, or thereafter allows those frequencies to remain dormant for a period of 90 days.

In light of United's long history of warehousing dormant U.S.‑Brazil frequencies, the Department should require that United make good on its October 31 proposal by ordering that if United does not institute new daily service by that date, or fails to operate service thereafter for a period of 90 days, seven of its frequencies will automatically revert to the unallocated pool. If United truly intends to operate its proposed double‑daily Washington‑Sao Paulo service, it should have no objection to such a condition. The Department should also order that United's two remaining dormant frequencies be placed in the unallocated pool now so they will be available to other interested carriers for re‑allocation as market conditions warrant.

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

OST-2005-20747 - Allocation of Five Weekly US-Brazil Frequencies (Miami-Rio de Janeiro)

April 28, 2005

Contingent Response of United Air Lines and Motion for Leave to File

Both United and American have unconditioned Brazil frequencies which they obtained prior to the imposition of dormancy conditions, in some cases in route transfer proceedings from other carriers. Each carrier has 21 such frequencies. These frequencies afford valuable relief from the often perverse effect of the Department's dormancy conditions. Those conditions require carriers to continue service even in periods of economic adversity such as that which has beset the U.S. industry in the present conditions of extraordinarily high fuel prices and continued demand for U.S.-Brazil services at levels below what would warrant full utilization of the frequency limits imposed under the U.S.-Brazil Air Services Agreement. In United's case, it has relied upon the unconditioned nature of these frequencies to facilitate the redeployment of its Brazil services from Miami to its Washington Dulles hub. Failure to maintain use of dormancy-conditioned frequencies risks their forfeiture and the carrier's inability to use them when market conditions change except by resort to expensive and time-consuming carrier selection proceedings.

Counsel: United and Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, bruce.rabinovitz@wilmerhale.com