Continental Airlines, Inc.

OST-2005-20889 - Certificate of Public Convenience and Necessity - New York/Newark-Shanghai

April 1, 2005

Application for a Certificate of Public Convenience and Necessity and a Frequency Allocation

Continental proposes to institute daily nonstop service between its New York/Newark Liberty International Airport hub and Shanghai in 2007 with 283‑seat (48 BusinessFirst, 235 Economy) B‑777 aircraft to introduce the first nonstop New York/Newark‑Shanghai service as well as offering online connecting service between Shanghai and points throughout North America, Europe and Latin America served through Continental's New York/Newark hub. Although the Department's expedited award of authority to Continental for New York/Newark­ Beijing service in 2005 will close the gap in New York/Newark‑Beijing service in June, the larger New York/Newark‑Shanghai market also requires daily nonstop U.S.‑flag service.

Despite the Department's expedited action granting Continental's New York/Newark‑Beijing authority, nine months elapsed from the June 18, 2004, initialing of the U.S. ‑China protocol and the Department's expedited award to Continental in the 2005/2006 U.S.‑China Air Services Case and Designations Both Continental and Polar have been unable to institute U.S.‑China services as soon as opportunities became available, and instituting a proceeding to award 2007 opportunities now to consider award of the seven combination frequencies which become available as of March 25, 2007 will ensure effective use of the 2007 opportunities when they become available.

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

Order 2005-3-24 - 2005/2006 US-China Air Services Case and Designations

OST-2005-20889 - Certificate of Public Convenience and Necessity - Newark/New York-Shanghai

April 6, 2005

Answer of American Airlines

American Airlines, Inc. hereby answers in opposition to the application submitted by Continental Airlines, Inc. on April 1, 2005 seeking U.S.‑China authority that does not become effective until March 25, 2007, almost two years from now. The Department should either dismiss Continental's application as premature, or hold Continental's application in abeyance until the Department establishes a 2007 U.S.‑China proceeding and invites competing applications.

When American applied on June 30, 1999 for U.S.-China authority that would not become effective until April 1, 2001, the Department stated that competing applications would not be required until the Department determined "formally to call for applications from any interested parties for the April 1, 2001, U.S.-China opportunities" (Notice of Action Taken, OST-1999-5871, July 13, 1999). The Department stated that "[w]e will consider American's application only in conjunction with those applications which we receive at that subsequent time," and therefore "any carrier interested in filing an application for the new U.S.-China authority need not file a competing application by the date for answers to American's application."

The Department should reach the same conclusion here.

American fully intends to seek additional U.S.‑China authority as further opportunities become available, either under the present U.S.‑China Air Transport Agreement or as a result of additional negotiations. Indeed, American believes that it should be favored for the next award of U.S.‑China frequencies since Continental benefitted by receiving the first year award in the 2005/2006 proceeding. But neither American nor any other interested carrier should be required to submit a competing application at this time as a result of Continental's premature filing. Consistent with the Department's decision regarding American's U.S.‑China application in 1999, Continental's application should not be considered until the Department establishes a 2007 proceeding and invites competing requests.

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

OST-2005-20889 - Certificate of Public Convenience and Necessity - US-China Air Services

April 11, 2005

Motion of Continental Airlines

Continental moves the Department to issue a notice promptly instituting a 2007 U.S.‑China Air Services Case to consider Continental's application for New York/Newark‑Shanghai authority and any other applications for the U.S.‑China frequencies which become available March 25, 2007. Prompt institution of a 2007 U.S. ‑China case will ensure that the Department has ample time to reach a final decision well in advance of the start‑up date, as it has just done for awards effective in 2006, and that the successful applicants will have sufficient time to secure authority in China and begin marketing their services well in advance of the March 25, 2007, start‑up date.

By: Crowell & Moring, Bruce Keiner, rbkeiner@crowell.com

April 11, 2005

Answer of United Air Lines

It is not clear why Continental filed an application now for China frequencies not available until March 2007. While Continental claims that the Department needs to allow sufficient time to conduct a route case and give the winning carrier time to launch its proposed service, there is no reason to believe that such a proceeding needs to be commenced now, nearly two years before the frequencies are available. Initiating a route case so far in advance of the proposed services is of questionable value given the amount of change that can occur in two years. Indeed, traffic forecasts for the proposed services in 2007 would be reliant upon origin and destination data from 2003 and a portion of 2004. Moreover, filing an application so far in advance, before the Department has established a carrier selection proceeding and a uniform procedural schedule, is likely to lead to needless time and expense for carriers like United with a serious interest in securing the 2007 frequencies that must now respond to Continental's premature application with answers and applications of their own, followed by more answers and replies.

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

April 20, 2005

Consolidated Answer of Delta Air Lines

Delta is hopeful that the U.S. Government will be successful in obtaining an agreement with China to authorize an additional U.S. combination carrier designation in 2007. If such an agreement is reached, Delta intends to be a vigorous applicant for that designation and for frequencies to permit it to operate daily service between the U.S. and China. New China service by Delta will create compelling public interest benefits by introducing a powerful new network for service to China, and creating important new access benefits for U.S. communities in regions of the country that continue to endure double or triple connections. Continental's application, two years in advance of its proposed service date, is premature ‑ particularly in light of the Department's stated intention to seek consultations with China "to pursue ... liberalization vigorously"

If the Government of China agrees to an additional U.S. combination carrier designation in 2007, Delta's and Continental's applications for frequency allocation requests for 2007 would be mutually exclusive, particularly if additional frequencies are not made available for the new designation. Delta must therefore oppose Continental's application and motion. While Delta supports institution of a carrier selection case, it should not do so until the U.S. Government completes consultations with China on the issue of providing an additional designation in 2007.

Counsel: Hogan & Hartson, Alexander Van der Bellen, 202-637-8382, sascha.vanderbellen@hhlaw.com

April 20, 2005

Answer of The New Jersey Parties

As Continental has pointed out, granting pleas to delay institution of a 2007 China proceeding would prevent the most effective, competitive implementation of the authority available in 2007. While delay may suit the objectives of American and United, which have said Continental's application is "premature," the public interest will be promoted if the airlines awarded authority for 2007 are able to begin their operations when the opportunities become available with sufficient advance marketing to compete effectively with incumbent airlines and gateways and ensure the success of their operations from day one. Delay would only weaken the ability of newer U.S. gateways to compete effectively for service to additional Chinese gateways. The New Jersey Parties are looking forward to demonstrating that Newark Liberty International Airport and Continental should be selected to institute Shanghai service in 2007 and urge the Department to institute a proceeding to allocate 2007 China opportunities so that process can begin immediately.

By: New Jersey Parties, Chip Hallock, 973-242-4209, challock@rbp.org

April 20, 2005

Answer of Northwest Airlines

Northwest disagrees with Continental that the Department should immediately institute the 2007 proceeding, some two years before the new rights at issue become available. First, Northwest is confident the Department has both the ability and commitment to complete an expedited proceeding, particularly with strict adherence by applicants to deadlines and evidentiary demands. Second, to conduct a proceeding prematurely could have substantial counterproductive implications. The MOC opened up relatively extensive new access to the U.S-China market, and market demand and supply characteristics are rapidly evolving. The 2005/2006 proceeding was just completed less than three weeks ago. None of the new capacity awarded has been implemented, or even marketed or sold. The only available data upon which to base traffic forecasts for proposed services in 2007 at this time is origin and destination data pre-dating even the initialing of the new MOC. The Department should seek to conduct the 2007 proceeding with the benefit of at least reasonably recent traffic data.

There is substantial probability that combination and/or all-cargo carriers serving the U.S.-China market will make adjustments to their schedules that may be decisional in making 2007 allocations. In addition, should the U.S. secure any additional rights in early 2006 negotiations, these rights may be factored into the Department's analysis of the 2007 awards.

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

April 20, 2005

Re: Representatives Robert Mendez and Bill Pascrell Letter in Support

Enclosed for submission in this docket is a letter to Secretary Mineta from Representatives Robert Menendez and Bill Pascrell, Jr. supporting Continental's application for authority to serve the New York/Newark-Shanghai market and its motion urging the Department to issue a notice promptly instituting a 2007 U.S.China proceeding.

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

OST-2005-20889 - Certificate of Public Convenience and Necessity - New York/Newark-Shanghai

April 22, 2005

Answer of The New Jersey Parties

Nonstop Beijing and Shanghai service at Newark Liberty will ensure that New Jersey and New York have the vital service they need to sustain and build upon their large and rapidly‑growing economic ties with China. At the same time, China service to both primary Chinese cities by Continental at Newark Liberty will bring comprehensive China hub connections to the Newark/New York region, positioning Newark, New Jersey and the surrounding region to compete with other gateways as a major U.S. hub for China traffic and providing Shanghai travelers and shippers in the Newark/New York region with an alternative to connecting flights through other gateways. Nonstop access to China's two primary cities will yield enormous economic benefits for New Jersey because China is already one of New Jersey's top 10 export markets and is growing much faster than other New Jersey export markets. Indeed, China is already New Jersey's third largest Asian export market, and it is growing far faster than other Asian export markets. Nonstop Shanghai and Beijing service will enable New Jersey and Chinese business travelers working to enhance trade and commerce to avoid the delay and inconvenience of using alternative gateways. Both Chinese and American tourist travelers will benefit from nonstop Shanghai service, and travelers visiting their families and friends will benefit far more from Continental's proposed service since New Jersey/New York has a larger Chinese population than other cities lacking Shanghai service.

By: New Jersey Parties, Chip Hallock, 973-242-4209, challock@rbp.org

OST-2005-20889 - Certificate of Public Convenience and Necessity - New York/Newark-Shanghai

April 26, 2005

Reply of Continental Airlines

Significantly, although the Department's Rules required competing applications to be submitted by April 22, not one of the airlines eligible to use the seven U.S.‑China combination frequencies that become available in 2007 submitted an application or a motion to consolidate any such application with Continental's or to modify the scope of this docket to consider their applications. Delta, an airline which is not eligible to apply for the seven frequencies that become available in 2007, has also asked the Department to defer action in the hope that it will become eligible to apply as a result of U.S.‑China consultations that are not scheduled to begin until 2006. Rather than procrastinate at the urging of carriers seeking shelter from additional competition and of a carrier ineligible for any 2007 award, the Department should consider Continental's application for New York/Newark­ Shanghai authority and seven U.S.‑China frequencies now and grant it promptly.

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