OST-2005-21121 - Lan Airlines, Lan Peru and LanExpress

OST-2005-21121 - Exemption under 49 USC 40109 Permitting Registration of Trade Name Pursuant to 14 CFR 215

Hereby request that the Department of Transportation grant them an exemption under 49 U.S.C. 40109 permitting them to register pursuant to 14 C.F.R. 215 a single trade name and designator code for their use in all services operated by them to and from the United States. The Joint Applicants plan to use the trade name "Lan" and the "LA" designator code in marketing and selling all of their services to and from the United States effective July 1, 2005. The Joint Applicants request that any exemption granted by the Department remain valid for at least two years.

In January 2005, the Department approved the TACA Group's request to use the TACA brand name and "TA" designator code in all of their services between Central America and the United States. Docket OST-2004-17355 / Order 2005-01-22

Counsel: Zuckert Scoutt, Charles Simpson, 202-298-8660, cjsimpson@zsrlaw.com for Lan Airlines and LanExpress / Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com

Close on the heels of the Department's ill-conceived decision granting the six members of Grupo Taca' authority to hold out their services using a single code and a single name, Lan Airlines, Lan Peru and Lan Express are now asking for authority to hold out their services using a single code and a single name without accepting the conditions imposed on Grupo Taca's authority. As with Grupo Taca, the applicants are not proposing an alliance brand but rather passing off services of all the alliance members as services of one of them. For the following reasons, Continental opposes the award of exemption authority to permit three of the five members of the Lan alliance to use a common code and a common name in air transportation as defined in the aviation statutes.

A "common branding" marketing exemption has only been granted by the Department on one prior occasion - involving the TACA group carriers. See Order 2004-10-5; Order 2005-1-22. The LAN applicants claim that this precedent supports their application, but that is emphatically not the case. In the TACA proceeding, the "good aviation relations" and open skies agreements that existed with all of the TACA Group carriers were pivotal to the Department's determination to grant extrabilateral exemption approval to the common branding alliance activities.

In contrast to the TACA Group alliance, the LAN alliance includes carriers whose homeland governments have not only rejected open skies -- but who are currently practicing restrictive aviation policies that are directly harming Delta and other U.S. carriers. The instant application has been carefully crafted to exclude LAN carriers with such restrictive homeland governments; however, as is clear from the LAN website, those carriers are included in LAN's overarching common branding strategy.

Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com

Delta's objection, which is driven by its continuing desire to operate extrabilateral codeshare services to Ecuador, is based on erroneous information and a faulty comparison of the Joint Applicants to the TACA Group. Delta's suggestion that the homelands of the Joint Applicants enjoy less liberal aviation relationships with the United States than those of the TACA Group is plainly incorrect. Chile and Peru are in fact the two most economically significant open skies partners the U.S. has in South America. Nor should urges that the Joint Applicants' proposal differs from the TACA Group proposal because the United States does not enjoy open-skies relationships with all of the homelands of the relevant applicant Lan carriers. Delta is wrong, and us conclusion is based on incorrect information.

Continental alleges that approval of the instant application somehow could have unspecified effects on competition through the Joint Applicants' relationships with American Airlines. Nothing could be less true. The Joint Applicants will codeshare with American and otherwise conduct their operations in strict compliance with existing and requested Department authorizations. The only difference resulting from approval of this application will be that the common LA code, paired with a dedicated flight number, will be displayed on American's flights, rather than the Joint Applicants' three different designator codes. No other changes will occur, and given the appropriate disclosures discussed below, approval of the application should produce benefits to consumers.

Counsel: Zuckert Scoutt, Charles Simpson, 202-298-8660, cjsimpson@zsrlaw.com for Lan Airlines and LanExpress / Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com

Lan Airlines,' Lan Peru and Lan Express have replied to the well-founded answers of Continental and Delta opposing their application to hold out their services using a single code and a single name without accepting all of th conditions imposed on Grupo Taca's authority, passing off services of all the alliance members as services of the best-known one of them. Because the Lan trio of carriers has re-reconfirmed that they have no intention of complying with all of the conditions imposed on Grupo Taca and failed to address the issue of through on-line service on carriers of Category 2 countries, Continental is constrained to submit this surreply and request leave to submit it.

Continental's latest submission is nothing more than an obvious effort to delay the Department's consideration of the Joint Applicants' request, and contains no new or persuasive reason why their application should not be approved immediately. The Joint Applicants therefore request that the Department deny Continental's objections and promptly issue a final order approving their application. Continental again raises consumer notification and safety oversight as reasons why the Joint Applicants' proposal should be disapproved. Neither argument, however, provides a basis on which to delay, much less deny, the Joint Applicants' request.

Counsel: Zuckert Scoutt, Charles Simpson, 202-298-8660, cjsimpson@zsrlaw.com for Lan Airlines and LanExpress / Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com

We find that there are public benefits that can be realized from implementation of the proposed common name and code. First, the Joint Applicants' plan will increase consumer awareness of their services, which can benefit the traveling public. Also, approval could serve to promote and further the already healthy liberal aviation relationships we have established with the Joint Applicants' homeland governments, by allowing the carriers to make better use of the rights provided by the open-skies agreements which these governments have concluded with the United States. We have reviewed the objections to the request and have concluded that, to the extent that they raise concerns that are germane to our public interest analysis, the conditions we propose to attach effectively deal with them.

Lan Airlines S.A., Lan Peru, S.A. and Transporte Aereo S.A. d/b/a Lan Express hereby request that the Department of Transportation renew the exemption and statement of authorization granted to them in the above-captioned docket permitting them to use the trade name "Lan" and the "LA" designator code in their services to and from the United States. The Joint Applicants request renewal of their existing authorities for a two-year period.

The Joint Applicants have complied with each of the conditions established by the Department in Order 2005-10-9.

The Joint Applicants' continued ability to use the "Lan" brand and "LA" code is critically important to the ongoing success of their marketing efforts, which incorporate and to a significant and increasing degree rely on a single brand and code.

The TACA Carriers have found, through experience, that the ability to use a common code and brand in their services to the United States is an effective marketing tool, and have no objection to renewal of the LAN Carriers' equivalent authority permitting them to similarly use a common code and brand. However, the TACA Carriers' request for amendment and renewal of their exemption permitting them to use a common code and brand has been pending before the Department of Transportation for nearly nine months, since January 25, 2006 (OST-2004-17355). The TACA Carriers believe fundamental fairness requires that their pending application be approved before or at least contemporaneously with the approval of the LAN Carriers' renewal request.

The LAN Carriers have no objection to approval of the TACA Carriers' pending application for amendment and renewal of their authority to use a common brand and code. However, the LAN Carriers do not believe a decision on their pending renewal application should be delayed while the Department completes its review of the TACA Carriers' application. Unlike the LAN Carriers' application, the TACA Carrier's application was opposed. Whatever the merits of that opposition, both applications involve different considerations and parties, and the disposition of one application should not affect the other.

The one-year duration of the authority we granted is consistent with what we granted previously in this matter and with our usual policy in the circurnstanccs presented. We, therefore, dismissed the application to the extent that it sought authority for a longer period.

LAN Airlines, S.A. and LAN Peru, S.A. hereby request that the Department of Transportation renew the exemption and statement of authorization granted to them in the above-captioned docket permitting them to use the trade name "LAN" and the "LA" designator code in their services to and from the United States. The Joint Applicants request renewal of their existing authorities for at least a two-year period on their existing terms and conditions.

Transporte Aereo S.A. d/b/a LAN Express does not request renewal of its authority to use the "LAN" brand and "LA" code in services to and from the United States.

Consumer awareness of the LAN brand continues to grow, generating valuable commercial benefits for the Joint Applicants, just as the Department and the Joint Applicants anticipated. The Joint Applicants' continued ability to use the "LAN" brand and "LA" code is critically important to the ongoing success of their marketing efforts, which incorporate and to a significant and increasing degree rely on a single brand and code.

Counsel: Zuckert Scoutt, Charles Simpson, 202-298-8660, cjsimpson@zsrlaw.com for Lan Airlines and Lan Express / Squire Sanders, Marshall Sinick, 202-626-6651, msincik@ssd.com for Lan Peru