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OST-2005-22195 - United Air Lines - US-Ukraine Third-Country Codeshare Frequency
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United Air Lines, Inc. OST-2005-22195 - US-Ukraine Third-Country Codeshare Frequency Allocation August 18, 2005 Application for Frequency Allocation By Order 2005-7-17, the Department awarded United an additional third- country code-share opportunity to offer service in conjunction with Lufthansa between the U.S. and Kiev via Munich. The Department in the same order also allocated to United 3.5 weekly frequencies, which is the number required for a single daily third-country code-share service between the U.S. and Kiev. Under the U.S.-Ukraine agreement, there are four remaining unallocated frequencies. United by this application requests 3.5 of those frequencies to allow it to offer code-share service on the second daily flight operated by Lufthansa between Munich and Kiev. By adding a code share on these additional Lufthansa Munich-Kiev services, United can offer enhanced competitive choices to passengers between the U.S. and Kiev. The four unallocated frequencies under the U.S.-Ukraine agreement are presently going to waste. The Department has consistently followed a policy of maximizing the use of underutilized service opportunities that are available under bilateral air service agreements. 2005 U.S.-Argentina Combination Frequency Proceeding, Order 2005-7-23 at 2-3; In the Matter of Delta Air Lines for Allocation of Us,-Brazil Frequencies, Order 2005-7-16 at 3; In the Matter of U.S.-Ecuador All-Cargo Frequency Allocation, Order 2000-9-23 at 5; 1998 US.-Brazil Combination Service Case, Order 98-12-33 at 11. These frequencies may currently be used by the U.S. carriers that have been awarded the four third-country code-share services opportunities available under the agreement: United, Northwest and Delta. The code-share partners of Northwest and Delta do not operate multiple daily services to Kiev. Counsel: United and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com OST-2005-22195 - US-Ukraine Third-Country Codeshare Frequency Allocation August 19, 2005 Supplement to Application for Frequency Allocation The additional Lufthansa Munich-Kiev services identified in United's application on which United proposes to code share (flights LH 3230/3231) are currently operating, and United will implement code-share service as soon as it has received all of the necessary governmental approvals. The allocation should be effective immediately for an indefinite term subject to the usual 90-day dormancy condition. Lufthansa uses different aircraft types for these flights. These aircraft include A319 (126 seats); B737 (123 seats); and Canadair RJ700 (70 seats). Lufthansa's aircraft are configured with Business (C) and Economy (Y) seats, with the number of seats in each class adjusted to meet demand. Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com OST-2005-22195 - US-Ukraine Third-Country Codeshare Frequency Allocation September 9, 2005 Motion for Leave to File and Answer of Delta Delta Air Lines, Inc. hereby submits this Answer in opposition to the above-captioned application of United Air Lines, Inc. United already holds seven U.S. -Ukraine frequencies, and is able to offer double daily codeshare service from United's U.S. gateways to Kiev via a choice of Lufthansa's Frankfurt and Munich hubs. United's proposal to add yet another third-country codeshare service on Lufthansa's second daily Munich flight adds virtually no new public interest benefits, and would exhaust 3.5 of the last four available U.S. -Ukraine frequencies. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
OST-2005-22195 - United Air Lines - US-Ukraine Third-Country Codeshare Frequency Allocation September 19, 2005 Consolidated Answer and Contingent Reply of United United Airlines hereby answers the application Delta filed in Docket OST-2005-22450 seeking the allocation of four of the currently unallocated U.S.-Ukraine weekly frequencies. United is also filing a contingent reply to the untimely answer Delta filed opposing United's application in Docket OST-2005-22195 seeking the allocation of 3.5 weekly Ukraine frequencies." As explained below, Delta's failure to answer United's application within the time allowed under the Department's Rules of Practice effectively forfeits Delta's right to oppose the application. Because United's application is otherwise unopposed, the Department should proceed expeditiously to grant the application. With the grant of United's application, there will be only one-half of a frequency available for allocation. United would have no objection to the Department granting Delta's application to that limited extent, with the balance dismissed. Counsel: Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, bruce.rabinovitz@wilmerhale.com OST-2005-22195 - United Air Lines - US-Ukraine Third-Country Codeshare Frequency Allocation October 3, 2005 Hereby replies to the Consolidated Answer and Contingent Reply of United Air Lines, Inc.. United's Answer is a meritless procedural smokescreen intended to divert attention from its weak proposal to add a third daily codeshare service on Lufthansa aircraft - and to avoid comparison with Delta's superior direct service proposal to provide the first and only U.S. flag nonstop service to Ukraine. The Department's public interest mandate overwhelmingly favors allocating the four available U.S.Ukraine frequencies to fund Delta's New York-Kiev service. Delta urges the Department to do so without delay. United fails to address, much less refute, the Department's clear policy and precedent in favor in favor of direct versus codeshare service. Indeed, under this policy, the Department could and should revoke any codeshare frequencies from United that are necessary to fund Delta's new direct service. It is clear that the public interest requires that long-term allocation of the available frequencies should be used to fund Delta's nonstop service proposal. However, Delta would have no objection to a temporary allocation of 3.5 frequencies to United for codesharing with Lufthansa -- provided that the frequencies automatically revert to Delta and do not interfere with Delta's proposed June 1 start date for JFK-Kiev service. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com OST-2005-22195 - United Air Lines - US-Ukraine Third-Country Codeshare Frequency Allocation October 11, 2005 Contingent Response of United Air Lines and Motion for Leave to File Delta offers arguments in favor of its selection based solely on the fact that it will use the frequencies to operate its own aircraft rather than for code-share service. However, as noted above, the delay in Delta's direct service is itself more than sufficient reason to give precedence to United's proposal which can be implemented immediately and will put these valuable rights to use far in advance of Delta. Moreover, the only precedent Delta has cited for its selection based on direct service relates to authority under the U.S.-Mexico bilateral where designations but not frequencies are limited. In the ease of the U.S.-Ukraine agreement, however, where it is frequencies not designations that are at issue, the 3.5 frequencies in question would support a daily codeshare service for United, whereas when used for direct service they will support only 4 weekly services (when added to the fractional 1/2 frequency United is not seeking). In this case, United would put the frequencies to even greater use than would Delta and would offer consumers more competitive choices. The precedent cited by Delta does not, therefore, apply to the issue of U.S.-Ukraine frcqueneies. Counsel: Wilmer Culter, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com OST-2005-22450 - Delta - Frequency Allocation - New York-Kiev October 20, 2005 Motion for Leave to File and Surreply of Delta Delta Air Lines, Inc. hereby moves for leave to file this Surreply to the Contingent Response of United Air Lines, Inc. In this proceeding the Department must decide how to allocate the last four available U.S.-Ukraine frequencies. These are the only frequencies that will be available for new U.S. carrier services to the Ukraine for the foreseeable future, and thus Department's decision will impact the overall state of U.S.Ukraine service and competition for years to come. This is an important choice for the Department -- and one that must be decided on sound public interest principles. United's suggestion that the Department's decision should instead turn on which application was filed first, and that Delta's application should be discounted merely because it was filed shortly after the close of United's answer period, is specious and wrong. The Department has before it two current and viable service proposals, and it is up to the Department to select the proposal that will produce the greatest public benefits. On the one hand, Delta would provide the first and only U.S. flag nonstop service to the Ukraine from the important New York gateway. On the other hand, United would offer duplicative third-country service with Lufthansa - on top of the double daily codeshare service United is already providing (including service over the same Munich routing it is proposing here). Delta's proposal is superior from every conceivable public interest standpoint, and United's assertion it should be awarded additional frequencies by default is patently inconsistent with Department's public interest mandate. Unlike United, which will only list its code on Lufthansa aircraft, Delta has made the decision to commit its own widebody international aircraft and other resources that are necessary to develop direct service between the United States and Ukraine. In these circumstances, the Department is well justified in granting priority consideration to Delta's direct service proposal. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com Order 2005-12-6 Issued and Served December 9, 2005 By this order, we tentatively select Delta Air Lines for allocation of four weekly round-trip frequencies to provide scheduled combination service between the United States and Ukraine. In addition, by this order, we award United Airlines, on an interim basis, three-and-a-half weekly round-trip frequencies to provide scheduled third-country code-share service to Ukraine with Lufthansa German Airlines, pending implementation of service pursuant to a final order on the carrier selection aspect of this case. United Airlines and Delta Air Lines filed applications for allocation of 3.5 and 4 of the available frequencies, respectively. United would use the frequencies to provide a daily third-country code-share service with Lufthansa between United’s U.S. gateways and Kiev, Ukraine, via Munich, Germany. Delta would use the frequencies, in combination with one of its currently held Ukraine frequencies, to provide five-times-a-week direct nonstop service using its own aircraft between New York (JFK) and Kiev, Ukraine, using B-767 aircraft. United filed its application on August 18, 2005, in Docket OST-2005-22195. On September 9, 2005, after the answer period for United’s application had passed, Delta filed a competing application in Docket OST-2005-22450. By: Michael Reynolds OST-2005-22450 - Delta - Frequency Allocation - New York-Kiev
December 19, 2005 Delta is pleased to have been selected to receive an allocation of the four available U.S.-Ukraine frequencies, which will enable Delta to provide new nonstop service between New York (JFK) and Kiev. Delta's proposed service will be the only U.S. flag nonstop service to Kiev, providing substantial benefits to New York gateway passengers, as well as the numerous U.S. behind-gateway cities that Delta serves from JFK. Presently, U.S. carriers offer only codeshare service to Kiev. Given the substantial improvement in terms of the level and quality of service represented by Delta's new nonstop service, the Department was well justified in concluding that "the selection of Delta would better serve the public interest." United's proposal to offer a third daily codeshare service on Lufthansa is duplicative of United's existing services, and does not produce benefits that are comparable to Delta's direct service. Delta will use all four available frequencies, plus one from Delta's existing allocation, to offer five weekly nonstop flights between New York and Kiev. By contrast, United would utilize only 3.5 of four frequencies, leaving a half frequency left-over and unusable for the forseeable future. The Show Cause Order correctly rejected United's specious argument that it was somehow entitled to a default award because United had filed its application first. The Department had reached no decision to award frequencies to United at the time that Delta's application was filed, and, given the choice of two active and viable applications, the Department was clearly justified in picking the one that would produce the greatest public benefit. Delta wishes to clarify that the proposed start date for its services is June 1, 2006 and that its new authority will be issued with that effective date. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
December 19, 2005 Objections of United Air Lines The Department has made this tentative decision without a shred of evidence comparing the relative benefits of United's and Delta's services. Rather, the Department merely asserts, without further analysis and contrary to past practice in frequency allocation carrier selection cases, that the record has not persuaded it that United's use of the frequencies "would outweigh the benefits that would derive from Delta's introduction of U.S.-flag nonstop service to Ukraine." The Department also concludes erroneously (Order 2005-12-6 at 3) that the award of frequencies to Delta will maximize the use of available frequencies whereas United's allocation would result in the waste of 1/2 of a frequency. In fact, United indicated that it had no objection to the award of the 1/2 frequency it does not require to Delta, giving Delta a total of 4 which it could use for its proposed schedule. The DOT also erroneously concludes that an award of 4 frequencies to Delta will increase competition between the U.S, and Ukraine in any meaningful way. In fact, the New York-Kiev market, which Delta proposes to serve, is already highly competitive. United and Delta already compete with each other as well as with Northwest for online code-share service. In addition, AeroSvit, a Ukrainian carrier, operates nonstop service with U.S.-built equipment, and several foreign carriers, such as Lufthansa, KLM, Air France, British Airways and others offer one-stop services via their European hubs. The Department recognizes that United's proposal to start immediately gives it a substantial advantage over Delta which does not propose to start until next summer, "on or about June 1, 2006." The Department seeks to neutralize United's advantage in this regard by offering a temporary allocation to United to use the frequencies until such time as Delta wants to use them. The Department's temporary allocation proposal is, however, unworkable in the form proposed because United cannot know when Delta will start to use the frequencies until 30 days before Delta proposes to do so. This would limit United to selling services on flights to be operated, only within 30 days of the date of sale. Effective marketing requires that services be available over a longer period than 30 days, but were United to do so, Delta would have the unilateral right to demand the frequencies at any time on 30 days' notice in a manner that would interrupt United's marketing and cause inconvenience and disruption to passengers booking more than 30 days in advance. Delta's actions could impose on United the onerous expense of notifying and rebooking passengers who bought tickets for United-coded services beyond the 30 day period of Delta's notice. Counsel: Wilmer Hale, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com OST-2005-22450 - Delta - Frequency Allocation - New York-Kiev
December 27, 2005 Delta Air Lines, Inc. hereby answers the objections of United Air Lines, Inc. submitted in response to Show Cause Order 2005-12-5. United’s objections are a meritless attack on the Department’s well-reasoned decision to award the four remaining U.S.-Ukraine frequencies to Delta to establish the first and only nonstop U.S. flag service to the Ukraine, rather than authorizing a third daily United/Lufthansa codeshare flight that duplicates United’s existing services. Delta urges the Department to promptly dispense with United’s objections, and immediately issue a Final Order confirming the tentative frequency allocation, so that Delta can begin marketing and preparations for the introduction of this important new service on June 1, 2006. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com
December 27, 2005 In sum, if the Department finalizes the award of the frequencies to Delta over United's objection, the Department should require that Delta give notice on March 1, 2006 of its intent to commence its proposed service on June 1, 2006, and provide that Delta's failure to commence service on that date would result in the permanent allocation of the 3 1/2 frequencies to United. By so doing, the Department will maximize the public benefits by ensuring the continuous and best use of these valuable frequencies. Counsel: Wilmer Hale, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com OST-2005-22450 - Delta - Frequency Allocation - New York-Kiev December 28, 2005 Motion for Leave to File and Reply of Delta Air Lines Delta requests leave to file this brief reply to respond to certain erroneous assertions in United's answer concerning Delta's startup conditions. United wrongly states that Delta's Comments to the Show Cause Order "adds a request that the effective date of its award be June 1, 2006, and that a 90 day dormancy period run from that date." Delta has stated in this proceeding no fewer than five times that the effective date of its proposed JFK-Kiev service is June 1, 2006. See, Delta Application at 1 (9/9/2005); Delta Reply at 4 (10/3/2005); Delta Surreply at 6 (10/20/2005); Delta Comments at 3 (12/19/2005); Delta Answer at 6 (12/27/2005). The Department's Show Cause Order expressly provides that it will "require institution of the service within 90 days of the effective date of the authority issued." Order 2005-12-6 at 4. Contrary to United's assertions, Delta's Comments did not propose any change to its startup date, nor the Department's proposed dormancy condition. Delta merely asked the Department to explicitly state the effective date of the service in the Final Order for the avoidance of any doubt - such as United is attempting to manufacture here. Delta fully intends to commence service on June 1, 2005, and plans to begin offering tickets for sale as soon as it receives final economic authority to do so. The 90 day dormancy condition proposed by the Department in the Show Cause Order makes sense in the event that unforeseen circumstances, such as the issuance of foreign government approvals, should delay the planned start date. Contrary to United's assertions, Delta has not submitted any new "request", and there is no reason to alter the dormancy conditions specified in the Show Cause Order. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com OST-2005-22450 - Delta - Frequency Allocation - New York-Kiev
December 30, 2005 Reply of Continental Airlines and Motion for Leave to File Although Continental is not an applicant in this proceeding, Continental remains interested in Ukraine frequencies, which it has sought in the past and may well seek again in the future. United has objected to, among other things, provisions in the Department's show-cause order that would return unused Ukraine frequencies to the Department for re-allocation and argued that any such frequencies should be awarded automatically to United. Continental opposes United's request. Continental requests leave to submit this reply in light of issues raised by United in its December 27 answer that could potentially affect future awards of U.S.-Ukraine frequencies to other potential applicants, including Continental. In the interest of a complete record, the Department should grant Continental's motion for leave to file this reply, which Continental has submitted promptly. Counsel: Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.com
December 29, 2005 The last paragraph, page 2, of Delta’s reply submitted on December should read “June 1, 2006” rather than “June 1, 2005.” Counsel: Hogan & Hartson, Alexander Van der Bellen OST-2005-22450 - Delta Air Lines - Frequency Allocation - New York-Kiev Janury 3, 2006 Response of United Air Lines and Motion for Leave to File Since Delta has now admitted that it has no immediate need for more than six frequencies, it should be granted no more than the 2.5 frequencies it needs to make up that total. United can use the remaining 1.5 frequencies to operate an additional one-way eastbound code-share service via Munich on six days per week. As United has pointed out previously, these services would improve connections for United's passengers via Munich in several major U.S.-Ukraine markets. The Department cannot lawfully make final its decision to award all 4 available frequencies to Delta absent any detailed evidence of how Delta will use them. Even from the existing record, however, it is apparent that Delta would waste 1.5 frequencies with some form of duplicative code-share service. While Delta has criticized United for seeking additional frequencies to operate what it describes as a "duplicative third-country code-share proposal", its own proposal (to the extent that it can be determined from the inadequate record) would result in "duplicative" codeshare services at least three days per week, United has at least explained how it would use the additional frequencies to improve connections for its passengers via Munich from certain U.S. gateways and is willing to submit schedules illustrating these improvements should the Department so require. Counsel: United and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.mnaley@wilmerhale.com OST-2005-22450 - Delta Air Lines - Frequency Allocation - New York-Kiev January 4, 2006 United's motion to file a further unauthorized "response" should be denied. United's "response" merely re-argues its pointless request for more schedules and details that are irrelevant to the Department's obvious public interest choice to select Delta's superior nonstop direct service over a third daily United/Lufthansa codeshare service. Department's decision was correct for all the well-supported reasons set for the Show Cause Order. The Department's decision achieved a near optimal market distribution with United and Delta having 7.0 and 7.5 frequencies, respectively, and the ability to offer a variety of services that benefit competition and the public interest. Delta will fully utilize all of its allocated frequencies to operate five weekly nonstop flights supplemented by five weekly codeshare flights. The Department should reject United's protracted delay tactics and proceed immediately with the issuance of a Final Order. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com Order 2006-1-12 Issued and Served January 18, 2006 By this order, we make final our tentative findings and conclusions set forth in Order 2005-12-6 and allocate Delta Air Lines four weekly frequencies to provide scheduled combination nonstop U.S.-Ukraine services. We do not agree with United’s argument that the record in this case is inadequate. The materials we needed to reach a decision were either provided by the parties or were officially noticeable and thus already available to the Department during the show-cause stage of this proceeding. As to Delta’s frequency needs, Delta has indicated that it requires four additional frequencies, in combination with one of its existing frequencies currently used for code sharing, to operate its proposed five-times-a-week nonstop service. Finally, Delta has confirmed that it will fully utilize its remaining 2.5 frequencies to operate five-times-a-week code-share service with Air France under the frequency conversion provisions of the agreement. The existing record of this case shows that Delta would introduce the first and only U.S.-flag nonstop service to Ukraine while United would not; that, to the extent United would use any frequencies awarded, it would use them to provide additional services of the same type it already provides, i.e., third-country code-share services; that Delta has proposed using all four available frequencies; and that United currently has seven frequencies - the most of any U.S. carrier now serving Ukraine - whereas Delta currently has only 3.5. Thus, an award of four frequencies to Delta would result in these two carriers each holding a level of frequencies that would promote competition and greater consumer choice, whereas an alternative award would not. Based on these facts of record, we conclude that selecting Delta would provide the greatest public benefits in this case. We will require that Delta inaugurate service by June 1, 2006. Any frequency not inaugurated by the deadline will revert to the Department. Should Delta conclude that because of unforeseen circumstances it needs additional time to start up, it must seek our leave in the form of a timely-filed formal request for waiver of the start-up condition. Such a request must be served on all parties to this proceeding. By: Michael Reynolds OST-2005-22450 - Delta Air Lines - Frequency Allocation - New York-Kiev February 7, 2006 Delta Air Lines Ukraine Inauguration Service Date Notice Pursuant to Ordering Paragraph 4 of Order 2006-1-12, Delta hereby provides advance notice of the date it plans to inaugurate service. Delta intends to operate nonstop Ukraine service beginning on June 1, 2006. Delta has begun publishing schedules in the Global Distribution Systems with a June 1 effective date. Delta believes that notice is required at this time to avoid the possibility of simultaneous publishing of schedules by United under it temporary award past June 1, which would exceed the number of frequencies available to the United States under the U.S.-Ukraine air transport services agreement. Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com |
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