Northwest Airlines, Inc. and Aeroflot Russian Airlines

OST-2006-26106 - Exemption and Statement of Authorization - US-Russia Codesharing

October 13, 2006

Joint Application for Statements of Authorization and Related Exemption Authority - Bookmarked

Pursuant to a reciprocal codesharing agreement, Northwest will display Aeroflot's "SU" designator code on Northwest flights between New York (JFK) and Minneapolis and between New York and Detroit and Aeroflot will display Northwest's "NW" designator code on Aeroflot flights between Moscow and Amsterdam and between Moscow and Paris. All codeshare traffic will connect to transatlantic service operated by the applicable marketing carrier.

Grant of the authority requested here would significantly enhance transportation options in the US-Russia market. It would introduce first-time online service from Minneapolis and Detroit to Moscow.

Counsel: Northwest, Alexander Van der Bellen, 202-842-4184, sascha.vanderbellen@nwa.com for Northwest / Garofalo Goerlich, Don Hainbach, 202-776-3970, dhainbach@ggh-airlaw.com for Aeroflot

October 24, 2006

Supplement No. 1 to Joint Application

Northwest Airlines Inc. hereby supplements its application in the above-captioned docket to include a request for seven U.S.-Russia combination frequencies to support Northwest’s proposed codeshare services to Moscow via Amsterdam (1 daily) and Paris (1 daily). Under the U.S.-Russia air transport services agreement, codeshare operations are counted as one-half of a combination service frequency. There are currently ample frequencies to support this request.

Counsel: Northwest, Alexander Van der Bellen, 202-842-4184, sascha.vanderbellen@nwa.com

October 24, 2006

United Will File an Answer

This is to advise you that United Air Lines, Inc., intends to file an answer to the above-referenced joint application and will do so on the due date for answers to the application for exemption - October 30, 2006.

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

October 25, 2006

Re: United Air Lines Letter of Clarification

Yesterday, October 24, 2006, Northwest and Aeroflot filed what is styled a "Supplement No. 1" to their above-referenced Joint Application. In fact, this filing amends their joint application to add a request for an allocation of frequencies under the U.S./Russia Air Services Agreement.

Under 14 CFR §302.5(b) the filing of such an amendment restarts the time for the submission of responsive pleadings to the application, as amended. The time period for answers to applications for frequency allocation is the same as that for exemption applications. 14 CFR §302.301(a). In these circumstances, the answer date for the Joint Application, as amended, is November 8, 2006.

This is to clarify that United will answer the Joint Application, as amended, on that date and not on October 30, 2006, as indicated in the letter of the undersigned, dated October 24, 2006, and filed in this docket prior to the submission of "Supplement No. 1 ."

Counsel: Wilmer Hale, Jeffrey Manley, 202-663-6870, jeffrey.manley@wilmerhale.com

November 8, 2006

Answer of American Airlines

American does not object to this application, provided that the Department obtains assurances from the Government of the Russian Federation that Russia will promptly approve applications by U.S. carriers, including American, to engage in third-country codesharing between the U.S. and Russia via intermediate points in Europe, consistent with the terms of the U.S.-Russia Air Transport Agreement, as amended.

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

OST-2006-26106 - Northwest and Aeroflot - Exemption and Statement of Authorization - US-Russia Codesharing
OST-2006-26257 - Continental and Aeroflot - Statements of Authorization to Engage in US-Russia Codesharing / Exemption - Russia-US Points and Special Authorization Under 14 CFR Part 216

November 8, 2006

Consolidated Answer of United Air Lines

Given the checkered history of Russia's compliance with the code-share terms of the ASA, the Department should not act to approve code-share services to the U.S. by Aeroflot (or any other Russian carrier) with Northwest, Continental, or any other U.S. carrier until it has received appropriate assurances that Russia has approved resumption of United's code-share service with Lufthansa. It should be noted that the Annexes governing code-share service expire by their terms on the March 25, 2007, startup date proposed by Northwest and Aeroflot. The Department should also receive assurances that Russia is prepared to authorize all types of code-share services proposed by U.S. carriers on and after that date before approving any code-share services involving a Russian carrier in the same time-frame.

In these circumstances, the Department may not be able to grant the authorities requested immediately. However, before starting an allocation proceeding, should one be necessary, the Department should assure that Russia is prepared to abide by the terms of the ASA and allow third-country code-share services by United and Lufthansa, as well as other carriers, to resume.

United urges that the Department defer action on the Applications of Northwest, Continental and Aeroflot in these proceedings until it receives the necessary assurances from Russia.

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

OST-2006-26106 - Northwest and Aeroflot - Exemption and Statement of Authorization - US-Russia Codesharing
OST-2006-26257 - Continental and Aeroflot - Statements of Authorization to Engage in US-Russia Codesharing / Exemption - Russia-US Points and Special Authorization Under 14 CFR Part 216

November 16, 2006

Supplement to Answer of United Air Lines and Motion for Leave to File

United has formally requested the Federal Civil Aviation Authority of the Russian Federation to approve the resumption of code-share services by United in conjunction with Lufthansa's flights between Frankfurt, on the one hand, and Moscow and St. Petersburg, on the other. The services will consist of a daily round-trip code-share service in each city pair and will begin on March 25, 2007.

That request was submitted yesterday, November 15, 2006 and a copy is attached to this supplemental answer.

United answered the Continental/Aeroflot applications on November 8, 2006, and consolidated that answer with its answer to the application of Northwest and Aeroflot in Docket OST-2006-26106. In so doing, United reserved the right to supplement its answer to the Continental/Aeroflot applications for which the regulatory due date was November 15, 2006. In its earlier consolidated answer, United stated it's intention to file with Russia its request for approval to restart its code-share services with Lufthansa between Frankfurt and Moscow and St. Petersburg. United made that filing yesterday. The purpose of this supplement is to submit a copy of the Russia filing in the dockets of this proceeding, as United said it would do in its consolidated answer. United's filing of the supplement today will not prejudice any party inasmuch as replies are not due until tomorrow in Docket OST-06-26 106 and on November 27, 2006, in Docket OST-2006-26257, In these circumstances, good cause exists for submitting this supplement one day late.

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

November 22, 2006

Motion for Leave to File and Consolidated Reply of Northwest and Aeroflot

The Joint Applicants’ modest bilateral codeshare proposal is consistent with the public interest and should be approved. American and United urge the Department to delay action this bilateral codeshare application pending resolution of long-standing and more complex third-country carrier codeshare issues with Russia. That would be a mistake. The bilateral codeshare service proposed by Northwest and Aeroflot would (i) create immediate public interest benefits and (ii) set the stage for advancement of the U.S.-Russia aviation relationship. The Department should not pass up this opportunity.

Public interest considerations compel prompt approval of the limited Northwest/Aeroflot bilateral codeshare arrangement at issue in this proceeding. Northwest does not currently have any online service to Russia. The introduction of codeshare service with Aeroflot will introduce a new competitor into a limited entry market — similar to the Department’s prior approvals of the Delta/Virgin and Continental/Virgin codeshare arrangements. Approval of the pending application would enable Northwest to offer attractive new competitive service to Moscow, in competition with Delta, and indeed, Aeroflot itself. Conversely, withholding approval would harm the traveling public and adversely affect U.S. carrier’s interests.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3970, dhainbach@ggh-airlaw.com for Aeroflot / Northwest, Alexander Van der Bellen, 202-842-4184, sascha.vanderbellen@nwa.com for Northwest

OST-2006-26106 - Northwest and Aeroflot - Exemption and Statement of Authorization - US-Russia Codesharing
OST-2006-26257 - Continental and Aeroflot - Statements of Authorization to Engage in US-Russia Codesharing / Exemption - Russia-US Points and Special Authorization Under 14 CFR Part 216

December 4, 2006

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

United wishes again to emphasize that it is not trying to prevent Aeroflot from entering into code-share arrangements with U.S. carriers such as Northwest and Continental. United agrees that their proposed arrangements will offer public benefits and are consistent with the U.S./Russia Air Services Agreement. The proposed third-country code-share arrangement of United and Lufthansa will offer similar benefits and is no less consistent with the terms of the ASA. The public benefits of these joint carrier arrangements are maximized when they are allowed to compete with each other. Aeroflot, on the other hand, posits a system where there can be no joint services unless a Russian carrier is a partner. That is not what the ASA provides. Moreover, such a system would be anticompetitive and contrary to consumer interests. The Department should reject Aeroflot's anticompetitive position and allow code-shares only when all eligible carriers can offer services consistent with the terms of the ASA.

As United has previously noted, the Russian authorities have, up to now, been inconsistent in their acceptance of U.S./third-country carrier code-shares. This was, however, in a context where Aeroflot had no code-share partner with which to serve the U.S. and was not itself a member of a global alliance. That has now changed, however, with Aeroflot having joined the SkyTeam alliance. In order to optimize its participation in such an alliance, Aeroflot is now ready to exercise its code-share rights under the ASA and, to that end, has entered into code-share arrangements with SkyTeam members Northwest and Continental.

Aeroflot cannot, however, reasonably expect that it will be allowed by the U.S. to exercise code-share rights while other U.S. carriers are foreclosed from doing so. Global alliances must be allowed to compete with each other if they are to achieve their objectives and benefit consumers. What Aeroflot seems to seek is a situation where its own government can protect the services it will offer by code sharing with Northwest and Continental from competition for U.S.-Russia traffic from code-shared services offered by United and Lufthansa or other U.S. carriers with their foreign partners. That result is simply not acceptable under U.S. aviation policy. If Russia is not prepared to allow other U.S. carriers to compete by refusing to approve third-country carrier participation that is consistent with the ASA, then Aeroflot must itself accept the result that its own codeshare aspirations cannot be met.

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