Continental Airlines, Inc. and Aeroflot Russian Airlines / Aeroflot Russian Airlines

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

October 31, 2006

Application for Statements of Authorization and Exemption

Continental requests a statement of authorization to display Aeroflot's SU* designator code on flights operated by Continental between New York (JFK), Washington, D.C. (IAD) and Toronto, on the one hand, and Houston and Cleveland, on the other hand.

Continental also requests fourteen U.S. -Russia combination frequencies for Continental's proposed codeshare service to Moscow via Frankfurt, London, Oslo and Paris. There are currently ample frequencies available to fulfill this request. Continental holds exemption authority to provide scheduled foreign air transportation of persons, property and mail between New York/Newark and Moscow, Russia and a blanket route integration certificate which allows it to combine its Moscow authority with its authority to serve Frankfurt, London, Oslo and Paris. (See Order 2006-1‑1)

Aeroflot requests exemption authority to engage in scheduled foreign air transportation of persons, property and mail between a point or points in Russia and Houston and Cleveland via New York (JFK), Washington, D.C. (IAD) and Toronto.

Aeroflot also requests a statement of authorization to display Continental's CO* code on flights operated by Aeroflot between Frankfurt, London, Oslo and Paris, on the one hand, and Moscow, on the other hand.

Continental's New York/Newark-Moscow authority awarded by Notice of Action Taken, Docket OST-2004-19375, January 3, 2005, would expire by its terms on December 23, 2006, but it will remain in effect pursuant to Continental's renewal application submitted in Docket OST-2004-19375 on October 23, 2006 and Part 377 of the Department's regulations.

Counsel: Garofalo Goerlich, Don Hainbach, 202-776-3976, dhainbach@ggh-airlaw.com for Aeroflot / Continental and Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.com for Continental

November 1, 2006

Codeshare Agreement - Redacted

Enclosed for submission in this docket is a redacted version of the Continental/Aeroflot codeshare agreement. Upon request, a copy of the redacted codeshare agreement will be provided to any interested party.

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

November 15, 2006

Answer of American Airlines

American Airlines, Inc. hereby answers the captioned applications submitted by Continental Airlines, Inc. and Aeroflot Russian Airlines on October 31, 2006 to engage codesharing between the U.S. and Russia. American does not object to these applications, 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.

On November 8, 2006, American submitted a similar answer to the joint application of Northwest Airlines, Inc. and Aeroflot Russian Airlines pending in OST-2006‑26106.

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 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

Reply of the City of Houston and the Greater Houston Partnership

The authority requested by Continental and Aeroflot is consistent with the U.S.-Russia bilateral agreement. The Houston Parties understand that in this proceeding other carriers have expressed concerns about the availability from the Russian aeronautical authorities of other, unrelated rights that are authorized by the bilateral agreement. But the Department should not deprive Continental, and thereby Houston and the surrounding region of the United States, of the benefits that would flow from the proposed code-share services by escalating a dispute that is best addressed in another context, namely amicable direct consultations between the U.S. and Russia.

Houston’s support for Continental and Aeroflot’s proposal is a natural outgrowth of its significant economic linkages with Russia, founded in large part on the City and region’s preeminent role in the oil and gas industry and in other high-technology fields of commerce.

Counsel: Zuckert Scoutt, Rachel Trinder, 202-298-8660, rbtrinder@zsrlaw.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

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