Delta Air Lines, Inc.

OST-2007-27019 - Certificate of Public Convenience and Necessity - US-China

January 19, 2007

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

Delta Air Lines, Inc. hereby proposes to offer daily nonstop service between Atlanta, Georgia, and Shanghai, China, beginning on March 25, 2008, when the next set of combination U.S.-China frequencies and a U.S.-China designation become available. Accordingly, pursuant to 49 U.S.C. § 41102 and 41108 and subpart B of 14 C.F.R. Part 302, Delta hereby applies for (i) certificate authority to engage in scheduled foreign air transportation of persons, property, and mail, between the United States and China, (ii) seven weekly frequencies for that service, and (iii) a U.S.-China designation.

Service Proposal Delta plans to begin daily, year-round nonstop service between Atlanta, Georgia, and Shanghai, China, starting on March 25, 2008. It plans to use either its B-777-200ER aircraft (configured in two-class configuration with 268 passenger seats) or its new B-777-200LR aircraft (configured in two-class configuration with 276 passenger seats).

An award to Delta would inject a new entrant and establish a new gateway for service to China. Delta's new Atlanta-Shanghai service, connecting the commercial and financial center of the world's largest country with Delta's expansive route hub at Hartsfield-Jackson Atlanta International Airport, the largest hub in the world, will provide unprecedented levels of convenient and competitive network coverage for U.S.- China travelers and shippers. More than 130 communities in the United States will receive convenient new or additional nonstop-to-nonstop service via Atlanta to/from Shanghai. Delta's service will be particularly beneficial to travelers and shippers in two critically underserved regions of the United States: the southern United States (at which there is currently no non-stop service to China) and the eastern United States (at which there is no U.S. carrier service to Shanghai and no daily nonstop service from any carrier to Shanghai). In addition, it will provide consumers and businesses with a new entrant carrier and a new U.S. gateway at the largest hub in the world, for U.S.-China service, thereby enhancing inter-carrier and inter-gateway competition in this otherwise restricted market.

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

February 9, 2007

Answer of American Airlines

The Department should either dismiss Delta's application as premature, or hold Delta's application in abeyance until the Department establishes a 2008 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 should reach the same conclusion here. American 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.

Consistent with the Department's decision regarding American's U.S.-China application in 1999, Delta's premature filing should not be considered until the Department establishes a 2008 proceeding and invites competing applications,

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

February 9, 2007

Answer of Continental Airlines

Continental opposes Delta's application for certificate authority, a designation, and seven U.S.-China frequencies to operate nonstop service between Atlanta and Shanghai beginning on March 25, 2008. Since the U.S. is currently seeking additional U.S.-China combination frequencies to remedy "the growing inadequacy of U.S.-China air services, with demand far exceeding supply under the current restrictive bilateral environment" (Order 2007-2-10), Delta's application is premature at best. Continental intends to seek seven frequencies and authority to institute New York/Newark-Shanghai service in 2008, and other carriers will also seek additional authority and frequencies, particularly if the current negotiations with China result in the additional combination frequencies necessary to serve the U.S.-China air transportation market adequately. Clearly, the Department's first priority should be continuing its efforts to alleviate the "limits on designations and frequencies" that act as "major constraints on entry and competition" and to address "the critical need for greater liberalization of the U.S. and China air services market" (Order 2007-1-4) through negotiations with China. Before taking any action on Delta's application, the Department should consider the potential for additional combination frequencies as a result of ongoing negotiations, invite applications by other airlines, and institute a comparative selection proceeding if the demand for U.S. -China combination frequencies in 2008 exceeds the number available.

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

February 9, 2007

Answer of Hawiian Airlines

In 2005 and 2006, Hawaiian applied for and was denied the right to service China. Like Delta, Hawaiian was ineligible to apply for operating rights in the most recent award because the bilateral only allowed additional frequencies to incumbent carriers.

So far service to the Chinese market from the United States has been provided only by the "usual suspects," United, Northwest, American and Continental. The Delta Application is more of the same -- another major carrier requesting rights to provide essentially the same service that the traveling public in the United States already has. Hawaiian has proposed, and will propose when the Department institutes a new proceeding, to offer service to China to and from markets not presently served by U.S. carriers. Accordingly, adding a new carrier like Hawaiian will increase consumer choice, add new gateways and stimulate competition in the marketplace.

Hawaiian assumes that the Department will institute a proceeding in a timely manner and at that time Hawaiian and other carriers will be given an opportunity to apply for the 2008 designation and required frequencies. Based upon that assumption, Hawaiian reserves its right to object to the Delta Application and reserves its right to file a competing application until such time as the Department institutes a proceeding with an appropriate order.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com

Hawaiian's 2005/2006 US-China Application

February 9, 2007

Answer of Northwest Airlines

Northwest strongly supports the Department’s efforts to achieve a substantial liberalizing agreement with China, so that route case proceedings for the very limited 2008 opportunities can be avoided. However, in the present circumstances, Northwest is constrained to oppose Delta’s request on well-settled Ashbacker principles. Northwest urgently requires additional U.S.-China frequencies for new services from its Detroit hub, and will respond to the Department’s invitation for applications at the appropriate time.

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

February 9, 2007

Answer of US Airways and Motion to Institute Route Proceeding

US Airways urges DOT to defer consideration of Delta’s application until there is the opportunity for full consideration of such other applications as may be submitted. Specifically, US Airways intends to apply for the designation and frequencies at issue, and it is presently coordinating its proposal with affected parties, including the U.S. gateways and communities it will serve.

In light of the scarcity and value of U.S.-China frequencies and designations, the Department has conducted virtually every allocation of China frequencies by means of a comparative selection route proceeding. There is no reason to deviate from that longstanding practice now, more than a year before the frequencies at issue even become available.

US Airways’ application to enter the U.S.-China market (Although US Airways expects soon provide code-share services on United Airlines’ flights between Washington Dulles and Beijing, it has never served China with its own aircraft.) may well be met by other applications as well, given the value of this opportunity. Since only one designation is available, any application by a new entrant, such as US Airways, is necessarily mutually exclusive of Delta’s application. Further, as Delta has requested all seven newly available frequencies, any other application would similarly be mutually exclusive.

US Airways therefore motions, pursuant to §302.212(c), that the Department follow well-established precedent and institute a route proceeding for the 2008 passenger-combination designation and frequencies. This should include the establishment of a date for filing competing applications for service to China at such time as will afford the Department and interested parties, respectively, adequate time to process the case and market the service effectively. This step will ensure the required contemporaneous consideration of the US Airways and Delta applications, and any others that may be filed.

Counsel: US Airways, Howard Kass, 202-326-5153, howard_kass@usairways.com