American Airlines, Inc.

OST-2008-0247 - US-Brazil - Re-Allocation of One Weekly Combination Frequency From United

August 14, 2008

Application for Re-Allocation of One Weekly Combination Frequency From United

American Airlines, Inc. hereby applies for the reallocation of one U.S.-Brazil weekly combination frequency from United Air Lines, Inc. in order to increase our proposed Miami Belo Horizonte service from three flights per week to four, effective November 2, 2008.

While United's frequencies are not explicitly subject to a 90-day dormancy condition, it is well-established that when one carrier is sitting on long-dormant authority in a limited-entry market, and a second carrier steps forward with firm plans to make use of it, such authority will be reallocated to the second carrier. Indeed, in one of the leading recent cases to rely on this principle, the Department re-allocated five dormant Brazil frequencies from United to Delta Air Lines to institute Atlanta-Rio de Janeiro service. Those five frequencies had been unused by United for at least two years. See OST-2004-19161, show-cause Order 2005-2-10, February 16, 2005; final Order 2005-4-13, April 12, 2005; and Order 2005-7-16, July 22, 2005.

Our initial application in that docket, filed on July 16, 2008, had requested 11 frequencies in order to operate the daily round-robin plus four weekly flights between Miami and Belo Horizonte, starting November 2, 2008. By granting our application here for re-allocation of one of United's dormant frequencies, the Department will permit us to implement our original July 16 proposal, benefiting the public with an enhanced nonstop service pattern to Belo Horizonte, a new U.S. carrier destination in Brazil.

Counsel: American, Carl Nelson, 202-496-5647

August 29, 2008

Answer of Delta Air Lines

American is correct that United has not used at least two of the U.S.-Brazil frequencies currently allocated to United for several years. American is correct that United has no current published plans to do so. As American correctly notes, the Department has a well-established policy of reallocating such long-dormant authority where another carrier presents firm service plans to put the valuable operating rights in limited entry markets to use. See, e.g., DOT Order 2005-2-10 (show cause order proposing to reallocate five dormant frequencies from United to Delta to allow Delta to initiate new Atlanta-Rio de Janeiro service); DOT Order 2005-4-13 (same, final order); DOT Order 2005-7-16 (same, reaffirmed after reconsideration).

However, Delta has today filed a competing application for re-allocation of both of the dormant U.S.-Brazil frequencies currently allocated to United. Delta would use these two frequencies to open a new U.S. carrier gateway at Los Angeles. The relief requested by Delta and American are mutually exclusive, and the Department is required to institute a comparative selection proceeding to consider the merits of the competing applications in accordance with Ashbacker Radio Corp. v. FCC.

Counsel: Delta, Scott McClain, 404-773-6514

OST-2008-0247 - US-Brazil - Re-Allocation of One Weekly Combination Frequency From United
OST-2008-0270 - Exemption - Los Angeles-Sao Paulo

September 10, 2008

Consolidated Reply of American Airlines

On August 14, 2008, American initiated this matter by applying for re‑allocation of one of two long‑dormant U.S.Brazil frequencies held by United Air Lines, Inc. American will use this frequency to increase its proposed Miami‑Belo Horizonte service from three times weekly to four, effective November 1, 2008. United did not oppose American's request.

On August 29, 2008, Delta filed a 'me too" application, asking for both of United's dormant frequencies for service between Los Angeles and Sao Paulo. Delta also answered in opposition in American's docket. 

Counsel: American, Carl Nelson, 202-496-5647

Order 2008-10-20
OST-2008-0307
OST-2008-0247 - American - Re-Allocation of One Weekly Combination Frequency From United
OST-2008-0270 - Delta - Exemption - Los Angeles-Sao Paulo

Issued and Served October 21, 2008

Order Instituting Proceeding

By this order, we institute the 2008 U.S.-Brazil Combination Frequency Allocation Proceeding and offer the two applicants, American Airlines, Inc. and Delta Air Lines, Inc. an opportunity to file additional information/evidence and comment, so that we may proceed with a decision in this matter. By this order, we also consolidate the captioned applications of American and Delta into the instituted proceeding. In the interest of ensuring a complete decisional record in this matter, we will allow American and Delta an opportunity to file any new information and/or evidence in this matter that they believe would be helpful to us in making our decision in this proceeding.

United has been allocated 23 weekly frequencies for combination service on any authorized U.S.-Brazil route. Unlike the new frequencies that are available under the 2008 ad referendum agreement for U.S.-Brazil combination service, United’s 23 frequencies are not encumbered by Brazil-gateway restrictions. In this regard, United could have used its allocated frequencies in any markets where it holds underlying economic authority for scheduled combination U.S.-Brazil service. American seeks reallocation of one of United’s unrestricted unused Brazil-gateway frequencies, and Delta seeks two. United did not file an answer opposing the American and Delta requests; nor has it challenged the allegations regarding use of the subject frequencies.

The 2008 Agreement provides, among other things, an additional 21 weekly frequencies for scheduled combination service to points in the North, Northeast, and Mideast regions of Brazil and/or Belo Horizonte. The Department has allocated the 21 gateway-restricted frequencies as follows: American-10 and Delta-11 (see Notice of Action Taken dated August 8, 2008, in Dockets OST-2008-0227 and OST-2008-0229).

We note that in June 2009, an additional 7 weekly frequencies for scheduled combination service to gateway-restricted points in Brazil will become available; and that in October 2009 and October 2010, additional frequencies for scheduled combination service to any authorized point in Brazil will become available. The frequencies for service to any point, however, may only be used at Sao Paulo’s Guarulhos International Airport once infrastructure-related constraints at the airport are removed. For more information on the 2008 Agreement, see Notice Inviting Applications for U.S.-Brazil and all-cargo services dated July 7, 2008.

We are not providing a specific evidence request. Instead, we will leave it to the applicants’ discretion to supply any additional information and/or evidence that, in their view, would be helpful to the Department in making a decision in this case. The elective submissions should be filed no later than 10 days from the service date of this order; answers to submissions, if any, should be filed no later than seven calendar days thereafter; and replies to answers, if any, should be filed no later than five calendar days thereafter.

By: Michael Reynolds