OST-97-3237 / United and Mexicana / US-Mexico Codesharing / Consolidated Reply of United Air Lines / January 8, 1998

Joint Application of

UNITED AIR LINES, INC. and COMPANIA MEXICANA DE AVIACION, S.A. DE C.V.

Docket OST-97-3237

for an exemption under 49 U.S.C. §40109 and a Statement of Authorization under 14 CFR §212

(U.S.-Mexico Code Sharing)

 

CONSOLIDATED REPLY OF UNITED AIR LINES, INC.

 

United Air Lines, Inc. ("United") submits the following consolidated reply to the joint answer of American Air Lines, Inc. ("American") and Aero California S.A. de C.V. and the answer of Delta Air Lines, Inc. ("Delta") filed in response to the above-captioned joint application of United and Compania Mexicana de Aviacion, S.A. de C.V. ("Mexicana"):

1. In their joint application, United and Mexicana seek authority to code share between certain additional U.S.-Mexico city pairs where Mexicana is operating nonstop or direct singleplane service. In addition, United and Mexicana also request blanket authority to code share between all points on their respective domestic systems via their respective U.S. and Mexico

 

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gateways. This blanket authority was requested in response to similar authority sought by American and Aero California in their applications for exemptions and statements of authorization dated May 7, 1997. Delta and its code share partner Aerovias de Mexico ("Aeromexico") have also filed a similar application for exemptions and statements of authorization on December 29, 1997.

2. American/Aero California and Delta each take the position that the Department should grant the United/Mexicana application only to the extent that such approval would not affect the Department's ability to grant their own pending applications for blanket U.S.-Mexico code-share authority. United and Mexicana recognized that approval of their application could be granted only to the extent that it was consistent with the U.S./Mexico bilateral air services agreement. American/Aero California and Delta/Aeromexico made similar representations.

3. There are now three U.S./Mexican carrier code-share alliances seeking blanket authority to operate between points on their domestic systems via their Mexican gateways. Due to the city-pair designation restrictions of the U.S./Mexico bilateral air services agreement, each of the alliances recognizes that

 

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there will be certain city pairs in their requests that must be deferred pending an amendment of the U.S./Mexico agreement as relates to designations for transborder code-share services. Thus, the various applications seek authority only to the extent designations are available. /1

4. The U.S. and Mexican governments are to meet later this month to address issues relating to code-share services. The amendments to the bilateral agreement needed to allow implementation of the various blanket authorizations should be addressed at that time. /2 United urges the Department to defer

1/ American/Aero California applications dated May 7, 1997, in Dockets OST-97-2477 and OST-97-2481, and undocketed and Delta/Aeromexico joint application dated December 29, 1997, in Docket OST-97-3289 and undocketed.

2/ American/Aero California in their joint answer urge that their various pending applications be processed before that of United/Mexicana in Docket OST-97-3237. The designation issues raised by the American/Aero California applications for blanket authority to code share via Mexican and U.S. gateways are the same as those raised by the United/Mexicana and Delta/Aeromexico applications. Each of these partnerships will need a large number of designations from their respective governments to implement these services on a blanket basis and there will inevitably be numerous conflicts. The Department should defer further action on all requests for blanket authority until the upcoming discussions regarding those codeshare designations have been completed. Depending upon the outcome of those talks, it may be unnecessary to resolve the conflicts arising from these pending applications for blanket authority.

 

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action on the various requests for blanket authority to code share via U.S. and Mexican gateways to interior domestic points until the results of those bilateral consultations are known.

With respect to five new city pairs for which United and Mexicana request authority where Mexicana is operating nonstop or direct single-plane service, there should be no bilateral impediment to the immediate grant of the necessary exemption for United and statement of authorization for Mexicana. Mexicana is already designated by its government to operate and is operating transborder services in each of these city pairs on either a nonstop or single-plane basis. United requires an exemption to offer code-share service on Mexicana's existing nonstop and single-plane transborder flights in these markets:

Chicago-Morelia

Chicago-Leon

Chicago-Durango

Denver-Zacatecas

San Francisco-Morelia

United is already designated to offer code-share services in the Chicago-Durango and Chicago-Morelia city pairs. Those designations were made pursuant to United's code-share arrangement with Transportes Aeromar. Because that arrangement involves operations in commuter size aircraft, however, United

 

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did not require additional exemption authority to offer services in conjunction with Transportes Aeromar.

With respect to three other transborder city pairs at issue, San Francisco-Morelia, Chicago-Leon, and Denver-Zacatecas /3 the Department should grant United's request for both exemption and designation. Delta seeks no exemption authority to offer service in conjunction with Aeromexico in these three city pairs. (Joint Application, dated December 29, 1997, in Docket OST-97-3289, Attachment 1). American requests exemption authority to offer code-share services in the San Francisco-Morelia but not the Chicago-Leon or Denver-Zacatecas city pair. There is, therefore, no conflict with respect to the Chicago-Leon and Denver-Zacatecas city pairs, and United can be granted exemption authority and designated immediately.

3/ With respect to Denver-Zacatecas, in their joint application, United requests authority to serve that market via connections at Mexican gateways and Mexicana seeks a statement of authorization to display United's code on its flights between those gateways and Zacatecas. Mexicana now operates a nonstop flight between Denver and Zacatecas as well as connecting services. In these circumstances, United urges that its exemption to serve the Denver-Zacatecas city pair be granted immediately so that it can offer U.S.-flag services on Mexicana's nonstop flights.

 

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With respect to San Francisco-Morelia, American's request to code share on Aero California involves services via connections at one or more of American's Mexico gateways. (American Application dated May 7, 1997, in Docket OST-97-2477 at 1). The Department has deferred action on American's request for exemption authority via Mexican gateways in the San Francisco-Morelia city pair. Order 97-7-31 at 7 and Appendix C. Whatever the reason for that deferral, it should not apply to United's proposal to offer San Francisco-Morelia code-share service on Mexicana's nonstop flights. Mexicana is the only carrier offering nonstop service in the San Francisco-Morelia market, with a daily southbound flight. OAG (Worldwide), January l998 at 878. /4

United urges the Department to grant United and Mexicana the necessary authority to code share in these five transborder city pairs immediately without awaiting the outcome of the bilateral talks with Mexico on code-share designations

4/ Mexicana's northbound flight from Morelia to San Francisco operates on a single-plane, one-stop basis via Guadalajara. Mexicana is already authorized, designated and displaying United's code on the San Francisco-Guadalajara portion of this flight. Notice of Action Taken, dated June 24, 1997, granting statement of authorization to Mexicana for various code-share services.

 

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later this month. There is no need to delay action on these city pairs given the status of United's and Mexicana's existing authority and the lack of any other carrier's request to serve these city pairs on a nonstop or single-plane service basis.

6. With respect to the balance of the United/Mexicana application -- i.e., those portions involving services to behind gateway points via connections at U.S. or Mexican gateways -- a deferral would be appropriate for the same reason United has urged that the similar blanket applications of American/Aero California and Delta/Aeromexico should be deferred. Assuming that the U.S. and Mexico are able to reach an agreement at the January 23, 1998, talks relating to code-share designations, this deferral need not be of long duration.

Respectfully submitted,

 

JOEL STEPHEN BURTON

GINSBURG, FELDMAN and BRESS, CHARTERED

1250 Connecticut Avenue, N.W.

Suite 800

Washington, D.C. 20036

(202) 637-9130

Counsel for UNITED AIR LINES, INC.

DATED: January 8, 1998