Docket OST-97-2201 | May 6, 1997
Application of
UNITED AIR LINES, INC.
for allocation of U.S.-Philippines Route 2 all-cargo frequencies
DATED: May 6, 1997
ANSWER OF UNITED AIR LINES, INC.
AND CONTINGENT MOTION FOR LEAVE TO FILE
United Air Lines, Inc. ("United") submits the following answer to the amended application of Northwest Airlines, Inc. ("Northwest") in Docket OST-97-2145: /1
1. By amending its proposed U.S.-Philippines all-cargo service plan, Northwest is seeking to counter the superior service that United itself proposed. To allow an applicant to amend its service proposal after it has seen that of a competing applicant is highly unusual. United objects to Northwest's belated attempt to "raise the ante" in this fashion and urges the Department to deny Northwest's motion for leave to amend its
1/ United seeks leave to file this answer in the event that the Department grants Northwest leave to amend its application after the original answer period had expired. United filed a timely answer to Northwest's original application and is entitled to address new issues raised by the amended application if the Department decides to accept it.
Answer of United and Contingent Motion for Leave to File
Page 2
application after the date for such amendments has long since
passed. /2
2. Even if Northwest is allowed to amend its service plan, the new all-cargo schedules it proposes for its U.S.-Philippines services merely confirm the superiority of United's proposal. Both of United's new U.S.-Philippines all-cargo services would operate to Manila on a turnaround basis. This would provide direct services twice weekly between Manila and the U.S. in both directions.
Northwest's new proposal would offer only a single turnaround flight at Manila. The other weekly frequency would serve Manila in the eastbound direction only. Any westbound freight from the U.S. to Manila on that service would be carried via Bangkok, adding a considerable amount of elapsed time for U.S. shippers. For example, a shipment from New York to Manila on Northwest's flight to Manila via Bangkok would arrive 31 hours
2/ A previous instance in which the Department failed to control such service proposal gamesmanship has not served the public well. Thus, in the Los Angeles-Guadalajara Exemption Proceeding, Docket OST-95-244, the Department allowed American Airlines, Inc., to "outbid" United by constantly changing its service proposal in response to United's. In the end, the Department selected American based on such an amended proposal in which that carrier promised to operate three daily flights between Los Angeles and Guadalajara. In fact, as United warned, this was a seriously inflated proposal merely aimed at capturing the award. In current schedules, American offers only a single daily flight on a regular basis, supplemented by two additional flights on Saturday and one on Sunday (a total of 10 flights per week). OAG Worldwide, May 1997, p.508.
Answer of United and Contingent Motion for Leave to File
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after departure. On United's flights, a shipment in the same city pair would arrive in Manila within 23 hours of departure from New York.
Only United's schedules afford U.S. shippers the type of direct air freight service they can rightfully expect. Northwest has scheduled its stops in the Philippines to accommodate its own operational convenience rather than that of its shippers. United is justifiably flattered that Northwest has seen fit to recognize the superiority of United's service proposal by matching it on one weekly flight. This proposal does not, however, justify awarding Northwest both of the available frequencies when one of its flights would continue to provide service that is obviously inferior to United's.
3. Northwest also argues that United's U.S.-Philippines all-cargo service will not be available to as many points in the U.S. as Northwest is serving. Thus, Northwest claims to offer all-cargo service between Manila and four of the five top U.S.Philippines cargo markets:
Northwest wrongly claims that United proposes service to only three of these markets. In fact, because of United's
Answer of United and Contingent Motion for Leave to File
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all-cargo connecting complex at Anchorage, it will offer allcargo service between Manila and all of the top five U.S. markets:
Indeed, when United's two new flights to Manila are combined with its existing all-cargo services at that point, United will be offering all-cargo service to these top five U.S. markets five days per week, compared to only 1H times weekly on Northwest's service. /3
4. Finally, Northwest claims that the nose-loading characteristics of its B747 freighters will offer superior service benefits compared to United's DC-10 freighters. Northwest fails to demonstrate, however, the importance of this factor. Thus, there is no indication of the number of shipments to/from the Philippines that require this special loading characteristic.
3/ United's current all-cargo services operate to the U.S. points of Los Angeles, Chicago and Anchorage. United plans to begin scheduled all-cargo service to New York and San Francisco in September 1997, prior to the introduction of its two additional frequencies to Manila.
Answer of United and Contingent Motion for Leave to File
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The largest all-cargo carrier serving the Philippines is Federal Express, and it has successfully served the market with DC-10 equipment comparable to that used by United. Federal Express, in fact, introduced DC-10 freighters to replace the B747 equipment used by its predecessor, The Flying Tiger Line. Some of the B747 equipment operated by Flying Tiger also had nose loading capability. Federal Express' experience would suggest that the special demand for B747 nose loading capability is less than Northwest would have the Department believe. /4
5. In conclusion, United objects to Northwest's being allowed to amend its application after the time to do so has expired. Northwest chose to begin this proceeding by filing the initial application and should not be allowed to amend its own service proposal after it has seen United's competing application. To allow Northwest to amend its application in these circumstances would encourage such maneuvering in future proceedings. In the event Northwest is permitted to amend its application, the Department should, nevertheless, award the two
4/ The only advantage the nose loading capability offers is to accommodate relatively long pieces such as drilling pipe which cannot be broken down into shorter shipments. Northwest has failed to demonstrate that there is any meaningful demand for this type of specialized shipment between the U.S. and the Philippines. Because of the weight added by the nose loading mechanism, most carriers acquiring the B747 freighters more recently have chosen not to include that feature.
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additional U.S.-Philippines frequencies to United based on United's superior service as discussed above.
Respectfully submitted,
JOEL STEPHEN BURTON
GINSBURG, FELDMAN & BRESS, CHARTERED
1250 Connecticut Avenue, N.W.
Suite 700
Washington, D.C. 20036
(202) 637-9130
Attorney for UNITED AIR LINES, INC.
DATED: May 6, 1997