Dockets OST-97-2371 OST-97-2373 OST-97-2372 | May 5, 1997

Applications of

DATED: May 5, 1997

1. United is the only applicant that has illustrated how it will use the seven (7) U.S.-Chile frequencies that are available in December. United has submitted a schedule showing that it will add seven weekly frequencies to Santiago by extending to Santiago an existing daily B777-200 flight that now operates between Miami and Sao Paulo. United will operate this service with existing equipment.

2. Delta has apparently not decided how it would serve Santiago, preferring to await the scheduling of a carrier selection proceeding before revealing its service proposal, to

Consolidated Reply of United

Page 2

the extent it has one. Continental, unlike Delta, claims to have formulated a firm intention with respect to how it will serve Santiago. This is described generally as involving nonstop services between Newark and Santiago in DC-10-30 equipment. Continental has, however, failed to introduce a schedule illustrating how or when these flights would operate. Based on United's analysis, it would require at least two fully dedicated DC-10-30 aircraft to operate daily nonstop services between Newark and Santiago at attractive arrival/departure times that would meet Continental's connecting banks at Newark. Continental has not indicated where or when it will acquire the necessary aircraft to operate this route, let alone their arrival and departure times.

Based on Continental's reluctance to submit a service plan for the record, the Department can reasonably infer that the details of the plan, if revealed, would not be favorable to Continental's case. Indeed, it appears that a New York-Santiago nonstop service would be a relatively high cost, high risk operation, especially for a carrier which has to acquire additional equipment in order to operate it. United has demonstrated that it could add new service to Santiago quickly and at relatively low cost by extending an existing service. United will not need to acquire additional aircraft. There is little risk that United would fail to institute this service in a timely manner.

Consolidated Reply of United

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Ironically, Continental is demanding that its application be granted immediately without making any demonstration of the feasibility of its relatively high cost service proposal. United strongly objects to that request. As the only applicant that has demonstrated how it would serve this route, United is the only carrier whose application could be lawfully granted on the present record. Only United has shown that it is fit, willing and able to operate these services.

3. Continental also questions why United cannot use four of its existing U.S.-Chile one-stop frequencies to operate service between Miami and Santiago via Sao Paulo. United plans to use those four frequencies to expand its Miami-Lima-Santiago services to a daily operation. At present, these services are limited by the terms of the U.S./Peru bilateral to three frequencies per week between Lima and Santiago. United hopes to be able to increase these services to a daily operation and is working with both the U.S. and Peruvian governments toward that goal. At such time as the opportunity becomes available, United will increase these services to daily immediately, and United needs its existing U.S.-Chile one-stop frequency allocation to enable it to implement this plan. In any event, United also proposes a daily pattern of services to Santiago via Sao Paulo and could not fully implement that level of service with its existing frequencies even if they were available for that purpose.

Consolidated Reply of United

Page 4

United needs these additional frequencies to offer effective competition with American at Santiago. With three daily frequencies to Santiago, American dominates the U.S.-Chile market as it does other U.S.-South America markets. /1 United will use the additional frequencies to match American's level of service to Santiago and can do so quickly and at a relatively low cost by extending existing flights.

4. In conclusion, United again urges the Department to consolidate the three competing applications for a contemporaneous investigation. United objects to the immediate grant of Continental's application on the current record but urges the Department to grant United's application if it decides that further procedures are unnecessary. Only United among the three applicants has submitted sufficient evidence to support the immediate grant of its application.

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: May 5, 1997

L/ American's third daily U.S.-Chile frequency will be available on a year-round basis effective June 15, 1997.