OST-97-2679 / Northwest / July 2, 1997

 

NOTICE: Interested persons may support or oppose this application by filing an answer and serving a copy thereof upon Northwest Airlines and all persons served with this application no later than July 17, 1997. However, Northwest intends to poll the parties on the attached service list to enable the Department to act upon this application prior to July 17, 1997.

 

Application of

NORTHWEST AIRLINES, INC.

for an exemption pursuant to 49 U.S.C. § 40109 (U.S.-East Midlands, England)

 

APPLICATION OF NORTHWEST AIRLINES, INC.

FOR AN EXEMPTION

 

Pursuant to 49 U.S.C. § 40109 and Subpart D of the Department's Rules of Practice (14 CFR § 302.400 et seq.), Northwest Airlines, Inc. ("Northwest") hereby applies for an exemption from 49 U.S.C. S 41101 authorizing Northwest to provide scheduled service between the United States and East Midlands, England, via Amsterdam, the Netherlands, pursuant to a code-share arrangement with Air U.K Limited ("Air U.K.")./1 Northwest and Air U.K. intend to commence the proposed code-sharing covered by this application on September 8, 1997. Northwest, therefore, respectfully requests that the Department grant Northwest exemption authority on an expedited basis to enable Northwest to engage in necessary advance sales and marketing activities.

 

1/ Air U.K. today is filing an application for an amended exemption and statement of authorization to permit Air U.K. to display Northwest's two letter designator code on Air U.K.'s Amsterdam-East Midlands flights.

 

 

In support of this application, Northwest states as follows:

 

1. Northwest seeks an exemption from 49 U.S.C. § 41101 authorizing Northwest to provide scheduled foreign air transportation of persons, property and mail between the United States and East Midlands, England, via Amsterdam, the Netherlands, pursuant to a code-share arrangement with Air U.K. Northwest intends to provide this service by displaying its two letter designator code on Air U.K.'s Amsterdam-East Midlands flights. Northwest does not intend to hold out service in the local Amsterdam-East Midlands market, but rather will sell transportation between points in the United States and East Midlands, England only.

 

2. Northwest and Air U.K. began code-sharing in October 1994 when Northwest discontinued its nonstop service between Boston and Glasgow. See Order 95-2-47. Northwest's code-share arrangement with Air U.K. enabled Northwest to maintain a competitive presence in the Boston-Glasgow market. Subsequently, the Department granted Northwest and Air U.K. the requisite authority to expand their code-share arrangement as follows:

 

(a) By Notice of Action Taken dated August 4, 1995, effective through August 4, 1997 (Docket OST-95-325), the Department granted Northwest exemption authority to provide code- share service in conjunction with Air U.K. between: (1) points in the United States, on the one hand, and Edinburgh and Glasgow, via London (Gatwick), on the other, and (2) between points in the United States, on the one hand, and Aberdeen, Belfast, Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Humberside, Leeds/Bradford, London (Stansted), Manchester, Newcastle, Norwich, Southampton and Teeside, via Amsterdam.

 

(b) By Notice of Action Taken dated August 15, 1996, effective through July 24, 1998 (Docket OST-96-1603), the Department granted Northwest exemption authority to provide code-share service in conjunction with Air U.K. between: (1) points in the United States and London City Airport, via Amsterdam.

 

(c) By Notice of Action Taken dated March 24, 1997 effective through July 24, 1998 (Docket OST-96-1603), the Department amended Northwest's exemption to add Inverness, Scotland as a terminal point under Northwest's existing authority to provide U.S.-London City Airport code-share service, via Amsterdam, in conjunction with Air U.K.

 

3. By this application, Northwest seeks further exemption authority to enable Northwest to code-share on Air U.K's flights between Amsterdam, the Netherlands, and East Midlands, England. /2

 

4. The proposed Service is permitted by and fully consistent with the U.S.-U.K. Air Transport Agreement, as amended by the Memorandum of Consultations ("MOC"), dated June 5, 1995. Under the terms of the MOC, U.S. designated airlines may offer service between any point or points in the U.S. to any point or points in the U.K., excluding London's Heathrow and Gatwick airports. (MOC Enclosure 1, U.S. Route 1A). Under Section 5, paragraphs 1, 2 and 4 of Annex l to the Agreement, U.S. airlines may carry transit and online connecting U.S.-U.K. traffic via

 

2/ On June 4, 1997, Northwest filed an application for consolidation and renewal of all of its existing exemption authorities relating to Northwest's code-share operations with Air U.K. (Dockets OST-96-1603 and OST-95-325). The Department has not yet acted upon Northwest's June 4 application. Northwest has filed this application as a stand-alone exemption application because Northwest did not want to delay authorization of its new U.S.-East Midlands code-share service until the Department acts upon Northwest's June 4 consolidation and renewal application.

 

 

third countries, as well as carry transit and online connecting traffic between two authorized U.K. points. /3

 

Moreover, Annex 1, Section 5, Paragraph 10 of the Agreement, as amended on June 5, provides as follows:

 

United States and United Kingdom designated airlines may enter into commercial arrangements with any other airline whereby services under this Agreement on any route or sector of a route may carry the airline designator code of the US or UK designated airline, in addition to that of the carrier operating the flight, and may be held out by the US or UK airline as though those services were its own, provided that the US or UK designated airline has authority to exercise traffic rights (whether under this Agreement or otherwise) over the whole of the route and the other airline has authority to exercise traffic rights (under this Agreement or otherwise) over the sector or sectors it operates. The proposed Northwest-Air U.K. code-share service fully complies with this provision.

 

5. The proposed Northwest-Air U.K. code-share service also is fully consistent with the public interest. Because Northwest serves a number of U.S.-Amsterdam nonstop markets and provides connecting service to many interior U.S. points, the Northwest-Air U.K. code-share service proposed herein will allow Northwest to offer a broad array of online connecting service between points in the U.S. and East Midlands, England, via Amsterdam.

 

3 The MOC further provides that U.S. airlines otherwise authorized to serve London's Gatwick airport may now carry transit and online connecting traffic between Gatwick and any point or points in the U.K. (excluding London (Heathrow)). (MOC Enclosure 1, n. 2). Grant of this application therefore will expand greatly the service options between the U.S. and the U.K. available to the public.

 

6. Northwest and Air U.K. will conduct their code-share operations in accordance with the Department's regulations, including the requirements contained in 14 C.F.R. §399.88. As required by the Department, Northwest and Air U.K. will ensure that the foreign air transportation in question will be sold by the carrier holding out the service and that the carrier selling the transportation will accept all obligations established in its contract of carriage with the passenger for the entire through service. In addition, Northwest will not permit its code to be carried on any flight that enters, departs, or transits the airspace of any area for whose airspace the Federal Aviation Administration has issued a flight prohibition.

 

7. Northwest requests that the amended authority be issued on an expedited basis to allow advance preparations for the scheduled commencement of code-sharing on September 8, 1997. Northwest asks that the Department grant Northwest's exemption no later than July 17, 1997.

 

8. Northwest further requests that the authority be made effective for a two-year period to avoid unnecessary submission and review of non-controversial requests for authority. Northwest's request for a renewal for two years is consistent with the HOC, which adds to the Agreement a new paragraph 13 of Section 5 of Annex 1 discussing U.S. approval of new applications for economic authority to permit a U.K. airline to implement code-sharing arrangements, which paragraph states that "[A]ny applications submitted in accordance with this paragraph shall be for a period of no less than two years." (MOC, p. 3).

 

9. Pursuant to the Department's letter to CRAF participants dated June 1, 1995, Northwest hereby states that this application will have no impact on Northwest's CRAF commitments.

 

WHEREFORE, Northwest Airlines, Inc. requests that the Department exempt it from 49 U.S.C. § 41101 to permit Northwest, in conjunction with its code-share arrangement with Air U.K., to engage in the transportation of persons, property and mail between the United States and East Midlands, England, via Amsterdam. Northwest requests that the exemption be granted on an expedited basis to enable the carriers to engage in necessary advance sales and marketing activities in preparation for the planned commencement of code-sharing on the route on September 8, 1997. Northwest intends to conduct a polling of all carriers listed on the attached service list regarding this application and promptly will notify the Department of the results of that poll.

 

Respectfully submitted,

 

 

Megan Rae Poldy

Associate General Counsel NORTHWEST AIRLINES, INC.

901 15th Street, N.W.

Suite 310

Washington, D.C. 20005

(202) 842-3193

Dated: July 2, 1997