OST-97-2230 / OST-97-2442 / OST-97-2557 / OST-95-277 / Frontier, ValuJet, AirTran, Western Pacific / July 23, 1997

Application of

for an exemption from 14 C.F.R. Part 93, Subpart K and S. pursuant to Section 206(c)(1) of the Federal Aviation Administration Authorization Act of 1994

Application of

for an exemption from 14 C.F.R. Part 93, Subpart K and S. pursuant to Section 206(c)(1) of the Federal Aviation Administration Authorization Act of 1994

Application of

for an exemption from 14 C.F.R. Part 93, Subpart K and S. pursuant to Section 206(c)(1) of the Federal Aviation Administration Authorization Act of 1994

Application of

for an exemption from 14 C.F.R. Part 93, Subpart K and S. pursuant to Section 206(c)(1) of the Federal Aviation Administration Authorization Act of 1994

Reply of Delta Air Lines, Inc.

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America ("ACAA"). ACAA's pleading should be rejected out-of-hand because it does not contribute in any substantive way to the issues before the Department in the captioned proceedings. However, in the event ACAA's Answer is accepted, Delta's Reply is necessary to promote a more complete and balanced record and to correct and place in proper context ACAA's largely irrelevant diatribe.

Delta replies as follows to the Answer of ACAA:

1. The pending applications of Frontier, ValuJet, Air Tran, and Western Pacific (the "Applicant Carriers") seek the creation of new slots to allow the applicants to provide service at high density airports under the "new entrant" provisions of 49 U.S.C. § 41714(c). These applications present the Department with the fundamental question of whether a major relaxation of the "exceptional circumstances" requirement, which the grant of these applications would require, is in the public interest.

2. ACAA's filing is largely an attack on the validity of the high-density and buy-sell rules, and ignores the fact that 49 U.S.C. § 41714(c) allows the grant of an exemption for qualified new entrants only if the applicants demonstrate "exceptional circumstances." As previously noted by Delta and other participants in the captioned dockets, the high density rule has been

Reply of Delta Air Lines, Inc.

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examined on numerous occasions by the Department and in each instance it was determined that the rule should not be disturbed. While the Department has the authority to decide the mechanism by which slots are allocated, a major revision of the high density rule and slot allocation procedures would require formal rulemaking procedures and is clearly beyond the scope of the instant applications.

3. ACAA's attempt to establish alleged inconsistencies in the positions of Delta and other carriers by taking selective quotes out of context is misguided and irrelevant. ACAA fails to comprehend the fundamental factual, policy and legal differences between the captioned applications and the issues presented in the AA-BA alliance, which render any comparisons meaningless. The proposed alliance between American Airlines and British Airways ("AA/BA") involves the effective merger of the two carriers and raises a host of complex antitrust and international regulatory issues that are inapposite as a matter of law or policy to the issues raised by new entrant slot exemption applications. The proposed AA/BA mega-alliance would involve a combination of two of the world's largest and most powerful carriers which together dominate the U.S.-London market. Moreover, AA/BA has applied for immunity from U.S. antitrust laws to enable AA/BA to fix prices, allocate markets, slots and facilities

Reply of Delta Air Lines, Inc.

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and pool revenues. Under the existing U.S.-U.K. bilateral all but two U.S. carriers are prohibited from serving London Heathrow Airport and, unlike the high-density airports, there is no buy-sell mechanism or any other means for excluded carriers such as Delta to gain access to that airport. ACAA's attempt to analogize the AA/BA situation to the new entrant slot exemption proceedings is sophomoric and misinformed and adds nothing to the record to assist the Department's decisonmaking on the issues presented by the captioned applications.

Respectfully submitted,

Robert E. Cohn

Alexander Van der Bellen

SHAW,PITTMAN,POTTS & TROWBRIDGE

2300 N Street, N.W.

Washington, D.C. 20037

(202) 663-8060

Counsel for DELTA AIR LINES, INC.