OST-96-1988 and Undocketed / United and Mexicana / August 15, 1997

 

Joint Application of

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

for exemptions pursuant to 49 U.S.C. §40109 and statements of authorization pursuant to 14 CFR §§207.10 and 212.4 (U.S.-Mexico Code Sharing)

 

DATED: August 15, 1997

 

JOINT MOTION OF UNITED AIR LINES, INC. AND

COMPANIA MEXICANA DE AVIACION, S.A. DE C.V.

FOR IMMEDIATE ACTION

 

United Air Lines, Inc. ("United") and Compania Mexicana De Aviacion, S.A. de C.V. ("Mexicana") hereby request the Department immediately to grant that deferred portion of their abovecaptioned joint application to the extent necessary to authorize United to offer code-share services on Mexicana's flight between Miami, Florida and Cancun, Mexico. United and Mexicana request that their respective authorizations be granted on a temporary basis pending agreement between the U.S. and Mexico to allow all authorized carriers to code share notwithstanding limits on designations or, absent such an agreement, completion of any carrier selection proceedings that may be needed to resolve longer term authorization issues with respect to designations for the Miami-Cancun city pair. In support of their request, United and Mexicana submit the following:

 

Joint Motion of United and Compania

Page 2

 

1. By Order 97-7-31, the Department confirmed its earlier action approving code sharing by United and Mexicana in various U.S.-Mexico and third country city pair markets. In so doing, the Department deferred action on the United/Mexicana joint application with respect to certain city pairs. Such deferral was based in some cases on pendency of an effective designation of Mexicana by the government of Mexico and in others on the proposed code-share services resulting in U.S. carrier designations in excess of those agreed under the U.S./Mexico bilateral, taking into account other pending applications for code-share authority.

 

2. The Miami-Cancun city pair is among those which the Department deferred. Miami-Cancun is already an agreed double designation city pair. /1 There is only one U.S. carrier (American Airlines, Inc.) currently designated and operating in that city pair.' There are two pending applications for the one available U.S. carrier designation in the Miami-Cancun city pair. In addition to the instant United/Mexicana application, Delta is seeking authority to code share between Miami and Cancun with Aeromexico (Application in Docket OST-97-2161). Both the United/Mexicana and Delta/Aeromexico applications have been

 

1/ Prestige Airlines, Inc., was granted exemption authority to serve the Miami-Cancun market. Order 97-3-35 (March 24, 1997). That carrier's authority became dormant, however, after 90 days passed without its having commenced services.

 

 

Joint Motion of United and Compania

Page 3

 

deferred pending a response by the government of Mexico to a U.S. government note requesting designation of both United and Delta for code-share service on the Miami-Cancun route as well as other U.S.-Mexico city pairs.

 

3. United and Mexicana urge the Department to grant their joint application for exemption authority and a statement of authorization on a temporary, Andante lite basis in order to assure maximum utilization of available but unused bilateral opportunities pending agreement by the two governments to eliminate the limit on designations or expand the number of designations available for code sharing or the completion of carrier selection procedures, whichever occurs first. United will be able to offer double daily code-share services between Miami and Cancun on Mexicana's existing schedules. The Delta/Aeromexico service in this city pair is, on the other hand, limited to a single daily roundtrip . 2/

 

A temporary award of the route to United for its codeshare services will produce immediate public benefits in excess of those which could be offered by the Delta/Aeromexico code share. In addition to offering more frequencies in the local Miami-Cancun market, United operates a connecting complex at the Miami gateway with nonstop service to 16 points in the U.S. and

 

2/ OAG, September 1997.

 

 

Joint Motion of United and Compania

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abroad. 3/ Delta, on the other hand, operates nonstop service to Miami from only three points.4/ United can use the code share flights to improve connecting opportunities to Cancun by feeding traffic from its other Miami services. Delta, on the other hand, serves Miami largely as a spoke from its hubs. Moreover, Delta itself already offers code-share service to Cancun from its largest hub, Atlanta, and does not need Miami-Cancun code-share services to improve connections to Cancun in the same way as United.

 

4. The Department can make a pendente lite award to United and Mexicana without prejudice to any final decision in a carrier selection proceeding should one be necessary. United does not need to establish a station at Cancun in order to offer codeshare services to that point. Indeed, United is already authorized to offer, and is offering code-share services to Cancun from Los Angeles on Mexicana's nonstop LAX-CUN services. Mexicana is already operating the two daily MIA-CUN nonstop flights on which United plans to code share. Consistent with the Department's policy regarding pendente lite authorizations, neither United nor Mexicana would be required to make any

 

3/ UNITED SYSTEM TIMETABLE, August 1997.

 

4/ OAG, September 1997.

 

 

Joint Motion of United and Compania

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irretrievable capital expenditure in order to operate code-share services under the temporary authority they request.

 

5. United and Mexicana do not oppose the grant of the Delta/Aeromexico code share. It would be preferable to allow all code shares to operate, notwithstanding limits on designations for direct services. However, until there is an agreement to allow unlimited code sharing, the U.S. should authorize codesharing to the fullest extent consistent with existing designation limits in order to assure maximum utilization of existing bilateral opportunities. A temporary grant of the joint United/Mexicana application to allow United to code share on Mexicana's flights between Miami and Cancun will assure the utilization of a valuable bilateral opportunity while at the same time maximizing public benefits by allowing a second U.S. carrier to compete on this important city-pair route. The United/Mexicana double-daily code-share schedule is the best utilization of this opportunity in terms of the public benefits it will produce.

 

WHEREFORE, on the basis of the foregoing, United and Mexicana urge the Department to grant their respective applications in this proceeding for an exemption and statement of authorization to enable United to display its designator code on Mexicana's services between Miami, Florida and Cancun, Mexico. United and Mexicana request that this authority be Granted on a

 

Joint Motion of United and Compania

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temporary basis pending the outcome of any government-to-government resolution of the designation issues or carrier selection proceeding that may be needed to award the authority on a longer term basis. United and Mexicana also request the Department to grant them such other and different relief as it finds to be consistent with the public interest and this application.

 

Respectfully submitted,

 

ROBERT D. PAPKIN

SQUIRE SANDERS & DEMPSEY, L.L.P.

FOR MEXICANA

 

JOEL BURTON

GINSBURG, FELDMAN and BRESS,

FOR UNITED

DATED: August 15, 1997