Applications of

AMERICAN AIRLINES, INC. OST-97-1988

AERO CALIFORNIA S.A. DE C.V. OST-97-2477

UNITED AIRLINES, INC. OST-97-2481

COMPANIA MEXICANA DE AVIACION,S.A. DE C.V. OST-97-2161

DELTA AIRLINES, INC. and Undocketed

for exemptions, designations and statements

of authorization: (U. S. -Mexico Code-sharing)  

Northwest Airlines, Inc. ("Northwest") hereby submits this Consolidated Reply to the Joint Answer of United Air Lines, Inc. and Compania Mexicana de Aviacion, S.A. de C.V. ("United/Mexicana") filed on August 25, 1997 and the Comments of American Airlines, Inc. and Aero California S.A. de C.V. (American/Aero California) dated August 14, 1997 in the above-captioned proceedings." In their pleadings, United/Mexicana and American/Aero California urge the Department to reconsider its decision in Order 97-7-31 to defer action on these carriers 1/ respective code  

1/ To the extent required, Northwest hereby respectfully requests leave to file this Consolidated Reply. While Northwest is not involved in the above-captioned proceedings (and therefore did not submit comments responding to Order 97-7-31), the action urged in comments submitted by United/Mexicana and American/Aero Mexico would negatively impact the interests of Northwest. It would be contrary to the public interest for the Department not to consider Northwest's views on the subject as well.

share applications in markets in which designation by the Mexican Government and exemption authority from the Department have not been secured. United/Mexicana and American/Aero California urge the Department to grant their applications even though required designations and economic authority are lacking in order to "signal" to the Mexican Government that the Department favors the expansion of U.S.-Mexico service options through code-share arrangements. Northwest opposes the relief sought by United/Mexicana and American/Aero California.

The United States and Mexico have been engaged in ongoing discussions regarding code-sharing. During those discussions, U.S. negotiators have communicated clearly to Mexico that the U.S. is interested in adding liberal code-share rights to the U.S.-Mexico bilateral. It in the Government of Mexico which is not prepared to exchange liberal code-share rights, as evidenced by Mexico's refusal to authorize Northwest/Alaska Airlines codeshare operations for more than six months at a time.

Mexicana and Aero California should be urging the Mexican Government to signal its willingness to permit unrestricted codesharing, not the Department. One way the Mexican Government could send an immediate and clear signal to the U.S. is by renewing Northwest's and Alaska's code-share authority for at least one year. So long as the Mexican Government refuses to grant Northwest/Alaska long term code-share authority, however, the Department should continue to be cautious in granting additional code-share rights to Mexican carriers.

2

The Department should not authorize code-share operations involving Mexican carriers until all requisite designations and underlying economic authority have been secured. The Department also should continue to limit to 179 days all authorizations of code-share operations involving Mexican carriers. See Order 977-31 (granting United/Mexicana and American/Aero California authority to code-share in certain markets but limiting the effective periods to 179 days); Notice of Action Taken dated September 3, 1997 "limiting to 179 days Aeromexico's authority to code-share with Swissair).

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

September 4, 1997