Application of

AIR NEW ZEALAND LIMITED OST-97-2847

for exemption authority from 49 USC

41301 (additional points for code-sharing

with United Air Lines, Inc.)

Application of

UNITED AIR LINES, INC. Undocketed

for a statement of authorization under 14 CFR Part 207

(code-sharing with Air New : Zealand Limited)

Application of

AIR NEW ZEALAND LIMITED Undocketed

for a statement of authorization under

14 CFR Part 212 (code-sharing with United

Air Lines, Inc.)

American Airlines, Inc. hereby answers in opposition to the captioned applications by United Air Lines, Inc. and Air New Zealand for statements of authorization and related exemption authority to engage in various reciprocal code

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sharing services. To the extent required, American requests leave to file this consolidated answer. 1/

In May of 1997, United announced the formation of the Star Alliance, a global combination that presently includes United, Lufthansa, SAS, Air Canada, and Thai (Varig is scheduled to join later in 1997). Based on reports in the press, and the recent expansion of cooperative arrangements between Air New Zealand and Star Alliance members, it is apparent that United is also considering the addition of Air New Zealand to the Star Alliance. Prior to the processing of the captioned applications, the Department should require United and Air New Zealand to discuss the status of Air New Zealand with respect to the Star Alliance, and to produce all documents that address the potential further expansion of the Star Alliance to include Air New Zealand.

1/ American's answer to United's undocketed application of August 25, 1997 is timely under 14 CFR 207.10(e), since the answer is being submitted within seven business days. American's answer to Air New Zealand's application of August 22, 1997 in OST-97-2847 is timely under 14 CFR 302.406, since the answer is being submitted within 15 days. American's answer to Air New Zealand's undocketed application of August 21, 1997 is technically late under 14 CFR 207.10(e). However, since that request is closely related to Air New Zealand's application in OST-97-2847, a consolidated answer is clearly warranted, and it is a matter of common practice in such situations for parties to file a single pleading on the latter of the two dates. Accordingly, to the extent required, American requests leave to file.

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The Department should require such evidence and documents in the interest of even-handed procedures in proceedings involving arrangements between U.S. and foreign carriers. At the insistence of United and its confederates, the Department has subjected American to unprecedented and burdensome demands for information regarding the proposed American/British Airways alliance.

What is the principled basis for permitting the proposed arrangement between United and Air New Zealand -which is clearly a potential Star Alliance partner -- without demanding that United and Air New Zealand produce information and documents of the kind and quantity that American and British Airways have been compelled to produce?

The Department should not approve, expand, or renew any of United's services that entail cooperation with Star Alliance partners or potential partners, including Air New Zealand, until the Department has had the opportunity to review fully the likely competitive effects of the Star Alliance, following comments from interested parties based on documents and other evidence that United and Air New Zealand should be required to submit.

In its filings in the AA/BA docket and in other proceedings involving American and its codeshare partners, United has recklessly charged that the Department should be 

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concerned with American's alleged plans for global domination. The attached data from the September 1997 issue of Airline Business, however, confirms that the Department should be targeting its efforts at United, rather than American. By nearly every measure, the combine of airlines that United has forged into the Star Alliance is larger than the AA/BA alliance would be, even including American's proposed and pending arrangements with additional carriers. As Airline Business states, "[t]his table reveals the truth behind the groups which seek to dominate the airline industry. The Star Alliance is well on the way to being the largest airline group." Of course, if the figures for Air New Zealand are included in the attached chart, the lead of United's league of airlines over other alliances is expanded even further.

United's goal appears to be exploiting DOT procedures to delay American's applications while United lengthens its lead in creating its own partnerships throughout the world. The Department should not aid United in achieving such a goal. The authorizations at issue here should be denied.

Respectfully submitted,

CARL B. NELSON, JR.
Associate General Counsel
American Airlines, Inc.
September 4, 1997