OST-97-2823 / Undocketed / American Airlines, Inc. / China Airlines / US-Ho Chi Minh / Reply of American and China Airlines / September 4, 1997
Application of
AMERICAN AIRLINES, INC.
under 49 U.S.C. § 40109 for an exemption (U.S.-Ho Chi Minh City via Taipei) (property and mail code-sharing with China Airlines, Ltd.)
Application of
CHINA AIRLINES, LTD.
for an amendment of a Statement of Authorization pursuant to 14 C.F.R. Part 212
JOINT CONSOLIDATED REPLY OF
AMERICAN AIRLINES, INC., AND CHINA AIRLINES, LTD.
AND MOTION FOR LEAVE TO FILE
On
August 15, 1997, American Airlines, Inc. ("American") and China Airlines, Ltd. ("CAL") filed the captioned applications to facilitate the expansion to several new city-pair markets of an existing blocked-space/code-sharing agreement between the two carriers for the carriage of property and mail. Specifically, CAL applied for an amendment of an existing Statement of Authorization (95-612) to permit the additional services, and American sought exemption authority to support the only aspect of the amended agreement for which it did not already enjoy operating rights: service (under the amended blocked
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space/code-sharing agreement with CAL) from points in the U.S., via Taipei, to Ho Chi Minh City.
Consolidated answers to the two applications were filed by Federal Express Corporation (
August 25, 1997), United Air Lines, Inc. (August 26, 1997), and Northwest Airlines, Inc. (August 29, 1997). The three answers address only one aspect of the amended blocked-space/code-sharing agreement between American and CAL -- the proposed provision of code-shared service via Taipei to Ho Chi Minh City -- and all make essentially the same points: (1) there is no bilateral agreement in effect between the U.S. and Vietnam; (2) other U.S. carriers aspire to serve Vietnam but cannot do so; and (3) the Department should not grant the exemption authority American now seeks unless it is prepared to grant comparable authority to other carriers at the same time.
The three answers raise no objection to any other element of the expanded blocked-space/code-sharing agreement between American and CAL.
American and CAL hereby file this brief reply to the answers of Federal Express, United, and Northwest. 1/
1/ To the extent that the answers address American's exemption application, American is entitled to file this reply as a matter of right (see Rule 407 of the Department's Rules of Practice); CAL, not being the applicant, requires leave to file this reply pursuant to Rule 4(f). Similarly, American may require leave to file this reply to the extent that the answers address CAL's application for an amended Statement of Authorization. American and CAL hereby apply for leave to file, to the extent required. Because the two applications are so fundamentally linked, the Department has good cause for entertaining this joint and consolidated reply to all three answers, rather than requiring two separate, artificially circumscribed replies.
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American and CAL acknowledge that U.S. carriers are not currently serving Vietnam, and that the Department has moved cautiously in this regard. It is the applicants' belief, however, that in this time of transition, the introduction of a U.S. carrier's service via a blocked-space/code-sharing agreement with a foreign airline already serving Vietnam may be an ideal way of testing these largely uncharted waters.
Both United and Northwest have alliance partners who currently serve Vietnam and they therefore have the opportunity to propose their own code-shared cargo services to Ho Chi Minh City. Federal Express undoubtedly has the wherewithal to find a foreign partner with service to Vietnam and propose new entry in a similar fashion. For any of these arrangements to succeed, of course, the agreement of Vietnam -- formal or informal, tacit or explicit -- will be required. That applies to the American/CAL arrangement as well. These proposed arrangements might well become the catalyst for discussions between Vietnam, the U.S., and possibly third countries over the extent to which such codesharing may serve as a way for U.S. carriers to gain initial
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entry in this long inaccessible aviation market. In short, American and CAL urge the Department to approve their proposal in this regard, and to encourage similar arrangements on the part of other U.S. carriers and code-sharing partners.
Nevertheless, even if the Department's decision is to defer or deny American's application for exemption authority to serve Ho Chi Minh City, thereby ruling out that element of the amended blocked-space/code-sharing agreement, there should be no further delay in authorizing all other elements of the agreement proposed in CAL's application for an amended Statement of Authorization. No objection has been received with respect to any of those other services, and they are clearly in the public interest. For that reason, however the Department rules on the Vietnam question, American and CAL urge the Department to grant immediately CAL's unopposed application for amendment of its existing Statement of Authorization (
95-612) to permit American to block space on CAL flights operated in the following additional city-pair markets: (1) Taipei-Jakarta; (2) Taipei-Kuala Lumpur; (3) Taipei-Singapore; and (4) Miami-Taipei.
Respectfully submitted,
Carl B. Nelson,
Of American Airlines
Jeffrey Shane
Of Wilmer Cutler
For China Airlines
September 4, 1997