OST-97-2913 / Delta / Certificate Authority, Atlanta-Tokyo; Portland Osaka; Portland-Fukuoka / September 17, 1997
Notice: Delta Air Lines, Inc. requests that this application be processed pursuant to Subpart Q. 14 C.F.R. § 302.1750(a)(4). Any person who wishes to support or oppose this application must file an answer by October 15, 1997, and must serve that answer on Delta Air Lines, Inc., and on all persons served with this application.
Application of
DELTA AIR LINES, INC.
under 49 U.S.C. §§ 41102 and 41108 for a Certificate of Public Convenience and Necessity (Atlanta-Tokyo; Portland-Osaka; Portland-Fukuoka)
APPLICATION OF DELTA AIR LINES, INC.
FOR A CERTIFICATE OF
PUBLIC CONVENIENCE AND NECESSITY
Delta Air Lines, Inc. ("Delta"), pursuant to 49 U.S.C. §§ 41102 and 41108, Part 201 of the Department of Transportation ("Department" or "DOT") Economic Regulations, and Subpart Q of the Department's Procedural Regulations, hereby applies for a Certificate of Public Convenience and Necessity authorizing Delta to engage in scheduled foreign air transportation of persons, property and mail between the following terminal points: (1) Atlanta, Georgia and Tokyo, Japan; (2) Portland, Oregon and Osaka, Japan; and (3) Portland, Oregon and Fukuoka, Japan.
Application of Delta Air Lines, Inc.
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Delta further requests route integration authority to permit Delta to combine services that will be operated pursuant to the grant of this application with all other Delta services authorized by existing certificates and exemptions granted by the Department, to the extent permitted by applicable international agreements.
The expansion of route opportunities for U.S. carriers to serve Japan - -the principal gateway to Asia and the largest and most important transpacific destination - - under a revised air transport agreement would provide significant trade and economic benefits to the United States. It would materially expand service options for the traveling and shipping public, substantially increase competition, and improve trade opportunities between the United States and Japan. Delta and other U.S. carriers are poised to implement new services to Japan as soon as bilateral rights become available.
Delta has had a longstanding interest in expanding its relatively limited service between the United States and Japan. As an "MOW" carrier, however, Delta has been restricted by the bilateral agreement to serving only three U.S.Japan routes with only 20 weekly nonstop frequencies. While Delta's current U.S.-Japan services provide substantial consumer benefits, the restrictive bilateral agreement has prevented Delta from increasing service to meet the
Application of Delta Air Lines, Inc.
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significant and growing market demand and has artificially foreclosed Delta from providing additional network competition for U.S.-Japan services. For example, the current bilateral restrictions preclude Delta from providing nonstop service to Japan from Atlanta, Delta's largest hub. In fact, Delta is the largest network carrier that does not have the ability to provide nonstop service from its major hub. Similarly, Delta has no rights to serve Osaka, Japan's second largest gateway.
The United States and Japan will resume bilateral negotiations on September 22, 1997. Delta is hopeful that the two governments will shortly reach an agreement that will authorize Delta and other "MOW" carriers to provide new nonstop services between cities in the United States and Tokyo, Osaka and regional cities in Japan, such as Fukuoka.
In preparation for the upcoming negotiations, Delta is filing this application to apprise the Department of its immediate route requirements for service to Japan. Subject to the successful conclusion of bilateral negotiations resulting in additional U.S.-Japan route opportunities for U.S. carriers, Delta requests certificate authority to provide daily nonstop service on the following U.S.-Japan routes: (1) Atlanta-Tokyo; (2) Portland-Osaka; and (3) Portland-Fukuoka.
Application of Delta Air Lines, Inc.
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Delta requests that the Department issue a new or amended certificate authorizing Delta to provide service on these routes as soon as possible after the conclusion of a new U.S.-Japan bilateral agreement. Expedited consideration of this application is necessary to enable Delta to move forward with plans to expand U.S.-Japan services in a timely fashion. Delta further requests that its new U.S.-Japan certificate authority be granted for a term of at least five years.
In further support of this application, Delta submits the following:
1. Applicant. Delta is a corporation organized and existing under the laws of the State of Delaware. Delta's general offices are located at 1030 Delta Boulevard, Hartsfield Atlanta International Airport, Atlanta, Georgia 303206001.
2. U.S. Citizen. Delta is a citizen of the United States, as defined by 49 U.S.C. § 40102(a)(15)(C). Delta has determined by reasonable investigation that its President and more than two-thirds of its directors and managing officers are citizens of the United States, and that at least seventy-five percent (75%) of its voting interest is owned and controlled by persons who are citizens of the United States. Delta is prepared to furnish such evidence, by affidavit or otherwise, as the Department may require, to establish the facts set forth above.
Application of Delta Air Lines, Inc.
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3. Fitness. Delta holds various certificates of public convenience and necessity and exemption authority permitting it to engage in domestic and international scheduled air transportation of persons, property and mail, including certificate authority allowing Delta to provide service between the United States and Japan. See Orders 96-5-9 and 97-3-24. Delta is currently performing scheduled foreign air transportation of the same type, character and scope as proposed, and is fit, willing and able to perform all of its existing services as well as those applied for herein. Delta requests that the Department take official notice, pursuant to Rule 24 of the Department's Rules of Practice, of all data on file with the Department necessary to establish Delta's fitness.
4. Bilateral Authority. Delta is currently authorized to provide service between the United States and Japan pursuant to the 1985 and 1989 Memoranda of Understanding approving interim measures to increase air service between the two countries. Under the 1985 and 1989 MOUs, Delta's service to Japan is limited to only three routes. Delta anticipates that a revised U.S.-Japan bilateral agreement will soon be reached that would permit multiple new routes and frequencies to be implemented by Delta and other "MOW" carriers.
5. Service Proposal. Delta proposes to operate its Atlanta-Tokyo, Portland-Osaka (Kansai) and Portland-Fukuoka services pursuant to a revised
Application of Delta Air Lines, Inc.
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U.S.-Japan bilateral agreement. Delta would operate its new services in conformance with any applicable provisions contained in the agreement. Delta will commence service with a daily nonstop flight on each route. Illustrative data for each proposal, including a route map, Delta's proposed schedule, and projected operating statistics, are set forth in the attached exhibits. Delta reserves the right to alter its schedules and frequencies as market conditions warrant, consistent with applicable bilateral restrictions.
6. Aircraft. Delta plans to operate its new U.S.-Japan services using McDonnell Douglas MD-11 or other suitable aircraft as Delta may determine to be appropriate and consistent with market conditions at any given time. Delta presently owns or operates a substantial fleet of aircraft consisting of the following: Boeing 727, 737, 757, 767 aircraft; McDonnel Douglas MD-11, MD-88 and MD-90 aircraft; and Lockheed L-1011 aircraft. Delta has additional aircraft of various types on order, and has options for the Boeing 777.
7. Fuel. Delta's estimated fuel consumption data for its AtlantaTokyo, Portland-Osaka and Portland-Fukuoka nonstop services is set forth in exhibits attached hereto. Delta anticipates that it will have no difficulty in obtaining adequate supplies of fuel for each of the proposed nonstop services.
Application of Delta Air Lines, Inc.
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8. Environmental Impact. The environmental impact of Delta's proposed services will be de minimus. To the extent that any requirement to prepare an environmental analysis may exist under the Department's Procedural Regulations, Delta hereby requests a waiver from such requirements.
Opening Argument.
9. The Public Interest Supports the Grant of Delta's Application. The grant of certificate authority to Delta for each of the proposed U.S.-Japan routes will provide substantial public benefits and be consistent with U.S. international aviation policy:
A. Atlanta-Tokyo. Delta is the largest U.S. carrier serving Japan that does not have the ability to provide nonstop service to its major hub. Atlanta, Delta's largest hub, serves the largest region of the country without nonstop service by a U.S.-flag carrier. In fact, Delta's Atlanta hub is the largest single-airline hub in the world. Delta and its Delta connection partner offer over 800 daily departures from Atlanta to 139 U.S. and international cities. Implementation of nonstop service between Atlanta and Tokyo would provide significant public benefits to the traveling and shipping public. Delta's proposed service would create a new hub-carrier gateway
Application of Delta Air Lines, Inc.
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service to Japan from one of the largest and most dynamic regions of the country and the nation's largest airline hub. Delta's new service would open vast areas of the United States to improved nonstop-to-nonstop access to Tokyo. Moreover, Delta's proposed service would inject massive intergateway network competition against the existing U.S. gateways of the "1952-carriers", that have for too long been protected from effective competition by the restrictions imposed on MOU carriers under the bilateral agreement.
Delta's Atlanta-Tokyo nonstop service will produce huge economic benefits for Atlanta and the southeast region, increasing investment and creating jobs. It has been estimated that new long-haul international air services produce economic gains to the affected community of up to $400-500 million per year. Delta's planned service between Atlanta, the geographic and economic center of the Southeast, and Tokyo, will generate extensive trade, investment and tourism between the two regions.
No other carrier-gateway combination would produce greater consumer and competitive benefits than Delta at Atlanta, due to the size of Delta's network, the scope and strength of Delta's Atlanta hub, and the economic prowess of Atlanta and the southeast region.
Application of Delta Air Lines, Inc.
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B. Portland-Osaka and Portland-Fukuoka. Since Delta began service between Portland and Tokyo in 1986, Delta has successfully established Portland as a major west-coast gateway for service to Asia. Delta currently operates daily nonstop service between Portland, on the one hand, and Tokyo, Nagoya, and Seoul, on the other hand. Osaka is Japan's second largest air travel center and is a critical component of Delta's desire to build its transpacific route network. Nonstop service to Osaka and Fukuoka represents an important opportunity for Delta to expand its transpacific service via its established Portland gateway, and would elevate Portland's emerging status as a premier U.S. gateway to Japan and Asia.
If the new bilateral agreement provides for unrestricted services to regional areas in Japan, Delta would also implement nonstop service between Portland and Fukuoka. The success of Delta's Portland-Nagoya service demonstrates Delta's ability to successfully implement nonstop service between Portland and regional cities in Japan.
With the addition of Osaka and Fukuoka, Portland would become the only U.S. mainland city with nonstop service to four cities in Japan.
Application of Delta Air Lines, Inc.
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Delta's proposed Portland-Osaka and Portland-Fukuoka services would also expand U.S.-Japan service alternatives from the West Coast, and thereby inject strong intergateway competition with services to Japan and Asia that are currently available via other west coast gateways, such as Seattle, San Francisco and Los Angeles. Furthermore, adding nonstop service between Portland and two additional new destinations in Japan will strengthen Portland's already established trade links with Japan, particularly in the areas of high technology and tourism, expanding on economic ties that have already been bolstered as a result of Delta's implementation of and commitment to its service over the Portland-Tokyo and Portland-Nagoya nonstop routes.
C. Delta's Service Record. Delta has offered Portland-Tokyo service since 1986, and Portland-Nagoya and Los Angeles-Tokyo service since 1991. Delta's fulfillment of its commitment to develop Portland as an important competitive gateway and the success of Delta's Portland-Japan services, demonstrates Delta's ability to develop and sustain new U.S.-Japan routes that create convenient services in local markets and add intergateway competition with existing services. The traveling and shipping public will enjoy similar benefits as a result of Delta's successful implementation and development of Atlanta-Tokyo, Portland-Osaka and Portland-Fukuoka nonstop services.
Application of Delta Air Lines, Inc.
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10. Route Integration. Delta requests that its certificate include a condition authorizing route integration, in order to permit Delta to integrate its new U.S.-Japan route authority with all of Delta's existing certificate and exemption authority to the extent permitted by applicable international agreements. The grant of route integration authority is consistent with the Department's policy of providing U.S. carriers with maximum operating flexibility with respect to their authorized foreign air transportation services. In this instance, route integration authority will provide Delta with added freedom to integrate, expand and develop its transpacific route network.
11. Conclusion. Prompt consummation of a revised bilateral agreement between the United States and Japan allowing expanded U.S. carrier access to Japan would provide significant trade and economic benefits to the United States. It would allow Delta and other "MOW" carriers to implement long awaited new services to meet the growing market demand. Delta reiterates its strong hope that the ongoing U.S.-Japan bilateral negotiations produce an agreement that facilitates, without delay, the approval of this and other applications for new U.S.-Japan authority. The Department's prompt approval of Delta's request for Atlanta-Tokyo, Portland-Osaka and Portland-Fukuoka certificate authority would represent an important international trade
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achievement and would significantly further the objectives of the U.S. international air transportation policy. Delta is the largest U.S. airline and the largest network carrier that does not have the ability to provide nonstop service from its major hub.
Application of Delta Air Lines, Inc.
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WHEREFORE, Delta Air Lines, Inc., respectfully requests that the Department expeditiously grant this application for a Certificate of Public Convenience and Necessity authorizing Delta to provide scheduled foreign air transportation of persons, property and mail between (1) Atlanta, Georgia and Tokyo, Japan, (2) Portland, Oregon and Osaka, Japan, and (3) Portland, Oregon and Fukuoka, Japan, as more fully described herein, and grant such other or further relief as the Department deems to be consistent with the public interest.
Respectfully submitted,
Robert E. Cohn
SHAW, PITTMAN, POTTS & TROWBRIDGE
2300 N Street, N.W.
Washington, D.C. 20037
(202) 663-8060
Counsel for DELTA AIR LINES, INC
Atlanta-Tokyo Service and Operating Statistics | Portland-Fukuoka | Portland-Kansai