OST-96-1381 / OST-97-2877 / OST-95-768 / Korean Air / Asiana Airlines / Seoul-Denver / Intermodal Cargo / Answer of United / September 18, 1997

Application of

KOREAN AIR LINES CO., LTD. | Docket OST-96-1381

for an exemption from 49 U.S.C. §41301

Seoul-Denver

Applications of

KOREAN AIR LINES CO., LTD. | Docket OST-97-2877

and

ASIANA AIRLINES, INC. | OST-95-768

for an exemption from 49 U.S.C. §41301 and 14 C.F.R. Part 222 (intermodal cargo service)

DATED: September 18, 1997

CONSOLIDATED ANSWER OF UNITED AIR LINES. INC.

United Air Lines, Inc., ("United") submits the following consolidated answer to the above-captioned applications of Korean Air Lines Co., Ltd. ("KAL") and Asiana Airlines, Inc. ("Asiana"):

1. By their instant applications, KAL and Asiana seek expansion of extrabilateral authorizations issued to them by the U.S. In one case, KAL seeks amendment of its authority to serve Denver, a point not named for Korean carriers in the U.S./Korea bilateral air services agreement. Essentially, KAL seeks flexibility to serve Denver via an additional U.S. gateway -- San Francisco. The other applications request a similar expansion of KAL's and Asiana's flexibility to offer intermodal cargo services

Consolidated Answer of United

Page 2

by adding new U.S. cities to their extrabilateral intermodal cargo authority.

2. The U.S. and Korea are working toward the negotiation of an open skies agreement. The expanded extrabilateral authority sought by Korean carriers in the instant applications would be available to those carriers as a matter of right under an open skies bilateral agreement. It would be a serious mistake for the U.S. to issue additional extrabilateral rights to Korean carriers while these negotiations are pending. Further expansion of Korean carrier authorizations by unilateral discretionary grants calls into question what a country such as Korea would have to gain by entering into an open skies agreement. If the U.S. is prepared to make unlimited and ever expanding grants of valuable economic rights on an extrabilateral basis, it can hardly expect its trading partners, such as Korea, to enter into bilateral agreements which require a reciprocal expansion of rights.

Indeed, it is United's understanding that the primary reason the Koreans broke off talks with the U.S. on open skies is their belief that their carriers already had all the U.S. authority they needed. If the Department were to act favorably on the instant applications, such action would merely re-enforce the Korean belief that Korea has little to gain from an open skies agreement when the U.S. will give their carriers whatever they want whenever they want it. On the other hand, United

Consolidated Answer of United

Page 3

believes it extremely unlikely that the government of Korea would act in a similar fashion to grant a U.S. carrier extrabilateral authority, for example, to implement a code share to, from or via Korea with a third-country carrier. /1

3. Given the movement of the U.S. and Korea toward an open skies agreement, the U.S. should defer action on KAL's and Asiana's instant applications. In so doing, the U.S. should, however, inform the Koreans that it would be prepared to grant such authority immediately once an open skies agreement has been concluded.

Respectfully submitted,

JOEL STEPHEN BURTON

GINSBURG, FELDMAN and BRESS, CHARTERED

1250 Connecticut Avenue, N.W.

Suite 800

Washington, D.C. 20036

(202) 637-9130

Counsel for UNITED AIR LINES, INC.

DATED: September 18, 1997

1/ Indeed, there are also unresolved issues relating to U.S. carriers doing business in Korea, including arrangements at the new airport being built at Inchon. These problems will also need to be addressed in the ongoing U.S./Korea negotiations and the unilateral grant by the Department of additional discretionary rights to Korean carriers is not helpful in reaching a favorable resolution of these issues.