OST-96-1672 / Delta / Waiver from Dormancy US-Russia / September 18, 1997

 

Application of

DELTA AIR LINES, INC.

for a waiver from the dormancy requirements relating to its U.S.-Russia combination frequencies.

 

REQUEST OF DELTA AIR LINES, INC.

FOR A WAIVER

 

Delta Air Lines, Inc. ("Delta") hereby requests a waiver of the 90-day dormancy provision relating to 9.25 of the U.S.-Russia combination frequencies allocated to Delta by Orders 96-10-l and 97-7-33. /1 Delta requests that the dormancy period with respect to 5.5 of its frequencies be waived until 90 days from the date that the Government of the Russian Federation permits Delta to implement certain services to Russia pursuant to a code-share arrangement with

1/ Delta requests Department action on this waiver request by no later than September 23, 1997. Delta will poll the carriers listed on the attached service list to ensure that no carriers holding U.S.-Russia frequencies object to the merits of this request, and will advise the Department of the results as soon as possible.

 

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Austrian Airlines ("Austrian"). /2 In addition, Delta requests a waiver of the dormancy provision with respect to 3.5 frequencies that it intends to use for its Brussels-Moscow code-share operations with Sabena, which Delta plans to implement by mid-October 1997, assuming that the Russian Government

approves its request in a timely fashion. /3 Finally, Delta also seeks a waiver with respect to an additional 0.25 frequency, which will be used by Delta to commence a new, daily Moscow to Zurich code-share service with Swissair. /4

2/ Order 97-3-33 confirmed the Notice of Action Taken, dated June 25, 1997, approving Delta's request to utilize 12 frequencies for code-sharing service and allocating an additional 4.5 frequencies for code-share services. The Notice advised that the 90-day dormancy condition would begin on the date of issuance of the notice, and that if foreign government approval for these services was withheld, Delta should notify the Department, and the Department would entertain a request for a waiver. Delta hereby formally notifies the Department that its authority to implement 5.5 of its U.S.-Russia combination frequencies is being inappropriately withheld by the Russian government in violation of the U.S-Russia bilateral agreement.

3/ Although Delta anticipates starting these services by mid-October, Delta respectfully requests that the Department issue a waiver for a period of 90 days from the date that the Russian government approves the Delta-Sabena code-share operations, in order to ensure that Delta and Sabena have sufficient time to implement the new services.

4/ Delta was recently allocated an additional 1.5 frequencies by Order 97-9-12, served September 11, 1997, to enable Delta to implement a new, daily Moscow-Zurich service with Swissair, which would utilize 1.75 frequencies. Delta was unable to put the 0.25 frequency to use absent the recent allocation of the 1.5 frequencies.

 

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Thus, in total, Delta requests a waiver of the dormancy provision with respect to 9.25 frequencies. /5

 

In support of its request, Delta states the following:

1. Delta currently holds a total of 25 U.S.-Russia frequencies. Delta was initially allocated 19 U.S.-Russia combination frequencies by Order 96-10-1. The allocation was subject to the condition that the frequencies would expire and revert back to the Department for reallocation if they are not used for a period of 90 days. By letter dated May 20, 1997, Delta notified the Department of its intention to amend its usage of the 19 U.S.-Russia frequencies by converting 12 of the previously allocated frequencies to new operations pursuant to code-sharing arrangements with its Alliance partners. In the same letter, Delta requested the allocation of 4.5 additional frequencies, to enable Delta to enhance its U.S.-Russia services by operating additional code-share

5/ Delta has been allocated a total of 25 weekly frequencies. Delta is currently using 7.25 weekly frequencies pursuant to its code-share with Swissair. When it commences its new daily Moscow to Zurich service, this will increase to 9 weekly frequencies. An additional 7 weekly frequencies are used for Delta's daily JFK-Moscow round-trip service. Upon approval by the Russian government, 5.5 frequencies will be operated under the Delta-Austrian code-share, and another 3.5 frequencies will be operated under the Delta-Sabena code-share.

 

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services. /6 The Department approved Delta's request by Notice of Action Taken dated June 25, 1997 (confirmed by Order 97-7-33). The additional 4.5 frequencies were issued by the Department subject to the standard dormancy condition.

2. The Department has previously granted carriers a waiver of the dormancy conditions for U.S.-Russia frequencies under almost identical circumstances, and should follow its established precedent by issuing the requested waiver to Delta. By Order 96-10-1 the Department granted a waiver to United Air Lines, Inc. ("United") from the 90-day dormancy conditions, resulting from the Russian government's refusal to allow United to implement third-country code-share service to Russia in conjunction with Lufthansa. See Order 96-10-1 at 3. /7 The Russian government is withholding authority both to Delta/Austrian and to United/Lufthansa, for almost identical (and improper) reasons. Given the similarity in the circumstances, fairness dictates that Delta be

6/ Under the terms of the U.S.-Russia Air Transport Agreement, code-share services count for one-half of one frequency.

7/ On September 9, 1997, United filed a Compliant against the Government of the Russian Federation under 49 U.S.C. Section 41310 (formerly Section 2(b) of the International Air Transportation Fair Competitive Practices Act of 1974 ("IATFCPA"), requesting that the U.S. impose sanctions against Aeroflot based on the Russian government's violation of the U.S.-Russia bilateral agreement by its failure to permit United to engage in third country code-share services with Lufthansa.

 

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granted a waiver of the standard dormancy provision for the same reason that such a waiver was granted to United.

3. Russia's actions are inconsistent with U.S. carrier's rights under the U.S.-Russia bilateral agreement, which expressly provides that Russia shall approve U.S. carrier third-country code-share authority involving any airline holding appropriate authority. Austrian clearly holds authority to operate its current Vienna-Moscow and Vienna-St. Petersburg services (and is, in fact, operating these services), meeting with the requirements for approval under the agreement. Russia's unwillingness to comply with the terms of the U.S.-Russia bilateral agreement should not be tolerated. Delta understands that steps are being taken to resolve Russia's position from both the Austria-Russia and the U.S.-Russia bilateral perspectives. Pending the resolution of this issue, Delta should not be unduly penalized by losing valuable frequencies that it would otherwise be putting to full use, providing enhanced service options to Russia.

4. The Russian government's actions vis a vis the Delta-Austrian and United-Lufthansa code-share approvals have cast a cloud of uncertainty over Delta's ability to obtain Russian approval of the Delta-Sabena code-share in time for Delta to commence its code-share operations with Sabena by mid-October.

 

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5. The additional 0.25 frequency will shortly be utilized in conjunction the 1.5 frequencies that were allocated less than a week ago for Delta's new daily Moscow-Zurich code-share service with Swissair.

6. Delta submits that good cause exists for the Department to waive the dormancy provisions contained in Orders 96-10-1 and 97-7-33 with respect to 9.25 weekly Russia frequencies. Delta plans to quickly implement its codeshare services for 3.5 frequencies under its code-share arrangement with Sabena, 5.5 frequencies under its code-share arrangement with Austrian upon receiving approval by the Russian government, and 0.25 frequency for use in conjunction with the 1.5 frequencies recently allocated to Delta to operate Moscow to Zurich service with Swissair. Delta is fully committed to utilize all of its frequencies and enhance its existing U.S.-Russia services with its code-share partners. For all of the reasons set forth herein, grant of the waiver to Delta is entirely justified.

WHEREFORE, Delta respectfully requests that the Department grant this request for a waiver of the dormancy conditions, as more fully discussed above, on or before September 23, 1997, and grant such other and further relief as the Department deems to be in the public interest.

 

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Respectfully submitted,

 

Robert E. Cohn

Sheryl R. Israel

SHAW, PITTMAN, POTTS & TROWBRlDGE

2300 N Street, N.W.

Washington, D.C. 20037

(202) 663-8060

Counsel for DELTA AIR LINES, INC.