OST-97-2913 / Delta Air Lines / US-Japan / Answer of Northwest / September 19, 1997

Application of

UNDER 49 U.S.C. §§ 41102 and 41108 for a Certificate of Public Convenience and Necessity (Atlanta-Tokyo; Portland-Osaka; Portland-Fukuoka)

A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY

The current U.S.-Japan bilateral does not permit new U.S.Japan operations by Delta. Moreover, given Japan's extraordinarily restrictive approach to U.S. carrier operations, it is virtually certain that Japan will not authorize the proposed services on an extrabilateral basis. Delta's application, therefore, is premature.

Northwest Airlines, Inc. Answer to Delta Application

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The Department should follow its longstanding policy of dismissing extrabilateral route applications where proposed operations cannot be implemented until bilateral negotiations have been concluded. /1 Indeed, in 1989 when the Department was faced with circumstances similar to those here, it dismissed applications by both United Air Lines, Inc. and American Airlines, Inc. for extrabilateral authority to serve Chicago Tokyo, concluding that the grant of such applications "would be inconsistent with the current aviation regime and would undermine our negotiation objectives." Applications of United and American, Order 89-4-6, April 4, 1989, p. 2. Just this week, the Department reaffirmed its policy, dismissing Continental's U.S.-Paris-Egypt code-share application without prejudice because "France has followed a consistent policy not to authorize new

1/ See, e.g., Applications of Continental Airlines Inc. et al., Order 93-6-6 at 6-7 (citing the Department's "longstanding practice" to "refrain from making extrabilateral route awards, save where we have reason to expect the foreign government to permit the operation on an extrabilateral basis"); U.S.-Vancouver Application, Order 87-8-52 at 2 ("where limited entry routes not provided for in the bilateral are at issue, it is our general policy not to award U.S. carriers new route rights unless we have first obtained those rights from the foreign government involved"); TWA Exemption Dismissal, Order 85-9-1 at 3 ("Our general policy on limited-entry routes not provided for in bilateral aviation agreements is to negotiate new route rights in advance of awarding new certificate authority"); American Airlines Chicago-London Dismissal, Order 85-4-44 at 4 ("We believe this approach -- i.e., negotiate route rights first and then conduct a proceeding to select a carrier for the route -- is a sensible policy").

Northwest Airlines, Inc. Answer to Delta Application

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In seeking new route authority, Delta undoubtedly is hoping that the ongoing U.S.-Japan aviation negotiations will authorize the services it seeks and, consequently, that it and other U.S. carriers will soon have the opportunity to compete for new Japan route rights. Should that scenario come to pass, there will be ample opportunity for Delta and other U.S. carriers to file and prosecute competing applications pursuant to the Department's normal carrier selection procedures. There is no benefit to be derived, however, by allowing Delta's application to lie dormant in the docket. Conversely, the pendency of Delta's application may undercut U.S. negotiating leverage in the upcoming round(s) of U.S.-Japan negotiations, by suggesting that the U.S. government is so interested in obtaining new route rights that it might be willing to accede to Japan's desire to curtail existing bilateral rights.

Northwest, of course, has urged the U.S. government on many occasions to insist on a U.S.-Japan open skies regime, which will allow all U.S. carriers to compete on equal footing against both one another and Japan's various carriers. To date, Japan has

Northwest Airlines, Inc. Answer to Delta Application

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obdurately avoided an open skies regime in favor of one designed to tie the hands of Northwest and other U.S. carriers that have built up a formidable competitive presence over the course of several decades. The Department ought to do everything possible to preserve the competitively effective U.S. aviation presence -and to safeguard the bilateral rights that U.S. airlines already enjoy.

WHEREFORE, Northwest Airlines, Inc. urges the Department to deny the referenced application.

Respectfully submitted,

Megan Rae Poldy

Associate General Counsel

NORTHWEST AIRLINES, INC.

901 15th Street, N.W.

Suite 310

Washington, D.C. 20005

(202) 842-3193

September 19, 1997