Order 98-2-20 / OST-98-3333 / US-Airways / Charlotte-London / February 20, 1998

Issued by the Department of Transportation on the 20th day of February, 1998

Served February 26, 1998

Application of

for an exemption pursuant to 49 U.S. C. § 40109

(Charlotte-London (Gatwick))

By this order, we (1) grant to US Airways, Inc., exemption authority to serve the Charlotte London (Gatwick) market; (2) withdraw the U.S. gateway designations of both Cleveland and Ft. Lauderdale; and (3) designate Charlotte as a new U.S. gateway on U.S. Route 1.

Under the current United States-United Kingdom Air Services Agreement, U.S. carriers may provide service on U.S. Route 1 from various U.S. gateways to London. Under section 6 of Annex I to the Agreement, certain U.S. gateway designations on U.S. Route I may be moved to alternative U.S. cities.

By Order 96-5-36, in response to an application from Laker Airways, Inc., the Department withdrew gateway status from the unserved Denver and Nashville gateways, named Ft. Lauderdale as a new U.S. gateway, and granted Laker an exemption to serve the Ft. Lauderdale-London (Gatwick) market. By Order 96-12-25, the Department used the other gateway selection to name Cleveland as a new U.S. gateway and granted Continental Airlines, Inc., a certificate to serve the Cleveland-London (Gatwick) market. In both orders, the Department put the carriers on notice that authorization of their London services could be reconsidered if certain service conditions were not met by the carriers and another carrier offered a superior service proposal.

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nonstop service to London and operate B-767 aircraft. It states that as soon as access to London's Heathrow Airport becomes available, it would operate exclusively to Heathrow.

US Airways argues that U, S. consumers will gain important public benefits from the introduction of U, S. -flag competition in the Charlotte-London market, which is now served exclusively by a foreign carrier (British Air-ways), and that its service will offer both intergateway and intragatewav competition, stimulating the U.S.-London market that has lacked new competitive service in recent years.

US Airways states that Laker has discontinued scheduled service in the market and plans to operate only charter service on this route. US Air-ways requests that the Department withdraw the Ft. Lauderdale-London designation held by Laker and name Charlotte in place of Ft. Lauderdale as a U.S. gateway for service to London on U.S. Route 1.

Charlotte supports US Airways' application, stating that there is a strong community of interest between Charlotte and a variety of foreign countries, especially the United Kingdom, and that US Air-ways' daily nonstop service to London would stimulate the Charlotte economy, provide important new travel options for Charlotte-London passengers, and facilitate travel opportunities in behind-Charlotte markets.

Laker states that it has no objection to US Airways' application for an exemption to operate Charlotte-London (Gatwick) scheduled service, but that it strongly objects to the reallocation of Ft. Lauderdale's selection as a U.S. gateway for London service. Laker states that it intends to operate Ft. Lauderdale-London scheduled air service in the 1998 summer season, using 308-seat DC-10-30 aircraft offering both business class and economy class service and that it intends to increase its service to three flights per week. Laker states that Continental has not provided any service in the Cleveland-London market since it was awarded authority and that the designation of Cleveland, instead of Ft. Lauderdale, could be reallocated for US Airways' Charlotte-London service.

Similarly, Continental states that it has no objection to US Airways' application for authority to provide service between Charlotte and London (Gatwick) using the designation abandoned by Laker when it terminated its Ft. Lauderdale-London scheduled service. Continental states that it objects strongly, however, to Laker's suggestion that Cleveland's gateway designation should be transferred to Charlotte instead of Ft. Lauderdale's gateway designation. Continental states that it plans to introduce daily nonstop service in the Cleveland-London market, and that its daily service together with US. Airways' proposed daily service in the Charlotte-London market would provide far greater benefits than two or three weekly flights by Laker in the Ft. Lauderdale-London market.

In its reply, US Airways argues that the Ft. Lauderdale gateway is now dormant and unused, and that Laker has not provided specific. plans for resuming scheduled service in the Ft. Lauderdale-

1/ Continental accompanied its filing with a motion for leave to file, which we will grant.

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London market. It also argues that US Airways' immediate use of the Ft. Lauderdale designation for Charlotte service would maximize the benefits that can be made available to the U.S. traveling public. US Airways suggests that if the Department chooses not to withdraw the Ft. Lauderdale designation, it could withdraw the Cleveland designation that was awarded to Continental, but which Continental has never used and apparently has no specific plans to use in the near future.

After careful review of the issues raised in the pleadings, we have decided to (1) grant to US Air-ways, Inc., exemption authority to serve the Charlotte-London (Gatwick) market; (2) withdraw the U.S. gateway designations of both Cleveland and Ft. Lauderdale; and (3) designate Charlotte as a new U.S. gateway on U.S. Route 1. /2

We find that approval of US Airways' application to serve the Charlotte-London (Gatwick) market is consistent with the public interest. US Airways proposes to introduce new U.S.-carrier nonstop service on May 6, 1998, at the Charlotte gateway where currently only foreign-flag service is available. Its service would contribute to the variety of price and service options available to travelers and shippers in the Charlotte-London market. Further, the authority requested is consistent with the aviation agreement between the United States and the United Kingdom. Finally, US Airways' proposed Charlotte-London service will use valuable bilateral route rights not currently being used.

Implementation of US Airways' award requires that Charlotte be designated as a U.S. gateway on U.S. Route 1. Consistent with our decision here, we will proceed with that designation.

Two movable U.S. gateways on U.S. Route 1, Ft. Lauderdale and Cleveland, are currently dormant. While the carriers authorized to serve these communities want to preserve the gateway status for their authorized services, neither carrier is currently providing service at its authorized gateway or has offered a firm proposal to institute such service. Moreover, in making the initial awards to the carriers, each was put on notice that the Department reserved the right to reconsider the award if the carrier did not implement service as proposed. /3 Continental never implemented the Cleveland services authorized by Order 96-12-25. Nor has it proposed a firm date for instituting service. Laker operated two weekly flights at Ft. Lauderdale during the 1997 summer season, but has now ceased its scheduled operations in the market. While it states that it has plans to use the authority again in the 1998 summer season, and may increase its service to three weekly flights, it has presented no firm plans for such service.

The gateway service opportunities under the U.S. -U.K. aviation agreement represent valuable route rights that we do not intend be wasted. Given the dormant services at both Cleveland and Ft. Lauderdale and U.S. Airways' firm plans for instituting daily nonstop service on May 7, 1998, in the Charlotte-London market, we believe that the public interest is best served by withdrawing the designations of both Ft. Lauderdale and Cleveland and using one of those designations for U.S. Airways' Charlotte-London service. In this way, we maintain a competitive balance for all

2/ Based on officially noticeable data under rule 24(n) of our regulations, we find that US Airways is fit to provide the proposed transportation services. The carrier has previously been found to be a U.S. citizen and fit to provide scheduled foreign transportation of persons, property and mail. See, e.g., Order 97-3-24 at

3/ Order 96-5-36 at 4 with respect to Laker and 96-12-25 at 3 with respect to Continental.

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cities, including Cleveland and Ft. Lauderdale, 'in securing future gateway status. Should Continental or Laker, or another carrier, develop firm plans for implementing service to London (Gatwick) from either of those cities, or any other city, it may then file its application.

We will make US Airways' exemption authority effective for one year. In addition, for the reasons cited above, we put US Air-ways on notice that if it fails to use the authority as proposed in its application, the Department reserves the right to reconsider its award of the Charlotte authority to US Airways.

ACCORDINGLY,

1. We grant the application of US Airways, Inc., in Docket OST-98-333 for exemption authority to provide scheduled foreign air transportation of persons, property, and mail between Charlotte, North Carolina, and London (Gatwick), England;

2. The authority granted in paragraph I will be effective immediately and will remain in effect for a period of one year from the service date of this order;

3. We will withdraw the U.S. gateway designations of Cleveland, Ohio, and Ft. Lauderdale, Florida, on U.S. Route 1: Atlantic Combination Air Services, in Annex I of the U.S.-U.K. Air Services Agreement;

4. We will designate Charlotte, North Carolina, as a new U.S. gateway on U.S. Route 1: Atlantic Combination Air Services, in Annex I of the U.S. -U.K. Air Services Agreement,

5. We grant the motion of Continental Airlines, Inc., for leave to file an otherwise unauthorized document in Docket OST-98-3333,

6. We will serve this order on all parties in the captioned docket, the cities of Ft. Lauderdale, Florida, and Cleveland, Ohio, the Ambassador of the United Kingdom of Great Britain and Northern Ireland in Washington, D.C., the United States Department of State (Office of Aviation Negotiations) and the Federal Aviation Administration (AFS-200).

By:

CHARLES A. HUNNICUTT

Assistant Secretary for Aviation and International Affairs

(SEAL)