OST-98-3820 / American Airlines / Certificate Amendment for Route 4, Dallas Love Field / May 6, 1998

NOTICE: American requests that this application be processed by non-hearing, show-cause procedures under Subpart Q of the Department's regulations, 14 CFR 302.1701. Answers are due on June 3, 1998.

Application of :

AMERICAN AIRLINES, INC. / OST-98-3820

under 49 USC 41102 for amendment of certificate of public convenience and necessity for Route 4 (Dallas Love Field)

American Airlines, Inc., under 49 USC 41102, hereby applies for amendment of the Dallas Love Field condition in its certificate of public convenience and necessity for Route 4 (Order 81-12-131, December 22, 1981). That certificate authorizes American to engage in air transportation of persons, property, and mail between points in the United States, its territories, and possessions.

The subject condition was imposed in 1981 to reflect the original language of the Wright Amendment, as enacted in 1979. In 1997, Congress changed the Wright Amendment, as shown in Attachment 1. American's certificate should be revised to reflect the new law.

American requests that its application be processed by non-hearing, show-cause procedures under Subpart Q of the Department's regulations, 14 CFR 302.1701. In support hereof, American respectfully states as follows.

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1. American is a Delaware corporation with its principal office at 4330 Amon Carter Boulevard, Ft. Worth, Texas 76155.

2. American is a citizen of the United States within the meaning of 49 USC 40102 (a)(15); its president and two-thirds or more of its board of directors and other managing officers are such citizens; and at least 75 percent of its voting stock is owned or controlled by persons who are such citizens.

3. American presently engages in scheduled air transportation and foreign air transportation of persons, property, and mail pursuant to various certificates of public convenience and necessity and exemptions.

4. American is fit, willing, and able to provide the air transportation covered by this application and to conform to the provisions of the statute and of the rules, regulations, and requirements issued by the Department.

5. In the early 1960s, the cities of Dallas and Ft. Worth each wanted its airport to be the region's dominant facility. Such competition between the two cities fragmented and diminished overall passenger air service. Indeed, the area's first regional airport, Greater Southwest International Airport, failed due to competition from Dallas Love Field.

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6. In 1964, the Civil Aeronautics Board threatened to intervene and to designate a single airport for the region if the cities could not resolve this matter between themselves. In 1968, Dallas and Ft. Worth agreed to build the Dallas/Ft. Worth International Airport to serve all airline passenger traffic in the region. Their decision to build DFW was preceded by years of investigation by the CAB, which included a three-month hearing in 1963, innumerable studies, and over 12,000 pages of documents and evidence addressing every aspect of the dispute. The Federal Aviation Administration itself intervened in the CAB proceeding, and urged the cities to operate a single airport.

7. In 1968, Dallas and Ft. Worth enacted a joint bond ordinance requiring each city to phase out interstate service at its other airports and to optimize development of DFW. Since 1968, the cities have sold over $2 billion in public bonds supported by the bond ordinance. The most recently issued bonds mature in 2024.

8. Ft. Worth, in reliance on the bond ordinance, demolished Greater Southwest Regional Airport, and closed Meacham Field to all interstate passenger traffic. For its part, Dallas required all Federally certificated carriers to leave Love Field and to move their operations to DFW.

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9. In 1978, Southwest Airlines, which had previously flown only within the state of Texas, sought to expand its service from Love Field to New Orleans, in violation of the bond ordinance. Dallas and Ft. Worth resisted Southwest's expansion, arguing that the bond ordinance was a valid exercise of proprietary rights expressly preserved by the Airline Deregulation Act. See Joint Brief of Cities of Dallas and Ft. Worth to Civil Aeronautics Board, Dockets 34582, 32711, and 33619 (August 16, 1979). In 1979, however, the CAB awarded interstate authority to Southwest, while reserving the question of proprietary powers. The CAB's decision set the stage for yet more litigation.

10. In 1979, Congress passed the Wright Amendment as a compromise to this dispute. See International Air Transportation Competition Act of 1979, Public Law 96-192, § 29, 94 Stat. 48. This reflected a settlement that was made between the two cities, which requested Congress to formalize the compromise they had reached. In enacting the Wright Amendment, Congress acknowledged that it did not intend to replace or diminish the cities' proprietary rights with respect to airports. The original Wright Amendment generally restricted interstate service to or from Love Field to the four states bordering Texas (Arkansas, Louisiana, New Mexico, and Oklahoma).

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11. The Wright Amendment, as enacted in 1979, was incorporated into American's certificate for Route 4 by the CAB in 1981 by the following condition (Order 81-12-131, December 22, 1981):

12. In 1997, Congress amended the Wright Amendment to expand the perimeter within which the FAA may certify carriers to operate from Love Field to include three additional states (Alabama, Kansas, and Mississippi), and to redefine the type of aircraft that may be certified by the FAA under the "commuter exception" to the Wright Amendment. See DOT and Related Agencies Appropriations Act for FY 1998, Public Law 105-66, § 337, 111 Stat. 1447 (Attachment 1).

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13. Neither Dallas nor Ft. Worth supported or agreed to expanded service at Love Field, and litigation is currently pending in Texas state and Federal courts concerning the agreement between Ft. Worth and Dallas that led to the building of DFW, Dallas' proprietary powers, and the scope of interstate traffic at Love Field. American is a party to this litigation, and is aligned with Ft. Worth in contending that the scope of interstate traffic at Love Field should not be expanded beyond the status quo that was agreed to by all parties and has been in place for the past 18 years. Those agreements include restrictions on the use of Love Field that are similar to those imposed on airports in New York (LaGuardia), Washington, DC (Ronald Reagan Washington National), Kansas City, White Plains, and elsewhere.

14. Under the regional airport plan developed by Dallas and Ft. Worth with the active encouragement of the Federal government, DFW has become one of the nation's great airports. DFW is not capacity constrained, has accommodated every carrier seeking access, and is prepared to meet the needs of the Metroplex for the next century. American is confident that it and Ft. Worth will prevail in the litigation, and that the agreements between Ft. Worth, Dallas, bondholders, and the carriers serving DFW are enforceable. American has no intention of operating aircraft in a manner that is inconsistent

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with local law or Dallas' proprietary powers, so long as Dallas enforces these laws on a non-discriminatory basis. However, if Dallas were to permit other airlines to expand the scope of interstate service at Love Field beyond the status quo that has been place over the past 18 years, American has the right to compete with airlines providing these services.

15. By seeking this amendment, American is not asking that the Department take any action inconsistent with Dallas' proprietary powers. Rather, American seeks to insure that its Federal authority to operate from Love Field is not more restrictive than the Federal authority of other airlines, so that American has the right to serve Love Field to the full extent allowed by applicable Federal and local laws. 16. Therefore, in order to secure maximum operating flexibility as authorized by applicable law, American requests that the Department promptly amend the Love Field condition in its certificate for Route 4. American asks that the current condition be deleted, and be replaced by the following:

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Amendment of American's certificate for Route 4, as requested herein, is consistent with the public interest, as this will conform American's operating rights with the applicable statute. American requests prompt approval under expedited Subpart Q procedures.

Respectfully submitted,

CARL B. NELSON, JR.

Associate General Counsel American Airlines, Inc.

May 6, 1998