OST-97-3289 / Undocketed / Delta and Aeromexico / Reply of American and Aero California / November 17, 1998

 

Joint Application of:

DELTA AIR LINES, INC. and AEROVIAS de MEXICO, S.A. de C.V.

OST-97-3289 / Undocketed

for exemptions under 49 USC 40109 and statements of authorization under 14 CFR 207 and 212(U.S.- Mexico codesharing)

 

REPLY OF AMERICAN AIRLINES, INC. AND AERO CALIFORNIA

TO SUPPLEMENTAL MOTION FOR IMMEDIATE ACTION

 

American Airlines, Inc. ("American") and Aero California hereby reply to the November 5, 1998 "Supplemental Motion for Immediate Action Concerning Discrete City Pairs" submitted by Aerovias de Mexico, S.A. de C.V. ("Aeromexico") and Delta Air Lines, Inc. ("Delta"). By that motion Aeromexico and Delta request that the Department act immediately to grant a statement of authorization to Delta allowing it to carry Aeromexico's code between Atlanta and twelve U.S. points and to issue exemption authority to Aeromexico allowing it to serve those twelve points. The moving carriers explain that they sought such authority in filings with the Department made on September 11 and 15, 1998 and that their goal is to support the economic viability of the Atlanta/Monterrey service that Aeromexico launched prior to the dates of their applications, on September 1, 1998. Aeromexico and Delta argue that the Department's decision to defer action on additional code share proposals will sour U.S./Mexico aviation relations, deprive them of the economic benefits of their proposed arrangement, deprive the traveling public of the competitive benefits of code share arrangements and lead to the reduction or termination of the Aeromexico's Atlanta-Monterrey service.

American and Aero California opposed the September 11 and September 15 applications, and they oppose this most recent motion. In effect, Aeromexico and Delta are asking the Department to bail them out of a situation in which Aeromexico initiated its Atlanta service before it received the Department's approval to code-share in the markets that it now claims are essential for that service to be viable. The Department should not do so.

Aeromexico and Delta are seeking relief in the wrong place for a problem of Aeromexico's own making. They are well aware that the Mexican aeronautical authorities have taken an unduly narrow view of U.S./Mexico code-sharing arrangements, insisting on applying a restrictive designation rule to code-share arrangements. They are also aware that the Mexican aeronautical authorities have delayed in responding to the Department's proposals for advancing toward a solution of this issue. The result of the Mexican policy has been continued discrimination in terms of access to code sharing opportunities in favor of Aeromexico and its commonly-owned sister carrier, Mexicana (both of which carriers are essentially owned and controlled by the Mexican government), at the expense of privately-owned Aero California. The result has also been that far fewer city pairs enjoy the benefits of code-share service than would be the case if the Mexican authorities adopted the more liberal approach to code-sharing urged by the Department. /1

Aeromexico would thus be well-advised to go to the government that owns it to plead for a more rational code-share policy. By that means, it could not only resolve its own immediate problem with respect to its Monterrey/Atlanta service, but ensure that the full benefits of codesharing that it describes in its motion are in fact enjoyed not only by passengers in the specific markets for which it seeks immediate relief, but by passengers in a much larger number of markets. Further, a more liberal policy would benefit not only Aeromexico and Delta, but all Mexican and U.S. carriers that provide transborder service between those nations.

The fact that the Mexican government has allowed some code-sharing offers no reason why the Department should grant the relief requested of it by Aeromexico and Delta. The degree of reciprocity that would support a healthy civil aviation relationship between the United States and Mexico with respect to code-share issues is clearly lacking, as evidenced by the lack of progress on the Mexican side in pursuing constructive proposals. Until a more equitable arrangement is fashioned, the Department should not succumb to piecemeal requests, such as that reflected in the Aeromexico/Delta filing.

1/ Aeromexico and Delta claim that American and Aero California "apparently" have "no interest" in implementing code-share arrangements in the U.S-Mexico market because they have not taken advantage of opportunities afforded by the limited approvals for code-sharing that they have received. This claim is untrue. American and Aero California have in fact implemented code-sharing in several city pairs, where they have received approval from both governments to do so. They have not implemented such arrangements in several other city-pairs for which such authority has been granted by DOT because they have not received the authorization required by the Mexican aeronautical authorities (under the restrictive code-share policy of those authorities) to implement their code-share arrangements. In short, the approach of the Mexican government has stifled the ability of these carriers to implement the broad code-share services that they would like to implement.

For these reasons, the Department should maintain a moratorium on granting new codeshare authority in the U.S./Mexico market until the Mexican aeronautical authorities choose to address this matter in a constructive manner. Aeromexico's self-induced problem in the Atlanta

Monterrey market presents an opportunity for that carrier to persuade its own government to progress bilateral discussions in this area. Over the longer term, bringing such discussions to a constructive resolution will benefit all parties involved, and the traveling public, to a much greater extent than were the Department to respond to the problem of the moment.

 

Respectfully submitted,

DAVID H. COBURN of Steptoe Johnson for Aero California

CARL B. NELSON, JR. for American