OST-97-2477 / OST-99-5113 / OST-99-5112 / Undocketed / American and Aero California / Answer of United / February 22, 1999

Applications of

for exemptions under 49 U.S.C. 40109 and statements of authorization under 14 C.F.R. Part 212

(U.S.-Mexico code sharing)

United Air Lines, Inc. ("United") hereby answers the recent applications of American Airlines, Inc. ("American") and Aero California, S.A. de C.V. ("Aero California") for new and amended exemptions and statements of authorization to expand their U.S.-Mexico code sharing pursuant to the January 26, 1999 U.S.-Mexico agreement amending the U.S.-Mexico Air Transport Agreement. /1

1. American and Aero California seek authority to engage in broad new transborder and starburst interior code sharing pursuant to the new annex to the U.S.-Mexico Air Transport

1/ These include the February 5, 1999 Joint Request of American and Aero California to Amend Statements of Authorization Under 14 CFR Part 212 to Grant Blanket Behind and Beyond Codesharing Authority, as amended February 17, 1999; the February 12, 1999 Application of American for Amendment of Statement of Authorization Under 14 CFR Part 212 (Codesharing with Aero California); the February 5, 1999 Motion of American to Amend U.S.-Mexico Exemption Authority (Docket OST-97-2477); the February 12, 1999 Aero California Application for Exemption Authority (Docket OST-99-5112); and the February 12, 1999 Aero California Application for Blanket U.S.-Mexico Exemption Authority to Serve Behind and Beyond Gateway Points (Docket OST-99-5113).

United Air Lines Consolidated Answer

Page 2

Agreement regarding cooperative service arrangements. United is not opposed to grant of the American/Aero California applications so long as the pending code-share applications of United and Compania Aviacion de Mexicana ("Mexicana") are granted concurrently.

3. Grant of these applications will generate a wide range of new service options for the traveling public. Because transborder code-share designations remain limited to four under the new agreement, however, the Department should approve the United/Mexicana applications

2/ This resolution also paves the way for approval of the May 20, 1998 United/Mexicana application for statement of authorization (Chicago-Toronto) and the December 29, 1998 United/Air Canada application for statement of authorization (U.S.-Mexico City), which were deferred pending resolution of the transborder dispute.

3/ American's complaints about the former transborder code-share regime effectively precluded the introduction of a great deal of new competitive service in the U.S.-Mexico market.

United Air Lines Consolidated Answer

Page 3

no later than it acts on any other U.S.-Mexico code-share applications, including the instant American/Aero California applications. It would be both unfair and potentially prejudicial if the Department were to grant other outstanding requests before approving the United/Mexicana applications, particularly where, as here, several of the applicants request authority for the same transborder city pairs. Moreover, United would be competitively disadvantaged if the Department were to enable other competitors to introduce new services in the U.S.-Mexico market before the Department grants the pending United/Mexicana applications.

WHEREFORE, the Department should promptly grant the pending United/Mexicana code-share applications no later than it acts on the pending American/Aero California applications.

Respectfully submitted,

JEFFREY MANLEY

CATHLEEN P. PETERSON

KIRKLAND & ELLIS

655 Fifteenth Street, NW

Washington, D.C. 20005

(202) 879-5 1 6 1

Counsel for UNITED AIR LINES, INC.

DATED: February 22, 1999