OST-00-6725 / OST-00-6728 / OST-00-6726 / American and Aer Lingus / US-Ireland / Reply of American Airlines / March 22, 2000

Application of

under 49 USC 40109 for an exemption (New York-Shannon/Dublin; codesharing with Aer Lingus)

Application of

for a statement of authorization under 14 CFR Part 212 for codeshare services with American Airlines

Application of

for extra-bilateral authority under the Department's "Cities Program" (Dublin/Shannon-Baltimore)

CONSOLIDATED REPLY AMERICAN AIRLINES, INC.

American Airlines, Inc., pursuant to 14 CFR 302.308, hereby replies to the answers submitted by Delta Air Lines, Inc. on January 19, 2000; by Northwest Airlines, Inc. and United Air Lines, Inc. on March 15, 2000; and by Continen

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tal Airlines, Inc. on March 16, 2000. /1 By consent of the parties, the date for answers was extended to March 15, 2000', and the date for replies to March 22, 2000.

American joins in the consolidated reply that is being separately submitted by Aer Lingus in OST-00-6726 and OST-00-6728. As Aer Lingus states, the proposed codesharing arrangement between Aer Lingus and American is consistent with the Department's precedent and stated policies, and all required authorizations should be promptly granted.

In addition, American wishes to address certain extraneous comments made by United and Continental. These comments are without merit, and provide no basis for the Department to reject the proposed Aer Lingus/American codeshare.

First, United cites American's opposition in 1996 to the Aer Lingus/Delta codeshare (p. 5). Inasmuch as the Department did not accept American's objections, but instead approved the Aer Lingus/Delta arrangement as being in the public interest, United's reference to American's 1996 position is beside the point. See Order 96-4-19, April 10, 1996, p. 3 ("we find that comity and reciprocity and our overall aviation relations with Ireland are positive. Indeed, our aviation arrangements

1/ Though styled a "reply," Continental's pleading is in effect a late-filed answer. To the extent required, American requests leave to reply to Continental's document.

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with Ireland include many of the features of an open-skies regime .... [Codesharing] would represent a major improvement in U.S.-Ireland services, substantially enhancing the quality of service available to travelers and shippers in th 4S market, and also providing consumers with meaningful competitive alternatives").

Second, United's remarks about the oneworld alliance (pp. 5-6) are ill-founded. American's eight oneworld partners include Aer Lingus, British Airways, Canadian, Cathay Pacific, Finnair, Iberia, Lan Chile, and Qantas. /2 United's 11 Star Alliance partners include Air Canada, Air New Zealand, All Nippon Airways, Ansett Australia, Austrian Airlines, Lufthansa, Mexicana, SAS, Singapore Airlines, Thai International, and Varig. /3 Each alliance has five members from non-open skies countries -- Ireland, the U.K., Hong Kong, Spain, and Australia in the case of oneworld, and Japan, Australia, Mexico, Thailand, and Brazil in the case of the Star Alliance. Moreover, United has codesharing arrangements with a number of carriers from non-open skies countries, including British Midland, which is expected to join the Star Alliance this year (the U.K.); Spanair (Spain); and Saudi Arabian Airlines (Saudi Arabia).

2/ Aer Lingus is joining oneworld in 2000; Canadian is leaving oneworld in June 2000.

3/ Austrian, Mexicana, and Singapore have publicly announced their intention to joint the Star Alliance in 2000.

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There is simply no merit to United's comments on alliance competition.

Continental's contentions are similarly off the mark. Continental criticizes American for allegedly joining forces in markets where both American and its foreign-flag partners are dominant (p. 2), but then concedes that in this case, American will be a new entrant to the U.S.-Ireland market (p. 4). Moreover, given Continental's global alliance with Northwest, KLM, and Alitalia, Continental clearly lacks credibility to assail the partnership arrangements of its competitors.

Accordingly, the proposed Aer Lingus/American codesharing arrangement should receive prompt approval, consistent with the Department's action in Order 96-4-19 granting approval to the predecessor arrangement between Aer Lingus and Delta. American's proposed codesharing with Aer Lingus will bring additional on-line services to the U.S.-Ireland market -- a market in which there are no overlaps between American and Aer Lingus -- thus enhancing competition and producing immediate consumer benefits.

Respectfully submitted,

CARL B. NELSON, JR.

Associate General Counsel American Airlines, Inc.

March 22, 2000