OST-00-7194 / US-Vietnam Third-Country Codesharing / Answer of American Airlines / April 14, 2000

ANSWER OF AMERICAN AIRLINES, INC.

American Airlines, Inc., pursuant to the Department's Notice of April 5, 2000, hereby answers the applications for U.S.-Vietnam third-country codesharing authority that have been submitted in this docket.

Four applicants are seeking three available designations. American has applied to codeshare with Swissair via Zurich; United to codeshare with Thai International via Bangkok; Northwest to codeshare with Malaysia Airlines via Kuala Lumpur; and Delta to codeshare with Air France via Paris.

American's application should be granted. American will provide same-day connections between the U.S. and Ho Chi Minh City via Zurich in both directions. Moreover, selection of American will help redress the competitive imbalance in U.S.-Pacific services, which are presently dominated by United and Northwest. These and other matters are addressed in detail below.

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American proposes to serve Ho Chi Minh City three days a week by codesharing with Swissair via Zurich. American and Swissair serve between Zurich and Atlanta, Boston, Chicago, Dallas/Ft. Worth, Miami, Los Angeles, New York (JFK), Newark, San Francisco, and Washington.

For travel to Vietnam, American's and Swissair's flights from the U.S., which arrive in Zurich in the morning and early afternoon, will connect on a same-day basis to Swissair's 8:55 p.m. departure to Ho Chi Minh City, which makes an intermediate stop in Singapore. /1 For travel from Vietnam, Swissair's flights, via Singapore, arrive in Zurich at 6:20 a.m., and are well-timed for convenient onward connections to U.S. points throughout the morning.

American understands that Swissair currently operates between Zurich and Vietnam, via Singapore, by overflying Afghanistan. Codesharing services by U.S. carriers on such flights are currently prohibited. In the event that American's application in this proceeding is granted, American will re-

1/ Unless otherwise noted, all of the arrival and departure times referenced herein are based on schedules as shown in the May 2000 OAG.

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quest that Swissair consider rerouting its flights to comply with U.S. requirements regarding Afghanistan prior to commencement of the codeshare service.

II. UNITED WOULD OFFER NO SAME-DAY CONNECTIONS TO VIETNAM FROM THE U.S., AND VIRTUALLY NONE FROM VIETNAM TO THE U.S.

United asserts that its proposal is superior because it would offer codesharing service to three points in Vietnam, Hanoi, Ho Chi Minh City, and Da Nang, with Thai Airways International via Bangkok. But none of these services would connect to Vietnam from the U.S. on a same-day basis, and virtually none would connect from Vietnam to the U.S. the same day.

For travel to Vietnam, all of Thai's flights depart Bangkok in the morning (8:30 a.m. to Hanoi and Da Nang, and 11:00 a.m. to Ho Chi Minh City). However, United's flights from Seattle to Bangkok, which stop in Tokyo, arrive at 9:55 p.m. the night before. United also states that it presently operates from Los Angeles to Bangkok via Hong Kong, but the OAG shows no such schedules. The only service United currently operates between the U.S. and Bangkok is from Seattle via Tokyo.

For travel from Vietnam, all of Thai's flights arrive in Bangkok in the afternoon (12:45 p.m. from Da Nang, 1:50 p.m. from Hanoi, and 3:05 p.m. from Ho Chi Minh City). However,

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United's flights from Bangkok to Seattle via Tokyo all depart at 7:30 a.m., providing no same-day connections.

United also claims that it operates codeshare service to Bangkok with ANA via Tokyo and with Thai via Taipei. Those flights offer no same-day connections to Vietnam from the U.S., and virtually none from Vietnam to the U.S.

To Bangkok, ANA's UA* flights from Tokyo arrive at 2:25 p.m., too late to connect to Thai's morning departures to Vietnam, while Thai's UA* flights from Taipei arrive at 10:55 p.m., requiring an overnight connection.

From Bangkok, ANA's UA* flights to Tokyo depart at 10:15 p.m., providing lengthy connections to Thai's afternoon arrivals from Vietnam, while Thai's UA* flights to Taipei depart at 7:00 a.m., and offer no same-day connections to Thai's afternoon arrivals from Vietnam.

In short, with the single exception of UA* codesharing service on ANA via Tokyo and Bangkok in the eastbound direction, United would offer no same-day codeshare connections between the U.S. and Vietnam. Because of this deficiency, United's application should not be favored in this proceeding.

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Northwest proposes codeshare service to two cities in Vietnam, Hanoi (twice a week) and Ho Chi Minh City (four times a week), on Malaysia Airlines via Kuala Lumpur. On most days of the week, Northwest would offer no same-day connections.

Northwest's twice-a-week proposal to serve Hanoi via Kuala Lumpur would require overnight connections in both directions. For travel to Hanoi, Malaysia's two weekly flights depart Kuala Lumpur at 10:00 a.m. However, Northwest's flights from Detroit to Kuala Lumpur, which require a change-of-gauge at Osaka, arrive at 10:45 p.m., while Malaysia's flights from Los Angeles to Kuala Lumpur, which stop in Taipei, arrive at 11:45 a.m.

For travel from Hanoi, Malaysia's flights arrive in Kuala Lumpur at 6:05 p.m. However, Northwest's flights to Detroit, via Osaka, depart at 7:20 a.m., and Malaysia's flights to Los Angeles, via Taipei, depart at 3:15 p.m. Connecting passengers would be required to stay overnight in Kuala Lumpur before taking an onward flight to the U.S. on either carrier.

Northwest's proposed codeshare service to and from Ho Chi Minh City would have a few viable connections, but not many. For travel to Ho Chi Minh City, Malaysia operates four days a week, with departures at 9:10 a.m. on Tuesday, Saturday, and Sunday, and at 2:30 p.m. on Thursday.

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Northwest operates from Detroit to Kuala Lumpur, via Osaka, three days a week, with arrivals on Tuesday, Friday, and Sunday at 10:45 p.m. Accordingly, Northwest's Tuesday night arrival in Kuala Lumpur would not connect to Ho Chi Minh City until Thursday afternoon; its Friday night arrival not until Saturday morning, and its Sunday night arrival not until Tuesday morning.

Malaysia operates from Los Angeles to Kuala Lumpur, via Taipei, four days a week, with arrivals on Tuesday, Thursday, Friday, and Sunday, all at 11:45 a.m. The only viable connection to Ho Chi Minh City would be on Thursday at 2:30 p.m.; Malaysia's Tuesday arrival from Los Angeles would not connect until Thursday; its Friday arrival would require an overnight connection of more than 21 hours; and its Sunday arrival would not connect until Tuesday.

For travel from Ho Chi Minh City, Malaysia operates four days a week, with arrivals in Kuala Lumpur at 2:00 p.m. on Tuesday, Saturday, and Sunday, and at 7:45 p.m. on Thursday.

Northwest operates from Kuala Lumpur to Detroit, via Osaka, three days a week, with departures on Monday, Wednesday, and Saturday at 7:20 a.m. None of these flights would connect on a same-day basis with Malaysia's service from Ho Chi Minh City.

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Malaysia operates from Kuala Lumpur to Los Angeles, via Taipei, four days a week, with departures on Tuesday, Wednesday, Friday, and Sunday at 3:15 p.m. Accordingly, Malaysia's flights arriving from Ho Chi Minh City would have onward connections to the U.S. only two days a week, on Tuesday and Sunday, and even on those days would require an eight-hour layover.

Moreover, Malaysia's flights to and from Ho Chi Minh City are shown in the OAG as being operated by 11MH/VN.11 MN is the designator code for Malaysia Airlines, and VN is the code for Vietnam Airlines. Northwest should be required to explain whether these flights are jointly operated by Malaysia Airlines and Vietnam Airlines, as the OAG seems to indicate. If they are jointly operated, Northwest's proposal to codeshare to Ho Chi Minh City could not be granted, since Vietnam Airlines does not hold any authority issued by the Department.

Delta proposes to serve Ho Chi Minh City four times a week and Hanoi three times a week with Air France via Paris. Delta's connecting times at Paris are equivalent to American's at Zurich. For travel to Vietnam, Air France's flights to Ho Chi Minh City, which make intermediate stops in Singapore, depart Paris at 6:55 p.m., and its flights to Hanoi, which stop in Bangkok, depart at 7:40 p.m. Accordingly, same day connec-

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tions from U.S. points are possible. For travel from Vietnam, Air France's flights from Ho Chi Minh City, which stop in Singapore, arrive in Paris at 6:20 a.m., and its flights from Hanoi, which stop in Bangkok, arrive at 6:30 a.m., allowing for connections to morning departures from Paris to the U.S.

While Delta proposes service to an additional city in Vietnam, the American and Delta proposals are otherwise equivalent. Both proposals provide for same-day connections in both directions, and both European carriers make intermediate stops on the way to and from Vietnam (at Singapore or Bangkok). Moreover, American believes that Swissair and Air France may be similarly situated with respect to overflying Afghanistan in their operations to Vietnam, and that Delta would also be required to enter into discussions with its codeshare partner to change its routing should Delta be successful in this proceeding.

As shown in the attached pages, United and Northwest dominate the Pacific. United operates an average of 105 weekly frequencies between the U.S. and Pacific destinations, and Northwest operates an average of 122. The United/Northwest duopoly accounts for a 73% share of all U.S. carrier frequencies in the Pacific.

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In order to redress the competitive imbalance in Pacific services, the Department should not award a limited-entry Vietnam third-country codeshare opportunity to either United or Northwest to the exclusion of American.

Respectfully submitted,

CARL B. NELSON, JR.

Associate General Counsel American Airlines, Inc.

April 14, 2000