OST-00-7148 / US-Turkey Combination Service Third-Country Codeshare / Answer of United Air Lines / April 21, 2000

 

U.S.-TURKEY COMBINATION SERVICE THIRD-COUNTRY CODE-SHARE OPPORTUNITIES / Docket OST-00-7148

 

CONSOLIDATED ANSWER OF UNITED AIR LINES, INC.

 

Pursuant to the Department's Notice dated March 28, 2000, United Air Lines, Inc. ("United") submits the following consolidated answer to the applications of American, Delta, and Northwest in the above-captioned proceeding:

1. Under the March 22, 2000, U.S./Turkey Memorandum of Consultations ("MOC"), the Department may allocate 21 -weekly frequencies to U.S. carriers for U.S.-Turkey third-country code-share services. Applications have been filed by four carriers seeking a total of 35 -weekly frequencies as follows:

U.S. Carrier/Partner

Intermediate Point

Turkish Point

Frequencies

United/Lufthansa

Frankfurt

Istanbul

7

Delta/Air France

Paris

Istanbul

7

Northwest/KLM

Amsterdam

Istanbul

14

American/Swissair

Zurich

Istanbul

7

 

With only 21 frequencies available, the Department will have to allocate frequencies based on the comparative public benefits of the various applications. United urges the Department to allocate seven frequencies each to United, Northwest and Delta so that each may offer a daily code-share service to Istanbul.

 

Consolidated Answer of United

Page 2

 

2. American's request to code share with Swissair should be denied. American has entered into a code-share agreement with Turkish Airways (THY) under which American and THY will code share on each other's services. See Docket OST-00715 1. American does not require any of the 21 third-country code-share frequencies subject to allocation under the MOC in order to offer code-share services on a Turkish flag carrier such as THY. Because American has access to Turkey pursuant to its code share with THY, it would be contrary to the public interest to allow American to code share with a second partner where that would deprive another carrier such as United of the ability to code share with its first partner.

American offers no reason for wanting to code share with Swissair other than to prove a point in another proceeding where American is seeking a code-share opportunity to offer service to South Africa. 1/ There are no public benefits cited with respect to Swissair's service to Istanbul that American cannot equally well offer on THY's service. Indeed, THY serves Istanbul and other points in Turkey from a number of European gateways also served by American, whereas Swissair operates only from Zurich. American serves Zurich only from the Dallas/Ft. Worth gateway (effective in

1/ In Docket OST-99-6595, American has requested a U.S.-South Africa thirdcountry code-share opportunity to offer service in conjunction with British Airways via London. American is seeking the third-country code-share opportunity held by Delta which now code shares with South African Airways, American's former partner. A decision on any American code shares with BA has been deferred because of competitive issues raised under the restrictive terms of the U.S./U.K. bilateral air services which limits the ability of other U.S. carriers to compete via the U.K. See Docket OST-996507. Moreover, American is not alone in seeking the reallocation of Delta's South Africa code-share opportunity. Continental also seeks to exercise that opportunity in conjunction with Alitalia via Milan (Docket OST-99-6587). The South Africa thirdcountry code-share allocation, therefore, raises different issues that are not relevant to the issues in this proceeding.

 

Consolidated Answer of United

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June 2000), whereas it would connect with certain of THY's other European points from multiple U.S. gateways. American could, therefore, offer a wider range of service between the U.S. and Turkey with THY than it could with Swissair. In these circumstances, it would be contrary to the public interest to award American a third-country code-share opportunity at the expense of United. /2

3. Northwest, unlike United and Delta, has requested 14 frequencies to offer double-daily code shares between Amsterdam and Istanbul. United and Lufthansa could offer as many as 49 weekly code-share services to Turkey if frequencies were not limited. Given the limit on frequencies, however, United restricted its request to seven in recognition that this would enable the U.S. to maximize competition by authorizing three carriers to offer a daily service each. Delta filed a similar application. Northwest appears to have also recognized this principle and includes an alternative request (NW App. at 4) for seven frequencies "depending upon the number of applicants for U.S.-Turkey thirdcountry code-share authority and the number of frequencies proposed by each. . ." Given that United and Delta have each requested seven frequencies, the Department should grant Northwest's alternative request for seven. This will enable each carrier to offer a daily service pattern.

4. This case can be decided, as noted above, without comparing the relative benefits of each proposal. If such a comparison were appropriate, however, United's

2/ See, e.g., Order 00-1-9 authorizing Delta to code share with one or the other but not both of its third-country code-share partners to Russia so that the Department could grant U.S.-Russia code-share designation to two additional U.S. carrier/third-country partnerships. See also Order 96-3-22 at 6. (United denied U.S.-Germany frequencies where it was allowed under applicable bilateral to use frequencies of its alliance partner, Lufthansa).

 

Consolidated Answer of United

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application should be one of the three granted in view of the fact that United would serve more U.S. gateways than either American or Delta. United would offer round-trip same day connections between Istanbul and thirteen U.S. gateways, three of which are United hubs which would be served in United's own aircraft as well as Lufthansa's. Delta serves only eight U.S. gateways and American, ten. /3 Northwest, like United, would offer service to thirteen U.S. gateways. If carrier selection were needed, on the basis of comparative consumer benefits, United's application should be one of the three granted seven frequencies to operate a daily code-share service to Istanbul.

5. As noted previously, American has entered into an agreement with THY seeking U.S.-Turkey code-share authority (OST-00-7151). The authority for such "bilateral" code sharing comes from the same agreement as that governing third-country code sharing -- the March 22, 2000 U.S./Turkey MOC. The authorities contained in the March 22 MOC do not, however, become effective on an ad referendum basis until the agreement has been signed.

U.S. carriers in third-country partnerships should be allowed to begin code-share services no later than American and THY. The March 22, 2000 MOC contemplates simultaneous effectiveness of code-share authorizations. Because American has seen fit to file a spurious application in this proceeding seeking duplicative authority to code share with a third-country carrier in addition to THY, a final order in this proceeding may now be delayed. The Department should take care not to reward American for its delaying tactics. Any action to authorize American and THY to code

3/ As noted above, American will serve Zurich from only one U.S. gateway in its own aircraft effective in June.

 

Consolidated Answer of United

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share pursuant to the March 22 MOC should be effective no sooner than a final order in this proceeding authorizing United, Delta and Northwest to code share with their thirdcountry carrier partners.

 

Respectfully submitted,

JEFFREY A. MANLEY

WILMER, CUTLER & PICKERING

2445 M Street, NW

Washington, D.C. 20037

(202) 663-6670

Counsel for UNITED AIR LINES, INC.

DATED: April 21, 2000