OST-00-7148 / US-Turkey Combination Service Third-Country Codeshare / Reply of American Airlines / April 26, 2000
U.S.-TURKEY COMBINATION SERVICE THIRD-COUNTRY CODESHARE OPPORTUNITIES /
OST-00-7148
REPLY OF AMERICAN AIRLINES, INC.
American Airlines, Inc., pursuant to the Department's Notice of March 31, 2000, hereby replies to the answers submitted on April 21, 2000 by United Air Lines, Inc., Northwest Airlines, Inc., and Delta Air Lines, Inc. These carriers, together with American, are seeking three available designations for U.S.-Turkey third-country codesharing under the March 22, 2000 Memorandum of Consultations between the U.S. and Turkey.
1. United
United asserts that American's application to codeshare to Turkey with Swissair is "spurious" because American is also seeking approval of a bilateral codesharing arrangement with Turkish Airlines (
OST-00-7151). United argues that this proceeding should be decided without comparing the relative benefits of each proposal simply by eliminating American from contention, and granting seven weekly frequencies to each of the three remaining applicants.
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American's application is not "spurious." American's proposal with Swissair will provide nonstop-to-nonstop connections between Atlanta, Boston, Chicago, Dallas/Ft. Worth, Los Angeles, Miami, New York, Newark, San Francisco, and Washington, on the one hand, and Istanbul, on the other, via Swissair's Zurich hub. Such services will supplement the American/ Turkish Airlines codesharing arrangement between Istanbul and U.S. points via New York, Miami, and Chicago, and will provide significant public benefits.
If, however, the Department adopts United's position and eliminates American from consideration for third-country codesharing because of its bilateral arrangement with Turkish Airlines, then the same principle should absolutely apply to United in the U.S.-Ukraine market, as well as to Delta in the U.S.-South Africa market. On April 26, 2000, United applied for limited-entry third-country codesharing authority with Austrian Airlines to the Ukraine (
OST-00-7293), even though United already holds a designation with Lufthansa. United should not be permitted to codeshare to the Ukraine with both Lufthansa and Austrian Airlines to the exclusion of American/Swissair proposal pending in OST-00-7227 and OST-00-7228. Nor should Delta be permitted to codeshare with both South African Airways and Air France to the exclusion of the American/British Airways arrangement pending in OST-99-6507 and OST-99-6595.
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2. Northwest
Northwest's principal argument, like United's, is that American's application for third-country codesharing with Swissair should be denied because of the American/Turkish Airlines arrangement. Our reply to United on this point also applies to Northwest.
Northwest also claims that its proposal with KLM via Amsterdam is superior because Northwest and KLM have more U.S. gateways. But where each applicant is likely to receive at most seven weekly frequencies, the fact that Northwest and KLM serve 13 U.S. gateways, while American and Swissair serve 10, should not be a conclusive selection factor. But if such a factor were conclusive, American and Swissair would prevail over Delta and Air France, which serve 9 U.S. gateways.
3. Delta
Delta, like United and Northwest, would eliminate American from consideration because of the American/Turkish Airlines proposal. Delta, however, attempts to defend its dual operations with both South African Airways and Air France in the U.S.-South Africa market by advancing a "grandfather" theory that would allow Delta to retain its Air France authorization despite its more recent arrangement with South African Airways.
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The Department should reject such a theory. If American is to be eliminated from contention here because of its arrangement with Turkish Airlines, there is no principled basis for Delta to continue holding dual authorizations to South Africa to the exclusion of American as a additional competitor, regardless of the chronology of Delta's codesharing alliances with two carriers in the limited-entry U.S.-South Africa market.
Respectfully submitted,
CARL B. NELSON, JR.
Associate General Counsel American Airlines, Inc.
April 26, 2000