OST-97-3289 / Undocketed / Delta and Aeromexico / Joint Reply of Delta and Aeromexico / October 1, 1998

Joint 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)

Delta Air Lines, Inc. ("Delta") and Aerovias de Mexico, S.A. de C.V. ("Aeromexico") hereby request leave to respond to the September 25, 1998 Joint Answer of American Airlines, Inc. ("American") and Aero California S.A. de C.V. ("Aero California") opposing the Motion of Delta and Aeromexico for Immediate Action on the above-captioned Applications. /1

The Joint Answer provides no basis for denial of the Delta/Aeromexico Motion for Immediate Action. The planned Delta/Aeromexico code-share

1/ The motion related to service between Monterrey, Mexico and Chicago, Illinois.

Motion and Reply

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service to Monterrey is in the public interest and would provide important service and competitive benefits.

There are several important factors that the Joint Applicants urge the Department to take into consideration in evaluating the current application, as well as the Joint Motion filed on September 11, 1998, which seeks expedited action to add Monterrey service to eleven additional U.S. points. In the Fall of 1994, Aeromexico and Delta instituted code-share service between Monterrey and Atlanta, but due to unfavorable economic. results, that service was terminated in the Spring of 1995, ending all nonstop service on that route.

On July 15, 1998, the Department authorized Aeromexico to carry Delta's code between Monterrey and Atlanta which enabled Aeromexico to initiate nonstop service between Atlanta and Monterrey. Thus, consumers have again been able to enjoy the substantial public benefits of competitive nonstop service on that route. However, Atlanta-Monterrey is a relatively thin O&D city-pair which is highly dependent upon flow traffic from other U.S. points to sustain nonstop service.

In order to enhance the economics of the Monterrey-Atlanta service and enable Delta and Aeromexico to maintain their current nonstop service offerings, Delta has applied for authority to carry Aeromexico's AM designator code in

Motion and Reply

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Delta already has authority to carry Aeromexico's code between Atlanta and all U.S. points (with the exception of Boston, Cincinnati, Chicago and Nashville) that are involved in this Application and the September 11, 1998 Motion. Delta is currently carrying Aeromexico's Mexico City passengers between Atlanta and each of these points. Delta and Aeromexico are merely seeking the flexibility to serve existing code-share points in a manner that will enable them to preserve the important public benefits of Atlanta-Monterrey nonstop service.

Finally, the Department has rejected similar arguments raised by American and Aero California on numerous prior occasions stating that "[the Department's] policy to consider new code-share services on a case-by-case basis and to limit U.S. -Mexican carrier code-share authorities to 179 days provides an adequate opportunity to monitor closely the aviation relationship with Mexico ... while facilitating the services that U.S. and Mexican carriers, including American and Aero California, seek to provide." See, e.g., Renewal of Delta/Aeromexico Statement of Authorization dated June 12, 1998. See also letter dated July 15, 1998 from the Department to counsel for Aeromexico

Motion and Reply

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granting Aeromexico a Statement of Authorization to code-share with Delta between Monterrey and Atlanta for a period of 179 days.

WHEREFORE, Delta and Aeromexico respectfully urge the Department to grant the Motion for Immediate Action, which will promote the availability of beneficial new U.S.-Monterrey services.

Respectfully submitted,

William Evans for Aeromexico

Robert Cohn for Delta