OST-00-7537 / American Airlines / Codeshare with Swissair and Sabena - US-India / Response of Delta Air Lines / July 13, 2000

Application of

under 49 U.S.C. 40109 for U.S.-India exemption authority and third-country codesharing designation (services with Swissair and Sabena)

Notice of

DELTA AIR LINES, INC., and SOCIETE AIR FRANCE / Undocketed

Codesharing Service to Mumbai and Delhi, India

DELTA AIR-LINES, INC.

Delta Air Lines, Inc. ("Delta") hereby submits this Consolidated Response to the July 3, 2000 Objections of American Airlines, Inc. ("American") to Delta's June 22, 2000 undocketed India Codeshare Notice, and to American's July 6, 2000 Reply in Docket OST-00-7537. /1

1/ To the extent necessary, Delta requests leave to submit this response, which will contribute to a more full and complete record.

Response of Delta Air Lines, Inc.

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Contrary to American's assertions, Delta's India codeshare designation has not been "unused and dormant" since 1998. Delta was forced by circumstances beyond its control to suspend codeshare services with Swissair in June 1998. However, Delta has since been using its valid and fully effective India codeshare designation to provide service with Austrian (with the Department's full knowledge and consent) up to and including the termination date of the Delta/Austrian codeshare agreement on March 25, 2000. /2 Moreover, Delta has actively been working to implement India codeshare services with Air France, which the Department previously authorized in connection with the Delta/Air France Statement of Authorization (approved August 6, 1998 (#98303)). Those services are now set to begin on July 22, 2000.

American's pleadings conveniently overlook the unique circumstances that compelled Delta to suspend India codeshare operations with Swissair (and which have impeded Delta's ability to introduce India codeshare services with Air France as rapidly as Delta would have preferred). Those circumstances are, however, well known to the Department.

Special Federal Aviation Regulation ("SFAR") 67, until its recent expiration on May 10, 2000, prohibited flight operations by U.S. carriers within the territory and airspace of Afghanistan. The Department has further conditioned the approval of

2/ American erroneously asserts that Delta and Austrian ceased codeshare operations in June, 1999. Source: Delta Schedules.

Response of Delta Air Lines, Inc.

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codeshare operations to prohibit the display of a U.S. carrier code on flights of foreign air carriers that enter, transit, or depart airspace for which the FAA has issued a flight prohibition. Delta sought and obtained assurances from Swissair that its flights to India would not traverse prohibited airspace. Nonetheless, contrary to those assurances, it was subsequently discovered that Swissair flights carrying the Delta code had been operated in contravention of SFAR 67 and DOT requirements. As soon as this came to Delta's attention, Delta immediately suspended India codeshare operations with Swissair.

Delta and Swissair entered into a consent agreement with the Department, and in accordance with that agreement, Delta undertook to develop a new set of internal safeguards, policies and procedures designed to prevent a reoccurrence of similar situations. Delta did not reintroduce India codeshare services with Swissair during the term of that agreement. However, in view of Austrian's successful compliance with the overflight restrictions, and a formal amendment to the Delta/Austrian codeshare agreement specifying overflight procedures and requirements, Delta did, in fact, maintain its India codeshare operations with Austrian until just recently.

While SFAR 67 remained in effect, Delta determined that before it could implement India codeshare operations with Air France, it would need to negotiate a similar amendment to the Delta/Air France codeshare agreement and develop an agreed set of procedures covering flights to India that might operate in the proximity of Afghan

Response of Delta Air Lines, Inc.

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airspace. However, during the course of negotiating the necessary amendments to the Delta/Air France codeshare agreement and developing the appropriate procedures, SFAR 67 expired by its terms on May 10, 2000, thereby obviating any concerns that flights on Europe-India routings might be subject to Afghan overflight prohibitions.

It is well established Department policy to waive any dormancy conditions that might otherwise be applicable to route authority when governmental restrictions or safety considerations, such as SFAR 67, impede normal flight operations. It would be inconsistent with this policy, the specific intent of the Delta/Swissair consent agreement with the Department, and the public safety, to put carriers such as Delta at risk of losing valuable route authority for dormancy, in circumstances where the U.S. carrier is not fully satisfied that there are adequate safeguards in place to ensure full compliance with all regulatory and safety requirements.

American erroneously characterizes the June 22, 2000 Delta/Air France joint notice regarding India codeshare services as a "defensive reaction" to the proposed American/Swissair/Sabena service. To the contrary, it is no surprise that since the Afghan overflight prohibitions have recently expired, U.S. carriers and their foreign flag partners have a renewed interest in introducing India codeshare services on trans-Asia routings. Thus, whereas American had months ago applied for various other codeshare routes formerly operated by the Delta/Swissair/Sabena alliance, American did not seek authority for India service until just now after the expiration of SFAR 67.

Response of Delta Air Lines, Inc.

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Similarly, Delta's current India service implementation plans with Air France have been facilitated by the lifting of the Afghan overflight restriction.

There is no public interest basis whatsoever to reexamine the merits of the Department's award of the third-county codeshare designation to Delta, which, by its terms and those of the U.S.-India air transport agreement, permits Delta to operate via an unlimited number of routings and with any foreign codeshare partner of its choosing.

These flexibility provisions were important bargained-for bilateral rights, and the Department has clearly and unequivocally stated that the public interest calls for maximum utilization of the U.S.-India codeshare opportunities. See Order 97-2-26 at 4. Ignoring the Department's express policy, American puts forth the novel argument that Delta should not be allowed the full range of commercial flexibility it is entitled to as a designated codeshare carrier under the U.S.-India bilateral, and that Delta should not be allowed to implement the Air France - India codeshare services which the Department has already approved (but which were deferred until the recent expiration of the Afghan overflight prohibition).

The only authority that American cites in support of its novel position is the Department's finding in Order 99-9-23 that American was not allowed to move its uniquely conditional New York-Rio de Janeiro frequencies to another U.S.-Brazil market without specific authorization by the Department. The circumstances of that

Response of Delta Air Lines, Inc.

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case are completely inapposite to the instant situation. American, with its huge cache of existing Brazil frequencies, was awarded its New York-Rio de Janeiro frequencies on a default basis (because there was no other carrier able to use the frequencies due to designation limitations). Moreover, American was specifically put on notice by the Department as to the tentative nature of its award, and that the frequencies would be subject to recall in a further proceeding to examine the long-term needs of the U.S.-Brazil market. Order 96-3-47.

Delta's India codeshare designation was not made on a tentative conditional basis, nor was Delta's designation award made subject to recall in a further proceeding, as was expressly the case with American's New York-Rio de Janeiro frequency award. Just as American has been allowed to move other of its 42 non-conditional Brazil frequencies between other U.S.-Brazil markets without specific authorization by the Department, so too has the Department allowed Delta to use its existing India designation to codeshare with carriers other than Swissair. And, unlike the U.S.-Brazil bilateral which strictly limits the number of available frequencies, the U.S.-India codeshare article permits and encourages designated U.S. carriers to offer as many codeshare services as possible.

Delta's continued use of its codeshare designation to provide online service to India with Air France this July will preserve and enhance the public interest benefits attainable from this opportunity. By virtue of the larger Delta/Air France network,

Response of Delta Air Lines, Inc.

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Delta will be offering more nonstop-to-nonstop India connections to and from more U.S. cities than ever before. The fact that Swissair will no longer be participating as a Delta codeshare partner in no way impacts Delta's ability to make full and effective use of its designation by implementing its previously-approved India codeshare services with Air France.

Respectfully submitted,

Robert E. Cohn

Alexander Van der Bellen

SHAW PITTMAN

2300 N Street, N.W.

Washington, D.C. 20037

(202) 663-8060

Counsel for DELTA AIR LINES, INC.