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OST-1997-3218

Delta Air Lines, Inc.

OST-1997-3218 - Certificate - Atlanta/New York-South America; US-Belize

December 10, 1997

Application for a Certificate of Public Convenience and Necessity

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applies for a new or amended Certificate of Public Convenience and Necessity authorizing Delta to engage in scheduled foreign air transportation of persons, property and mail as follows: (i) between Atlanta, Georgia and New York, New York, on the one hand, and -- (1) Buenos Aires, Argentina; (2) La Paz, Bolivia; (3) Santiago, Chile;t (4) Bogota, Colombia; (5) Guayaquil and Quito, Ecuador; (6) Asuncion, Paraguay; (7) Lima, Peru;2 (8) Montevideo, Uruguay; and (9) Caracas, Venezuela -- on the other hand. (ii) between a point or points in the United States and a point or points in Belize.

Delta is today announcing plans for Delta's major service expansion into Latin America, and is filing this application in conjunction with that announcement. The prompt approval of this application is an important element of Delta's plan to establish itself as a major U.S.-flag competitor between the United States and Latin America. The grant of this application will have far-reaching impacts on the level and effectiveness of network competition between the United States and Latin America. Delta's proposed new services will produce enormous public benefits by providing the traveling and shipping public with important new service and competitive options. Further, Delta's services will produce important economic benefits for U.S. communities (and Latin American communities) by intensifying trade and travel between the United States and Latin America.

• Atlanta-Buenos Aires | Operating Statistics | Map
• Atlanta-Bogota-Guayaquil | Operating Statistics | Map
• New York-Bogota-Guayaquil | Operating Statistics | Map
• New York-Santiago | Operating Statistics | Map
• New York-Lima-La Paz | Operating Statistics | Map
• New York-Rio de Janeiro-Asuncion | Operating Statistics | Map
• New York-Buenos Aires-Montevideo | Operating Statistics | Map
• New York-Caracas | Operating Statistics | Map
• Atlanta-Belize | Operating Statistics | Map

Service List

Answers are due by January 7, 1998 - Subpart Q

Counsel: Delta and Shaw Pittman, Robert Cohn, 202-663-8060

January 7, 1998

Answer of Continental Airlines

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Delta's' request for Atlanta/New York-South America authority is more a publicity stunt than a serious request for authority. Delta's Johnny-come-lately approach to Latin America is far different from Continental's painstaking efforts over the past ten years to develop Houston and Newark as Latin America gateways to provide nonstop service in major gateway markets and expand connecting opportunities for passengers throughout the Continental hub networks. Continental embarked on a Latin American expansion program in 1988.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500

Answer of the Georgia and Atlanta Parties in Support

Atlanta, as the hub of the Southeast region, will attract traffic over the Delta hub to and from Latin America, in strong competition with Miami, Houston, Dallas/Fort Worth and New York/Newark.

Counsel: Ball Janik, Bill Alberger, 202.638.3307

Answer of United Air Lines and Motion to Modify Scope

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United has been attempting for several years to compete with American Airlines, Inc. ("American") for U.S.-South America traffic. In 1992 United acquired the U.S.-South America authority of Pan American World Airways, Inc. ("'Pan Am") in order to offer competition in this increasingly important region. Pan Am's route system did not, however, include authority to serve several key points in South America. For example, Pan Am's authority to serve Colombia was limited to Barranquilla, precluding service to the key market of Bogota. In addition, Pan Am's certificate contained no authority to serve points in Ecuador, Bolivia, or Paraguay. United, therefore, does not have authority to serve these countries despite the fact that American, its primary competitor, is authorized to serve and is serving these countries.

Counsel:  United and Ginsburg Feldman, Joel Burton, 202-637-9130

OST-97-3124 | OST-97-3218 | February 9, 1998

Supplement to Applications, Request for Frequency Allocation, and Request for Pendente Lite Authority

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Delta requests allocation of the seven (7) weekly frequencies available for scheduled combination services by a U.S. carrier between the United States and Peru to enable Delta to operate daily nonstop service between Atlanta and Lima.

The Department's Notice indicated that the additional frequencies will become available "no earlier than June 1998." Accordingly, Delta's proposed start-up date will be in June 1998, or within 90 days of the service date of a final order granting Delta's request for route authority and frequencies, whichever is later. Delta further requests that the Department immediately grant, on a pendente late basis, the allocation of seven frequencies and an exemption authorizing Delta to serve Atlanta-Lima, pending final action on Delta's certificate application and a final determination on the long term award of frequencies. The public interest fully supports the grant to Delta of an immediate frequency allocation and exemption. The recently announced frequency opportunities will enable Delta to implement daily Atlanta-Lima nonstop service.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

OST-98-3764 | OST-98-3814 | OST-97-3218 | June 2, 1998

Contingent Motion of Delta Air Lines to Consolidate

Delta and Continental have both submitted certificate applications for U.S.-Argentina certificate authority, and United has requested to transfer a portion of its U.S.-Argentina frequencies for use on the Chicago-Buenos Aires route. In the event the Department determines that there are allocable frequencies available for U.S. carrier services to Argentina, Delta moves the Department to consolidate the above-captioned applications and to establish a carrier selection proceeding to determine the award of U.S. -Argentina frequencies. The requests of Delta, Continental and United are mutually exclusive and must receive contemporaneous consideration under the Ashbacker doctrine.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

OST-98-3764 | OST-98-3814 | OST-97-3218 | June 11, 1998

Answer of United Air Lines

United urges the Department to deny Delta's contingent motion. There is no basis for a comparative carrier selection case in circumstances where the U.S./Argentina bilateral air services agreement does not provide any opportunity for expanding U.S. carrier services at the present time. There can be no finding of mutual exclusivity where there is no authority to award.  The appropriate remedy in this instance is to deny Delta's motion and dismiss its application in Docket OST-98-3218 insofar as it requests U.S.-Argentina authority. Such dismissal should be without prejudice to Delta's resubmission of its application at such time as additional economic opportunities become available under the U.S./Argentina bilateral agreement.

Counsel:  United and Ginsburg Feldman, Joel Burton, 202-637-9130

Undocketed | OST-97-3218 | June 12, 1998 | Filed and Stamped with the Docket Section on June 18, 1998

Response of Delta Air Lines

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Delta is rapidly developing Atlanta as a major connecting hub for service to Latin America, and will begin service between Atlanta and Lima on July 1, 1998. The second element of Delta's plan to become a major competitor in Latin America involves developing a substantial route network between New York (JFK) and key South American cities. Delta currently has an application on file for U.S.-South America certificate authority, including New York-Lima. Delta proposes to begin New York-Lima service on June 12, 1999, when 14 additional frequencies become available under the terms of the MOC.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

Order 98-9-3 | OST-98-3764 | OST-98-3814 | OST-97-3218 | Issued September 3, 1998 | Served September 9, 1998

Order (Corrected Copy)

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By this order, we determine that United Air Lines, Inc. (United) holds all the economic authority needed to operate its proposed Chicago-Buenos Aires combination services and that no further award of authority or carrier selection procedures are necessary for United to operate this service.

We also will dismiss the requests of Continental Airlines, Lnc., and Delta Air Lines, Lnc., for certificate authority in the U.S.-Argentina market. While Delta's application includes requests for authority to serve various Atlanta/New York-South America and U.S.-Belize markets, this order deals with its specific request for AtlantalNew York-Buenos Aires authority only. The remaining portions of the application will be handled separately.

By: Charles Hunnicutt

September 11, 1998

Petition for Reconsideration of Delta Air Lines

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For the foregoing reasons, Delta respectfully requests that the Department reconsider Order 98-9-3 and vacate its dismissal of Delta's U.S.Argentina application in Docket OST-97-3218.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

By:  Paul Gretch

Delta has been aggressively seeking expansion opportunities in South America and rapidly developing Atlanta as a major competitive gateway for service to Latin America. The recent MOC provides the Department with a valuable opportunity to inject Delta as a strong new network competitor to Colombia and to establish Atlanta as a new competitive U.S. gateway to Colombia. Grant of authority to Delta will improve the market structure to Colombia and help improve the overall market structure to Latin America by helping Delta’s efforts to achieve parity with its three larger U.S. carrier rivals. Delta requests that it be issued a certificate and frequencies authorizing Atlanta-Colombia nonstop service as soon as possible and that such authority be granted for an indefinite term. Delta further requests route integration authority to permit Delta to combine its Colombia service with all other Delta services authorized by certificates and exemptions, to the extent permitted by applicable international agreements.

The new MOC provides for an additional seven weekly frequencies, which can be used immediately on any route except Miami and New York/Newark. Delta hereby requests seven weekly combination frequencies to allow it to operate daily roundtrip Atlanta-Bogota service, and hereby further moves to consolidate this request with its pending Atlanta-Bogota certificate application.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060

Counsel: Continental and Crowell Moring, Bruce Keiner, 202-624-2500

While both of the applicants in this case have presented proposals that would benefit travelers, based on our review of the record and all relevant factors, we tentatively conclude that Delta is the better choice. Delta's proposal offers greater service benefits and better fulfills our goal of increasing competition in the U.S.-Colombia market. Delta would provide Colombia service at a new U.S. gateway, thereby benefiting both local and connecting passengers. Furthermore, selecting Delta would add a significant new competitor to a major South America market.

Currently, American and Continental are the two carriers authorized to serve Colombia. American operates 35 weekly frequencies, all from its large Miami gateway, with three daily flights to Bogota and a daily flight each to Barranquilla and Cali. Continental operates 14 weekly flights to Bogota with a daily flight each from its two major hubs-Newark and Houston. Colombian carriers operate 47 weekly frequencies, nearly all from Miami. /11 Bogota is by far the largest market, as reflected by the predominant level of services provided to that city. American operates the majority of its services to Bogota, Continental operates all of its services to Bogota, and the Colombian carriers serve Bogota on over half of their services.

Delta's proposal would offer the public service to this important Colombian destination from a new U.S. gateway, Delta's hub at Atlanta. This service would afford Atlanta passengers their first nonstop service to Colombia. Delta's Atlanta hub, which serves passengers throughout the United States with over 150 daily flights, would also provide travelers in the Atlanta catchment area with an important competitive service option for connecting service to Colombia to the services offered by American at Miami and Continental at Houston. Given the size of Delta's Atlanta hub and the fact that U.S. services are now provided by U.S. carriers from only two U.S. cities, the addition of a new gateway will increase significantly the service options for Colombia passengers.

By:  Bradley Mims

Continental objects to the Department’s precipitous, tentative decision to award Delta certificate authority and seven frequencies to operate duplicative U.S.-Bogota service via Atlanta. The Department’s failure to institute full comparative proceedings to consider the relative merits of Continental’s Houston-Cali proposal and Delta’s Atlanta-Bogota proposal reflects a "don’t confuse me with the facts" attitude which has resulted in factual errors and omissions in the Department’s tentative decision which can be cured only by instituting an evidentiary proceeding to give Continental and Houston the full consideration they deserve and to base the Department’s final decision on a fully-developed factual record.

In the Department’s rush to judgment, it has reached factual conclusions which are erroneous, as noted above, and failed to develop a sufficient factual basis for its decision to add a seventh carrier to U.S.-Bogota routes rather than a second carrier to U.S.-Cali routes. Thus, the Department must, at the very least, institute further proceedings to develop a factual record on the benefits of the two proposals before it. Had the Department held a full comparative proceeding, it would have before it actual numbers of passengers who would receive their very first online Cali service and their first competitive online Cali service to compare with the minimal number of passengers who would receive their first online Bogota service or their first competitive online Bogota service. Similarly, the Department could compare the number of Bogota seats available per passenger with the number of Cali seats available per passenger to evaluate which new competition would provide more significant benefits. Although the Department is well aware of the effects of monopolies in air transportation generally, a full proceeding would enable it to consider the actual adverse effects of continuing American’s monopoly on U.S.-Cali service. Without evaluating such factors, the Department cannot reasonably conclude that Delta’s proposal would provide greater benefits. Thus, the Department’s conclusion that there are "no unresolved issues of relevant fact that would benefit from further evidentiary procedures" (Order 2000-7-19 at 7) is simply incorrect.

Counsel:  Continental and Crowell Moring, Bruce Keiner

The Department correctly recognized the importance of authorizing service from a major hub gateway in order to maximize the online service benefits of an award. Thus, not only will Delta’s Atlanta-Bogota services provide Atlanta travelers their first and only nonstop service to Colombia, but Delta’s new Colombia flight will provide an unprecedented number of new and competitive nonstop-to-nonstop connecting services to all areas of the country. As the Department observed, there is vastly greater demand for Bogota service, than there is for travel to Cali. Atlanta holds the undisputed title of "world’s largest airline hub." From Atlanta, Delta and the Delta connection carriers offer some 900 daily flights to over 160 nonstop destinations. Consequently, more U.S.-Colombia passengers will have convenient competitive online service options than ever before.

The Department correctly recognized that Delta’s large capacity B-757 proposal (with 48 percent more seats than Continental’s competing proposal) coupled with the strategic attributes of Delta’s Atlanta hub, will have a profound effect on improving the competitive market structure between the United States and Colombia.

Counsel:  Delta and Shaw Pittman, Robert Cohn

In the limited opportunity that it was given, Continental made a persuasive case for using the seven available frequencies between Houston and Cali, Colombia. By awarding these frequencies to Continental, the Department would ensure that the central and western regions of the United States will have the benefit of adequate service to Colombia. Continental operates a single daily flight to Bogota from Houston, the only Colombia gateway west of the Mississippi.

Counsel:  Houston and Leftwich Douglas, Rebecca Taylor, 202-434-9100-rltaylor@ldpllc.com

If the Department takes this opportunity to consider fully the correct facts regarding Colombia service, it will recognize that adding a seventh U.S.-Bogota carrier is far less important than adding a second U.S.-Cali carrier. Delta ignores the fact that U.S.-Cali service is not only a U.S.-flag monopoly for American, it is a total monopoly. Although Delta quotes the Department’s conclusion, neither the Department nor Delta has explained why eliminating a monopoly is less important than adding a seventh carrier between the U.S. and Bogota. Only an opportunity to submit exhibits and briefs can allow the Department to answer the questions raised.

Indeed, it is ironic that the Department is rushing to expedite this proceeding while the 1999 U.S.-Brazil Combination Service Proceeding has been on the Department’s docket since September 1999, languishing over 100 days since Continental submitted a motion asking for immediate allocation of a single frequency.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202.624.2500

Continental’s Motion for Leave to File should be denied, and its associated erroneous Reply should not be admitted into the record. Contrary to Continental’s assertions, Delta’s Answer did not contain any factual errors, and admitting Continental’s unauthorized pleading would only serve to further confuse the issue.

Delta’s Answer correctly stated the level of Continental’s Colombia operations and did not attribute Continental with double-daily Houston and Newark frequencies. It appears that Continental’s confusion stems from its misplaced reliance on an unofficial electronic source document posted by a commercial internet vendor, rather than the official signed copy of record (which, as far as Delta can determine, was duly served on Continental). As for Continental’s claim that Delta has "misstat[ed] Continental’s service record in South American," Delta believes that the facts speak for themselves. The remainder of Continental’s unauthorized Reply is devoted to repeating arguments already raised in its Objections, and which were fully addressed in Delta’s previous Answer. There is no point in allowing Continental to repeat them again here.

Counsel:  Delta and Shaw Pittman, Alexander Van der Bellen, 202-663-8060

Delta wants the Department to deny Continental's motion for leave to file. Continental's reply to Delta's factually inaccurate answer because Delta's counsel supplied an incorrect version of Delta's answer to a commercial Internet vendor for publication, the vendor published it and Continental relied on this version of Delta's answer to prepare its reply. Whether Delta's official version of its answer said, Continental offers double-daily Houston and Newark frequencies or not misses the point, however. Delta has not challenged, much less refuted, the balance of the factual errors in the record that Continental correctly cited in its reply, which are myriad, material and require correction. Delta has also failed to rebut Continental's argument that comparative selection procedures will enable Continental to show the Department that breaking American's monopoly on U.S.-Cali service will produce far greater public benefits than adding a seventh airline for U.S.-Bogota service. Without a proceeding, the Department cannot weigh the arguments and evidence to ensure the maximum public benefits of a Colombia award and introduce competition on U.S.-Cali routes.

Counsel:  Crowell Morning, Bruce Keiner, 202.624.2500

Continental petitions the Department to reconsider its decision awarding seven frequencies and related route authority to Delta for Atlanta-Bogota service because the Department’s failure to institute full comparative proceedings to consider the relative merits of Continental’s Houston-Cali proposal and Delta’s Atlanta-Bogota proposal and develop the facts necessary to evaluate the relative merits of the two applications fails to comport with relevant judicial standards. The Department’s decision is arbitrary and capricious and an abuse of the Department’s discretion. Moreover, the decision is not based on substantial evidence and fails to comply with relevant procedural standards. Only through the Department’s normal evidentiary process can Continental and Houston be given the requisite due process they deserve so the Department can make a rational decision based on a fully-developed factual record.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500

In the limited opportunity that Continental as well as the Houston Parties had to present a case, they submitted sufficient evidence and arguments at least to require the Department to review the competing proposals with a closer eye. For example, the Houston Parties noted that while the central and western regions of the U.S. relied on a single daily flight to Colombia from Houston, U.S. and foreign-flag carriers operate 74 flights per week to Colombia from the southeastern comer of the United States, including 39 flights to Bogota alone.' The Department did not address this tremendous geographic imbalance in any of its orders in this proceeding.

Moreover, the Houston Parties, in their objections, noted the existence of significant gaps in the record before the Department. For example, the Department did not address whether the differences in the size of the aircraft that Delta and Continental proposed to operate should have been compared in light of the (undetermined) load factors that each carrier reasonably could expect to achieve. In previous cases in which a route award was made based on abbreviated proceedings which had not carefully scrutinized carrier service proposals, the Department has subsequently changed its decision. For example, in the Los Angeles- Guadalajara Exemption Proceeding, Docket OST-95-244, the Department withdrew its initial award to United Airlines and instead authorized American Airlines to serve the market based on additional information that had not been made available to the Department at the time of its original decision, and was disclosed only in response to a request for additional details about each carrier's plans. See Order 95-8-3, at 3. Similar uncertainty in this proceeding does not benefit the public interest.

Finally, the Department appears in its orders in this proceeding to have relied on claims about connecting services and the effectiveness thereof at Delta's Atlanta hub which never were substantiated in the record. As far as the Houston Parties are aware, the Department at no time has explained to what extent it can or will rely on evidence external to the record if it proceeds to confer a route award without a full evidentiary proceeding. At a minimum, the Department should clarify its position on this issue in order to provide guidance for future proceedings.

Counsel:  Leftwich Douglas, Rebecca Taylor, 202.434.9100, rltaylor@ldpllc.com 

Counsel:  Continental and Crowell Moring, Bruce Keiner, rbkeiner@cromor.com

OST-1996-1417- American - Exemption Renewal- Miami-Paris
OST-1998-3419 - American - US-Japan Combination Services
OST-2003-14523 - American Airlines and Iberia - US-Spain Codeshare
OST-1996-1118 - Arrow Air - US-Uruguay
OST-1999-6587 - Continental - US-South Africa
OST-2000-7655 - Continental - US- Colombia Combination Service Proceeding
OST-2000-7186 - Continental - Houston- Cali, Colombia
OST-2000-7104 - Atlanta/New York- South America: U.S.- Belize; Atlanta, Georgia- Bogotá, Colombia
OST-1997-3218 - Delta - Certificate - Atlanta/New York-South America; US-Belize
OST-2004-19165 - Continental - US-Tripoli, Libya Codesharing with KLM
OST-2001-9953 - Continental - US- Brazil/Argentina Codeshare with Transbrasil
OST-1997-2708 - Delta - US-Brazil Codesharing with Transbrasil
OST-1997-2967 - Delta - US-Recife and Iguassu Falls, Brazil Codeshare with Transbrasil
OST-2002-12161 - Delta - United States-Algiers, Algeria Codeshare with Alitalia
OST-2004-19232 - Northwest - US-Tripoli Codeshare with KLM
OST-2000-7339 - US Airways - LaGuardia- Nassau, Bahamas
OST-2002-12481 - US Airways - Washington Reagan National - Nassau-Bahamas
OST-2002-13854 - US Airways - Boston-Nassau, Bahamas
OST-2001-9952 - Continental - US- Brazil/Argentina Codeshare with Transbrasil
OST-2001-9951 - Continental - US- Brazil/Argentina Codeshare with Transbrasil
OST-2003-16354 - TAMPA - Miami-Lima-Colombia All-Cargo

Issued April 19, 2005

Dismissing Applications - Various Dockets

By: Paul Gretch

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