ost995061

OST-99-5061

Allocation of Chicago-London Combination Service Frequencies

OST-99-5061

Posted and Served February 1, 1999

Notice

Chicago-London Combination Service Frequencies

In view of the need for a timely decision to permit the most effective use of our bilateral opportunities, we intend to act quickly to allocate the frequencies in time for the 1999 summer season. In the interest of developing a complete record for this allocation, we will require American and United to submit, at a minimum, the following information:

The total number of minimum entitlement 1999 summer season frequencies planned; the distribution of these frequencies throughout the season, the size of the aircraft to be used in these services, including the seating configuration broken down by class of service (first, business, economy);

The total number of additional 1999 summer season frequencies sought; and

A full description of how the requested additional frequencies would be used, including the date the carrier would begin to use the frequencies; how the frequencies would be distributed throughout the season; the aircraft to be used in these additional services, including the seating configuration broken down by class of service (first, business economy); and the London airport to which the frequencies would be operated.

By: Paul Gretch

Allocation of Chicago-London Combination Service Frequencies

OST-99-5061	February 8, 1999	Submission of American Airlines	Chicago-London Combination Service Frequencies
		Attachments: 1998/1999 Summer Season

American seeks 67 additional frequencies for the 1999 summer season. Combined with American's minimum entitlement of 886 frequencies, that will provide 953 frequencies, and allow American to operate four daily nonstop roundtrips between Chicago ants London (Heathrow) for the entire summer season (April 1 - October 31), as well as one daily nonstop roundtrip between Chicago and London (Gatwick) for the period June -September using MD-11 aircraft

Counsel: American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com

OST-99-5061	February 8, 1999	Application of United Air Lines for Allocation of Additional Chicago-London Combination Frequencies	Chicago-London Combination Service Frequencies
		Service List

United's minimum entitlement of 488 round-trip frequencies for the 1999 Summer Season would be used to operate double daily service throughout the season and to add one additional daily service from July 1, 1999 through August 29, 1999. The minimum entitlement would be operated with B-777 aircraft with a total of 292 seats (12 first, 49 business and 231 coach). United would use the 67 additional Summer Season frequencies to extend its triple daily service for a longer portion of the summer -- from May 1, 1999 through September 4, 1999. The aircraft for these additional services would also be B-777, in the same configuration described above. These services would be offered from Chicago's O'Hare Airport to London's Heathrow Airport.

Counsel: United and Kirkland Ellis, Jeffrey Manley, 202-879-5161, jeffrey_manley@kirkland.com

Chicago-London Combination Service Frequencies

OST-99-5061

February 12, 1999

Answer of American Airlines

Allocation of Chicago-London Combination Service Frequencies

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United proposes service only to Heathrow. While Heathrow is the preferred London airport for many itineraries, Gatwick is the preferred airport for other itineraries, particularly for passengers who work or reside close to Gatwick; who prefer the ground transportation available at Gatwick to Central London; and who require connections to or from destinations that: are not served via Heathrow. By serving both Heathrow and Gatwick, American will provide additional travel options that will not be available from United's exclusive Heathrow service. The Department should promptly conclude this proceeding by awarding 67 additional Chicago-London frequencies to American for the 1999 summer season.

Counsel: American, Carl Nelson, Jr., 202.496.5647, carl_nelson@amrcorp.com

OST-99-5061	February 12, 1999	Answer of United Air Lines	Allocation of Chicago-London Combination Service Frequencies	HTML
		Exhibit UA-1: Even if All Extra Frequencies Went to United, AA Would Still Have 60% More than UA
		Exhibit UA-2: Even if All 67 Extra Frequencies Went to United, AA Would Still Have 20% More Seats than UA

The Department's policy and precedent represented by these past allocation proceedings fully support grant of United's request for all available frequencies and denial of American's application. To award any frequencies to American would increase that carrier's dominance of the Chicago-London market contrary to the Department's efforts to eliminate such dominance through the frequency application process. Granting American's application would strengthen that carrier's position as the dominant carrier allowing it to operate in excess of four daily frequencies (953 for the season) against United's operation of only three daily frequencies on nearly half the days of the summer season (137). Particularly where, as here, American has a marketing alliance with the only foreign carrier in the market where frequencies are to be allocated, there is no reason to depart from past precedent to favor American with any allocation beyond its minimum entitlements American offers in its smaller aircraft because of the enormous frequency advantage American possesses.

Counsel: United and Kirkland Ellis, Jeffrey Manley, 202-879-5161, jeffrey_manley@kirkland.com

Allocation of Chicago-London Combination Service Frequencies

Order 99-3-20
OST-99-5061

Issued and Served March 23, 1999

Order to Show Cause

Scanned Version

Allocation of Chicago-London Combination Service Frequencies

By this order we tentatively allocate 67 round-trip frequencies to United Air Lines for service in the Chicago-London market for the 1999 summer season.

By: Patrick Murphy, Deputy Asst Secretary, Aviation and Intl Affairs

Allocation of Chicago-London Combination Service Frequencies

OST-99-5061

March 29, 1999

Objections of American Airlines to Order 99-3-20

Chicago-London Combination Service Frequencies

In Order 99-3-20, the Department called this "a positive aspect of American's proposal," and acknowledged that American "would offer travelers a choice of London airport services and certain beyond-London services not available at Heathrow" (p. 3). Nonetheless, the Department tentatively found that "we are not persuaded that the competitive benefits of American's once-daily Gatwick service, which it proposes to operate for less than half the summer season, outweigh the benefits of additional competitive service at Heathrow" (p. 4). American disagrees with the outcome of Department's balancing test, and believes that its Gatwick service would provide far greater competitive benefits than additional service by United to Heathrow, which would likewise operate "for less than half the summer season," inasmuch as neither applicant can be awarded in excess of 67 additional frequencies for the coming summer season.

Counsel: American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com

Allocation of Chicago-London Combination Service Frequencies

OST-99-5061

March 31, 1999

Reply to Objections of American to Order 99-3-20 of United

Chicago - London

As United has previously noted, American could easily act on its convictions about the merits of increasing service to Gatwick. Even if American shifted one daily frequency from Heathrow to Gatwick for the entire summer season, it would still outschedule United on the Chicago-Heathrow route. That American has failed to do this indicates that perhaps, like the Department, American is not persuaded that the increased service and competitive benefits of once-daily Gatwick service outweigh the benefits of additional competitive service at Heathrow, the airport through which both [United and American] have chosen to concentrate their Chicago-London service.

Counsel: Kirkland & Ellis, Jeffrey Manley for United, 202.879.5161

Allocation of Chicago-London Frequencies

Order 99-4-16
OST-99-5061

Issued April 15, 1999
Served April 16, 1999

Final Order

Scanned Version

Chicago-London Combination Service Frequencies

We have decided to make final our tentative decision and allocate 67 additional round-trip frequencies to United for use in the Chicago-London market.

American has presented no arguments or evidence that refute these tentative conclusions. Rather, American has reiterated its previous arguments that its proposal to use the additional frequencies to serve Gatwick would constitute a better use of the additional frequencies. We fully considered American's argument in our tentative decision. Indeed, as we noted in our show-cause order, we found American's proposal to serve Gatwick to be an attractive feature of its application. However, we note that American was proposing to serve Gatwick for less than half the seven-month season, with the overall majority of its service operated through Heathrow. Against this background, we are not persuaded that American's proposed short-term service at Gatwick offers greater benefits in this case, particularly in view of the benefits of an allocation to United, which would use the additional flights to increase competition and consumer choice at Heathrow, the airport where both carriers have chosen to focus their services.

We are also unpersuaded by American's arguments that slot allocation at Chicago's O'Hare airport should affect our allocation of frequencies here. The issue in this case is how the additional frequencies in the Chicago-London market should be allocated between the only two carriers that can serve the market. In this regard, we note that American operates almost twice as much service in the Chicago-London summer season market as United and has all of the O'Hare slots necessary to operate these services. In these circumstances, we are not persuaded that the issues related to overall slot awards at O'Hare are relevant to the public interest factors affecting the frequency allocations for service in the Chicago-London market.

By: Patrick Murphy