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OST-1999-6076 - Air France - Amendment of Foreign Air Carrier Permit

http://www.airfrance.com/

Societe Air France

Application of Societe Air France pursuant to 49 U.S.C. Section 41302, and Part 211, applies for amendment of its foreign air carrier permit to engage in foreign air transportation: 

• (1) Of person, property and mail from points behind France via a point or points in France to a point or points in the United States, and beyond to two points in the Western Hemisphere, points in the French Department of America and points in the French Territories in the Pacific. 
• (2) Of property and mail from points behind France via a point or points in France and intermediate points to a point or points in the United States, and beyond. 
• (3) Of persons, property and mail from points behind the French Department of America via a point or points in the French Department of America and intermediate points to a point or points in the United States and beyond. 
• (4) Of persons, property and mail from points behind French Polynesia via French Polynesia and intermediate points or point in the United States and beyond. Provided, that all such services are operated in conformity with the provisions and annexes of the Air Transport Agreement between the United States and France dated June 18, 1998.

Counsel:  Silverberg Goldman, Michael Goldman, 202-944-3305

American does not oppose the Air France request, provided that the Department simultaneously grants American's longstanding application for amendment of its certificate of public convenience and necessity for Route 602 (U.S.-France).

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

The recent U.S.-France Air Transport Agreement conveys valuable rights upon U.S. carriers. United's request to have these rights incorporated into its certificate of public convenience and necessity should receive priority over comparable, but subsequently filed, requests for permit authority filed by French-flag carriers. To relegate U.S. carrier certificate applications to the back burner, while granting foreign air carrier permit applications filed later in time, would unfairly burden U.S. carriers, such as United, that now must continue to rely on and renew shorter-term exemption authority in order to conduct comparable operations.  Air France's application does not specifically delineate the transitional operating restrictions contained in the U.S.-France agreement, but rather seeks broad foreign permit authority subject to the proviso that all services be "operated in conformity with the provisions and annexes of the Air Transport Agreement between the United States and France dated June 18, 1998.

Counsel:  United and Kirkland Ellis, Jeffrey Manley, 202-879-5161

Air France must also observe that American states in its Answer that its pending application for certificate amendment seeks a new segment authorizing foreign air transportation of persons, property, and mail between any points in the United States directly and via intermediate points and any points in France and beyond France to points in third countries." Obviously, American's authority cannot exceed that permitted by the U.S. -France Air Transport Agreement, which does not authorize open fifth freedom rights. Assuming American's application is limited to intermediate and beyond point rights, consistent with the Air Transport Agreement, Air France would have no objection to grant of American's application. Similarly, United notes in its Answer that Air France has not specifically delineated in its Application the transitional operating restrictions imposed by the U.S. -France Air Transport Agreement. As United subsequently points out, however, Air France has referenced the provisions of the Agreement in its Application and has made clear that Air France understands that its authority will be limited by the transitional restrictions contained in the Agreement. Such reference is fully sufficient for purposes of foreign air carrier permit authority and is standard practice in DOT proceedings (Indeed, United's U.S. -France certificate application contains a similar limitation regarding operation of United's U.S. -Paris services during the transition).

Counsel:  Silverberg Goldman, Michael Goldman, 202.944.3305

Counsel:  Silverberg Goldman, Michael Goldman, 202.944.3305

Subsequent to the filing of the Application, Air France experienced a fatal accident on July 25, 2000 when an Air France Concorde aircraft crashed on takeoff at Paris Charles de Gaulle Airport (CDG). The French Accident Investigation Bureau concluded that the cause of the accident that led to the loss of the aircraft and fatalities was the presence of a metal strip on the runway that led to a burst tire and the rupture of the fuel tank and the resulting fire. Air France Concorde aircraft were re-certificated by French Authorities and returned to scheduled service on November 7, 2001.

Counsel:  Silverberg Goldman, Michael Goldman, 202.944.3300

By application filed August 5, 1999, as supplemented, Air France requests that we renew its existing foreign air carver permit issued by Order 76-2-25, and amend that permit to enable Air France to conduct services between France and the United States consistent with the provisions of the open-skies aviation agreement between the United States and France.

The foreign air carrier permit issued Air France by Order 76-2-25 authorizes Air France to engage in scheduled foreign air transportation of persons. property and mail between France and specified points in the United States, via named intermediate points: and authority to perform charters subject to 14 CFR Part 212. Air France also holds another foreign air carrier permit, issued by Order 81-8-135. which awarded fir France, as well as other named foreign air carriers, conditional Alaskan stopover authority on its transpolar route between Europe and Japan, and emergency authority to transfer or receive passengers from one foreign carrier to certain eligible foreign or U.S. air carriers in Alaska in defined emergency situations.

Answers in response to Air France's permit amendment application were filed by American Airlines, Inc. and United Airlines, Inc. While neither carrier opposed Air France's request, both state that their pending requests for U.S.-France certificate authority should be granted along with Air France's amended foreign air carrier permit. Air France tiled a reply stating that all three applications should be processed expeditiously.  With respect to the issues raised by United and American concerning issuance of their certificate authority in the U.S.-France market, we agree with the parties that the certificates of United and American and the permit amendment of Air France should be issued expeditiously. In addition to the permit amendment order here, we are actively processing the certificate requests of American and United.  We have already awarded United exemption authority consistent with the rights available under the new open-skies agreement with France. See Notice of Action Taken, dated March 1, 2002. American has not sought broad U.S.-France exemption authority, but does hold exemptions to serve a number of US - France city-pair markets.

Air France has provided financial information which indicates that it can conduct the proposed services without jeopardizing passenger or shipper funds. Specifically, during the year ending March 31, 2000, Air France reported total assets of $9.9 billion, total liabilities of $6.9 billion and owners' equity of $3 billion. For the year ending March 31, 2000, Air France reported an operating profit of approximately $36 million. For the year ending March 31, 2001, Air France reported total assets of $10.8 billion, total liabilities of $7.5 billion, owners' equity of $ 3.3 billion. For the year ending March 31, 2001, Air France reported an operating profit of $38 million.  The majority of Air France's stock is held by the Government of France. Those shares of Air France stock not held by the government are traded on public stock exchanges.

By:  Read Van de Water

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