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OST-99-6108

Delta Air Lines, Inc.

Counsel:  Shaw Pittman, Robert Cohn, 202.663.8060

Continental Airlines Inc./ Delta Air Lines Inc.

Continental and Delta have submitted certificate applications for U.S.-Argentina certificate authority and mutually-exclusive requests for the seven U.S. Argentina frequencies which become available September 1, 2000. Continental asks the Department to consolidate the above-captioned applications and to establish a carrier selection proceeding to determine the award of U.S. -Argentina frequencies. Because the requests of Continental and Delta are mutually exclusive, they must receive contemporaneous consideration under the Ashbacker doctrine. Continental moves the Department to consolidate the above-captioned applications and establish a carrier selection proceeding.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202.624.2500

Delta Air Lines, Inc.

Continental has long sought Buenos Aires authority so it can compete for the large volumes of New York/Newark traffic and offer convenient connecting service through its Newark hub. Delta, on the other hand, has only recently reinstituted South America service at all, much less sought authority to serve Buenos Aires. Although Delta now claims that Delta has been "aggressively seeking expansion opportunities in South America and that Atlanta-Buenos Aires is "at the top of Delta's Latin American route priorities", just last year Atlanta-Buenos Aires was only one "among Delta's highest route priorities in Latin America.114 In sharp contrast, Buenos Aires authority has long been Continental's priority in Latin America. Before Delta even reinstituted South America service, Continental opposed the award of additional U.S.-Argentina frequencies to the incumbent carriers, American and United, in 1994; sought to acquire an interest in Aerolineas Argentinas; and asked the Department to consider new Argentina applications when United instituted Chicago-Buenos Aires service using frequencies awarded for Miami and New York service. Continental's longstanding, major commitment to developing a comprehensive Latin American route network requires the award of Buenos Aires authority to close the gap between Continental and its primary competitors throughout Latin America.

LAPA, an Argentine airline, has just introduced nonstop Atlanta-Buenos Aires service which should suffice to meet demand in the local Atlanta-Buenos Aires market. Press reports indicate that LAPA is "in a codeshare with Delta," which would allow it to utilize the world's largest airline hub for convenient online connections, but even without a codeshare connecting Delta/LAPA passengers can be accommodated through Atlanta, where Delta handles LAPA.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202.624.2500

New U.S.- Argentina Combination Service Opportunities

On August 12, 1999, representatives from the United States and Argentina initialed a Memorandum of Consultations and a set of amendments to the U.S.-Argentina Air Transport Services Agreement, providing for an open-skies accord between the countries after a three-year transition period for combination services. Under the terms of the transition, the number of U.S.-Argentina scheduled combination service frequencies that can be operated by U.S. carriers, beyond the 42 weekly flights that can be operated currently, can be increased in phases. Specifically, U.S. carriers may use seven additional frequencies per week beginning on September 1, 2000, and an additional seven each on June 1, 2001, and June 1, 2002. All frequency limitations between the U.S. and Argentina will be lifted by June of 2003, subject to certain conditions. There are no limitations on the number of U.S. carriers that may be designated to serve the market.

During the first phase of the transitional agreement (September 1, 2000 to May 31, 2001), U.S. carriers may serve from any points in the U.S. via intermediate points to Buenos Aires, Cordoba, and one additional point in Argentina to be selected by the U.S., and beyond to Santiago, Chile, and Montevideo, Uruguay. Under the second phase (June 1, 2001 to May 31, 2002), U.S. carriers may serve from any points in the U.S. via intermediate points to Buenos Aires, Cordoba, and two additional points in Argentina to be selected by the U.S., and beyond to Santiago, Chile, and Montevideo, Uruguay. In addition, under the second phase (June 1, 2001 to May 31, 2002), U.S. carriers may serve five additional points in Argentina to be selected by the U.S. on a code share basis only.

By this notice, we request that all U.S. carriers interested in making use of the frequencies available under the first two phases, i.e. seven frequencies beginning on September 1, 2000, and seven on June 1, 200 1, file applications as specified below with the Department no later than September 22, 1999. Answers to applications should be filed no later than September 29, 1999. Replies to answers should be filed no later than October 6, 1999.

By:  Bradley Mims

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