Order 01-08-16

Order 01-8-16

2001 China Code-Share Points Case

Order 01-8-16
OST-01-10172

Issued August 17, 2001
Served August 17, 2001

Final Order

China Code-Share Points

Order 2001-8-16 makes final the tentative findings and conclusions set forth in Order 2001-7-10, and selects the Chinese cities Kunming, Changsha, Dalian, and Chongqing as four of the nine available Chinese points for use by U.S. carriers for code-share operations with their Chinese code-share partners. It also make final the tentative decision to permit American Airlines and Delta Air Lines to choose one additional code-share point each from those requested in their respective applications with notification of the selected cities within five calendar days from the service date of this order.

No objections were filed to the Department's tentative decision in Order 2001-7-10. Delta filed comments, noting the important new code-share benefits that all three U.S. carriers would receive and urging the Department to make final the tentative portion of Order 2001-7-10.

We have decided to make final our tentative findings and conclusions set forth in Order 2001-7-10. As we stated in that order, we believe, given the nature of our aviation agreement with China, that it is important to maximize use of the code-share opportunities, and that the public interest will best be served by our selection of code-share only points that will enhance the likelihood of service and competition in the market. We note that no party has objected to our proposed selection of code-share points.

The U.S.-China Protocol permits all U.S. carriers with a Chinese carrier code-share partner to serve the points selected for code-share only services. Thus, even though all of the carriers to this proceeding did not apply for all of the points we have selected, we are granting all carriers the necessary regulatory authorities required to serve the Chinese points selected in this order (Dalian, Kunming, Changsha, and Chongqing). Furthermore, once American and Delta each name the additional point of their choice, we intend to grant all parties the necessary authority to serve those selected points as well. To the extent that the applicants in this case applied for points not selected by the U.S. government, we deny the balance of the applications.

We note that China Eastern applied for exemption authority to serve between the United States and Shanghai/Beijing and beyond to named points. China Eastern states in its application that carriers selected by the Government of China are authorized to operate to the United States from any point or points in China. We granted China Eastern exemption authority to the extent necessary to permit it to hold out services between the United States and Dalian, Kunming, Changsha, and Chongqing. To the extent that China Eastern intends solely to display American's code on China Eastern's domestic flights between Beijing and Shanghai and the interior China points named above, China Eastern already holds the necessary underlying economic authority in its foreign air carrier permit (Order 92-11-7) for those services, subject to its holding the Statement of Authorization under 14 CFR Part 212 that we have granted it here.

We note that the code-share arrangement between Delta Air Lines, Inc. and China Southern Airlines Limited did not include provisions regarding exclusive dealings between the code-share parties. Should the parties subsequently decide to amend their code-share agreement or any other agreement between them to include any provision relating to an exclusive arrangement between the parties regarding their code-share services, that amended language must first be submitted for consideration by the Department.

By: Susan McDermott