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U.S.-Brazil Combination Frequencies

Delta is requesting a continued temporary allocation of four unused Brazil frequencies to maintain daily service on the Atlanta-Rio de Janeiro route. According to April 2002 schedules, and the dormancy notices filed with the Department on February 15, 2002, Continental, American and United each have dormant and/or unused frequencies they do not intend to operate. All together, based on the information available to Delta, there appear to be 18 available Brazil frequencies for which there are no immediate service plans. See, Attachment A. Thus, there are more than sufficient frequencies available to fund a continued temporary allocation of four frequencies to Delta. The Department should grant Delta's allocation from an unspecified source, so that Delta's Atlanta-Rio de Janeiro services will not be subject to recall until the last frequencies are exhausted from among the many sources of dormant and/or unused frequencies.

The Department has a public interest obligation to preserve the highest possible levels of international air transportation service -- particularly on limited-entry routes such as U.S.-Brazil. In Order 2001-11-15, Department recognized "the importance of ensuring that services in restricted markets are available to consumers to the full extent possible." Moreover, in Order 2002-2-2, the Department stated that "sufficient frequencies should be available to facilitate continuation of Delta's daily service in the Atlanta-Rio de Janeiro market," and the Department established a February 15, 2002 notice and dormancy waiver request date, specifically so that "should frequencies remain dormant, Delta will be able to seek a timely extension of its frequency allocation."

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

U.S.- Brazil Combination Frequencies

 American does not object, provided that the Department contemporaneously grants American's application for a dormancy waiver, submitted on February 15, 2002 in OST-19996284, with respect to two New York (JFK)-Rio de Janeiro weekly frequencies, through January 8, 2003. Otherwise, American objects to Delta's application.

Accordingly, there will be a total of 15 (not 18) unused U.S.-Brazil weekly frequencies -- four held by American, four held by Continental, and seven held by United. Of these 15 unused frequencies, two (JFK-Rio de Janeiro) of American's four are subject to a 90-day dormancy condition, and two are not; Continental's four (New York/Newark-Rio de Janeiro) are subject to a 90-day dormancy condition; and United's seven are not subject to a 90-day dormancy condition. Nonetheless, if Delta attempts to parlay its temporary request into a permanent reallocation, all frequencies not being used, whether or not they are subject to an explicit 90-day dormancy condition, should be placed in issue.

American also wishes to note that Delta's Attachment is incorrect. American will in fact be operating 45 (not 42) weekly frequencies as of the summer of 2002 (DFW-Sao Paulo, seven; JFK-Rio de Janeiro, five; JFK-Sao Paulo, seven; MiamiRio de Janeiro, 12; and Miami-Sao Paulo, 14).

Counsel:  American, Carl Nelson, 202.496.5647, carl.nelson@aa.com

With 18 Brazil frequencies currently unused, Delta should be permitted to continue its Atlanta-Rio de Janeiro service using what Delta describes as an "allocation from an unspecified source" until notice has been given that all of the unused Brazil frequencies will be required for authorized operations. Requiring at least 90 day's notice to Delta and the Department should allow sufficient time to resolve any issues raised when all frequencies are required for authorized Brazil operations. With so many frequencies currently unused, granting the Continental and American requests for waivers of the dormancy conditions applicable to their frequencies is also appropriate. For these reasons, Continental urges the Department to grant Continental's waiver application promptly, and Continental has no objection to the continued temporary award of four Brazil frequencies to Delta, under the conditions described above, for its Atlanta-Rio de Janeiro service.

Counsel:  Crowell Morning, Bruce Keiner, 202.264.2500, rbkeiner@crowell.com 

Atlanta has already proven itself as a highly successful gateway to Brazil, and currently enjoys daily nonstop service by Delta to both Rio de Janeiro and Sao Paulo. Atlanta can readily support the continuation of daily nonstop service to Rio de Janeiro, and Delta has indicated its willingness to maintain this service, so long as it receives the necessary frequency allocation. The strength of the Atlanta gateway, backed by Delta's extensive connecting complex at the Hartsfield Atlanta International Airport, has enabled travelers and shippers across the country to enjoy important new travel options to Rio de Janeiro this winter -- at a time when carriers have retrenched Brazil services at other gateways across the country.

By:  Metro Atlanta, HollyBeth Anderson, 404.586.8462, handerson@macoc.com

U.S.- Brazil Combination Frequencies

Although the commenting carriers also argue that their dormancy waiver requests for U.S.-Brazil frequencies be granted, there is no linkage or conflict between Delta's temporary request and the pending dormancy applications. The Department should consider the merits of American's and Continental's dormancy waiver requests in the separate dockets established for that purpose. The grant of temporary authority to Delta in no way impacts or affects the Department's ability to grant, or not grant, Brazil dormancy waivers to Continental or American.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202.663.8060

U.S.-Brazil Combination Service Frequencies; American Airlines, Inc. and Continental Airlines, Inc.

United, which holds no U.S.-Brazil frequencies that are subject to dormancy conditions, did not answer either Delta's request for extension of its temporary allocation or the requests of American and Continental for extensions of their dormancy waivers because none of those requests had any direct affect on United. Delta's subsequent request for a "permanent" reallocation of four frequencies, however, threatens to raise issues that could affect United as well as the other designated U.S.-Brazil carriers. American has, for example, urged that seven of United's unconditioned U.S.­Brazil frequencies be placed at issue in any proceeding involving Delta's request for a "permanent" reallocation and that American's eleven unused frequencies be exempted from that process.  The premise for American's unprecedented request seems to be that it had announced plans as of March 8, 2002 (the date of its Motion and Response in Docket OST-99-6284) for reuse of its eleven dormant frequencies. What American ignores, however, is that United has also implemented plans for reutilization of its seven temporarily suspended U.S.-Brazil frequencies. United has established October 31, 2002, as the date on which it will again use those frequencies for daily nonstop New York-Sao Paulo services.

Delta's original request in Docket OST-02-11627 for continuation of its temporary reallocation was, in effect, open-ended. That reallocation would continue for as long as there remained U.S.-Brazil frequencies that were not used by their original holder, and whenever the holder proposed to use them, it would be required to give 90­days' notice to Delta and DOT. Such a temporary allocation gives Delta sufficient flexibility to plan at least through the end of this year when Continental and American propose to reuse their dormant frequencies. Should it appear 90 days before that time that any of these frequencies will continue to be unused, the Department can then revisit the issue of whether to consider a permanent reallocation. Until that time, the Department should undertake no proceeding to "permanently" reallocate frequencies which are not yet restored to service due to the impact of the events of September 11.

American's own position is inconsistent with the inclusion of United's suspended frequencies. Thus, American urges that its own plans to reutilize its currently dormant frequencies should protect such frequencies from inclusion in a reallocation proceeding. However, this ignores the fact that United plans to reuse its seven frequencies later this year while American would not reuse all of its frequencies until next year, more than two months after United's restart date.

Counsel:  Wilmer Cutler, Jeffery Manley, 202.663.6670, jmanley@wilmer.com

Delta Air Lines, Inc.

Temporary indefinite allocation of four weekly U.S.- Brazil service frequencies for continuation, beyond March 31, 2002, of its Atlanta-Rio de Janeiro services. In support of its application, Delta argues that the other authorized U.S.-Brazil carriers (American, Continental, and United) all have unused frequencies, which would allow the Department to fund Delta’s request for a temporary indefinite allocation of U.S.-Brazil frequencies. Delta further states that the Department should grant Delta’s request from an unspecified source, so that its Atlanta-Rio de Janeiro services will not be subject to recall until the last frequencies are exhausted from among the many sources of available unused frequencies. American, Continental, and the Georgia and Atlanta Civic Parties (the State of Georgia, the City of Atlanta, Atlanta Hartsfield International Airport, and the Metro Atlanta Chamber of Commerce) filed answers to Delta’s application.

By:  Paul Gretch

U.S.-Brazil Combination Service Frequencies; American Airlines, Inc. and Continental Airlines, Inc.

Order 2002-4-19 grants dormancy waiver extensions to Continental Airlines through December 31, 2002, and January 8, 2003, respectively, with respect to their U.S.-Brazil service frequency allocations. Also, granting the application of Delta Air Lines for a temporary, indefinite allocation of four weekly U.S.-Brazil service frequencies for continuation of its Atlanta-Rio de Janeiro services. Deferring action on the application of Delta for a permanent allocation of four weekly U.S.-Brazil service frequencies.

Against this background, we believe that it would best serve the public interest to provide Continental and American the additional dormancy waivers they seek. We do not find that it would be appropriate now, given the current economic climate in the U.S.-Brazil market, to make any decisions regarding permanent reallocations or back-up awards regarding U.S.-Brazil frequencies. Rather, we believe that the public interest would be best served here by deferring action on Delta's application for a permanent U.S.-Brazil frequency award. We may decide to reevaluate the situation at a later date, including consideration of Delta's permanent U.S.-Brazil frequency request, should it appear that U.S.-Brazil frequencies would continue to go unused.

While we have decided to grant the requests of Continental and American here, as in the public interest, based on the circumstances stated in the request, there should be no expectation that an additional request necessarily will be granted. Any future requests to extend the dormancy waiver for the frequencies at issue here will have to be considered in light of the specific arguments offered in support of the request and any comments that might be filed in response, and in the context of the circumstances present at that time.

By:  Read Van de Water

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