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US Airways and United Airlines for Approval of Codesharing Alliance

In order for all parties to be able to comment on all issues involved in this application, the application should be suspended until all of the above documents are placed in the docket. In addition, since US Airways' loan application has not been finalized by ATSB and since the ATSB is currently in discussions with US Airways about slots, gates and the proposed US Airways/United Alliance, this proceeding should be suspended until the ATSB has completed processing US Airways' loan guarantee application.

ACAA asks that the Department establish a public docket with copies of all documents between US Airways and the ATSB that relate to any of the issues addressed in this docket. Moreover, ACAA requests that the proceeding be suspended until those documents are in the docket and ATSB has completed its action on the US Airways loan application.

Counsel:  ACAA, Edward Faberman, 202.639.7502

US Airways and United Airlines for Approval of Codesharing Alliance

Enclosed are redacted copies of the US Airways-United Air Lines codeshare-, frequentflyer, and related agreements that were submitted to the Department of Transportation last Thursday, July 25, 2002: Codeshare/Regulatory Cooperation Agreement (Ex. A); United Mileage Plus® and US Airways Carrier Participation Agreement (Ex. B); US Airways Dividend Miles® Program and United Air Lines Carrier Participation Agreement (Ex. C); Reciprocal Airport Lounge Agreement (Ex. D); Passenger Prorate Agreement (Ex. E); and the Star Alliance Participation Agreement (Ex. F). The parties do not object to the Department's making these redacted copies of the agreements publicly available. If the Department has any questions about any of these agreements, please do not hesitate to contact the undersigned.

Counsel:  O'Melveny Myers, Joel Stephan Burton, 202.282.5300 and Wilmer Cutler, Bruce Rabinovitz, 202.663.6000

US Airways and United Airlines for Approval of Codesharing Alliance

For the foregoing reasons, the Department should extend the waiting period for the proposed codesharing agreement by 150 days, extend the waiting periods for the other agreements by 60 days, open a public docket, and require United and US Airways to disclose all communications with the Department or the ATSB regarding any commercial cooperation between the two carriers.

Counsel:  American, George Nicoud, trey.nicoud@aa.com 

America West is particularly concerned the alliance will further impair competition in East-West long-haul markets, and pose a threat to America West's unique capacity to provide price competition in these markets. The Department has described America West as the only network airline having comparably low costs to the non-network, low-fare airlines.

Counsel:  Baker Hostetler, Joanne Young, 202.861.1532

By:  various

US Airways and United Airlines for Approval of Codesharing Alliance

Before a US Airways/United Airlines codeshare/frequent flyer alliance is approved, steps must be taken by the Department to ensure that other carriers are able to compete in markets controlled by US Airways and United Airlines. These steps must include the redistribution of slots at National and LaGuardia Airports and providing gates and airport facilities to new entrants/ smaller incumbents at any airport in which United Airlines and US Airways have more than a 20°,% market share.  

ACAA asks that the Department: (1) Establish a public docket with copies of all documents between US Airways and the ATSB that relate to any of the issues addressed in this docket; (2) Redistribute slots at DCA and LGA, providing gates and airport facilities to new entrants/smaller incumbent at any airport where US Airways and united Airlines exceed a 20% market share; and (3) Block codeshare and frequent flyer program alliances unless small carriers at each hub are provided with equal access and rights. These are the steps that will promote a competitive market.

Counsel:  ACAA, Edward Faberman, 202.639.7502

Frontier Airlines believes the proposed code share alliance between United Airlines and U.S. Airways has the potential to impair the competitive environment for the airline industry, especially as it relates to smaller carriers without the same extensive resources, route structures or access to facilities.  It is a sad fact that airport authorities, whether intentionally or unintentionally, defer to the wants and desires of airlines commanding the market shares described above. Airlines holding significant market share, and therefore paying significant use fees, are given substantial deference when the allocation of ticket counter space and gates is determined. Unfortunately, Frontier has experienced the effects of this discrimination first hand. Frontier has flown into Chicago Midway Airport since 1995 with a schedule that includes an aircraft remaining overnight. Over the years, Frontier has consistently been left on its own to make arrangements for the accommodation of this overnight aircraft. Last fall, preliminary gate charts showed this aircraft as remaining overnight at Gate C-3, a common use gate at Midway. However, when Delta announced it was returning to Chicago-:Midway in early September 2001, Frontier's aircraft was pulled off of Gate C-3 to make room for Delta's overnight flight. Frontier has been left to cobble a patchwork and unacceptable solution to gate this overnight aircraft. It is our belief that Delta represented more airport fees, and was therefore given priority use of the common gate. With US Airways now starting service at Midway and considering United's strength in Chicago, Midway should be required to provide satisfactory gates and facilities to Frontier at Midway.

Counsel:  Frontier, Jeff Potter, 720.374.4200

By:  various

US Airways and United Airlines for Approval of Codesharing Alliance

We have concluded that we need additional time to determine whether the agreements or specific provisions in the agreements raise questions under 49 U.S.C. 41712 that may require us to request modifications of the agreements or to institute an enforcement proceeding. The agreements present important issues that require additional investigation by us. We have therefore determined to extend the waiting period by another thirty days, from August 24 to September 23. We understand that the two airlines wish to be able to implement the agreements promptly, and we therefore intend to conclude our review as soon as reasonably possible.

We recognize that the Air Carrier Association of America filed a motion to suspend proceedings and open a docket. ACAA argues that all information relating to the application should be made public, including all discussions between US Airways and the Air Transportation Stabilization Board, the board that is considering a loan guarantee application filed by United and that has conditionally approved a loan guarantee application filed by US Airways. Docket OST-2002-12986. We have given ACAA and all other interested persons the ability to comment on the United/US Airways agreements. If ACAA has evidence and analysis indicating that the United/US Airways agreements in whole or in part may involve unfair methods of competition, it has had the opportunity to submit that material for our consideration.

In addition, the ACAA motion incorrectly assumes that the ATSB based its conditional approval of the US Airways application on the airline's ability to implement its agreements with United. The letter released by the ATSB did not make the implementation of those agreements a necessary condition to approval of the loan guarantee application. The ATSB has been expressly informed and is fully aware that

this Department and the Justice Department have independent responsibilities for preventing unlawful anti-competitive conduct in the airline industry and that this Department has other independent regulatory responsibilities over the airline industry and the airports used by commercial airlines. This Department intends to carry out all of its regulatory responsibilities regarding the agreements before it completely independent of any matters that may or may not be pending before the ATSB.

By:  Read C. Van de Water

US Airways and United Airlines for Approval of Codesharing Alliance

In light of the two proposed major alliances involving five of the six largest carriers in the United States, it is absolutely imperative that the Department not conclude its review of the US Airways/United proposed codeshare and frequent flyer alliances until the Department also reviews the Delta, Northwest and Continental proposed alliance. Just as the Department found it necessary to conduct a joint review of the proposed AA/BA and United/BMI/Austrian/Lufthansa/SAS alliances, so too must these domestic alliances be looked at together. The enonnity of these two alliances and the unprecedented shift of market power and the resultant market dominance demands that the Department thoroughly review the impacts of both of these proposals before either one is allowed to proceed.

Counsel:  ACAA, Edward Faberman, 202.639.7502

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