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OST-98-4341

Allocation of Chicago-London Combination Service Frequencies

OST-98-4341 | Posted and Served August 19, 1998

pdficon.gif (87 bytes)Notice

As agreed by the United States and the United Kngdom under the consultation provisions of Annex 2 of the US-UK Air Services Agreement, a total of 129 additional round-trip frequencies have been provided above the minimum entitlemenets of 390 round-trip frequencies for American and 324 round-trip frequencoies for United, the two US carriers designated to serve the Chicago-London market, during the 1998/99 winter traffic season (November 1, 1998-March 31, 1999).  American and United have filed schedules that exceed that number.  Therefore, we must allocate the additional available frequencies.

Because of the need to make a decision quickly, we will require that this information be filed no later than seven calendar days from the date of service of this notice.   Answers to these submissions should be filed no later than five calendar days thereafter.

By:  Charles Hunnicutt


Allocation of Chicago-London Combination Service Frequencies

OST-98-4341 | August 26, 1998

pdficon.gif (87 bytes)Submission of American Airlines

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American seeks 64 additional frequencies for the 1998/99 winter season, or approximately one-half of the 129 available for allocation in this proceeding. Combined with American's minimum entitlement of 390 frequencies, that will provide 454 frequencies, and allow American to operate three daily roundtrips between Chicago and London for the entire 151day winter season, beginning November 1, 1998 and ending March 31, 1999, using MDll and B767 aircraft, as detailed in Attachment 3.

American already holds Heathrow slots to provide three daily Chicago-London roundtrips during all of the 1998/99 winter season, as confirmed at the IATA schedule coordination conference on June 24, 1998. United, by contrast, did not even apply for Heathrow slots to support additional Chicago-London operations this winter, and did not list any such service in its IATA schedule drafts submitted in May and June. In these circumstances, United's interest in additional frequencies has been minimal.

Counsel:  American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com

pdficon.gif (87 bytes)Application of United Air Lines

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This winter, American originally proposed four daily frequencies (604 frequencies for the season) in the Chicago-London market. British Airways will operate double daily Chicago-London service (302 frequencies) for the season. American and British Airways combined originally proposed to operate six daily flights, which is the equivalent of 906 frequencies for the season. Taking advantage of the current restrictive nature of the U.S.-U.K. bilateral, American and British Airways are seeking to insulate themselves from the impact of liberalization of the market. By proposing to increase their combined Chicago-London services now, the alliance hopes to be better positioned to ward off competition under whatever conditions might ultimately be imposed on the American/BA alliance. This is particularly true in markets such as Chicago-London where the American/BA alliance operates hubs at both ends of the route and slots for competing carriers are not generally available.

United urges the Department to allocate to United the 129 additional Chicago-London combination service frequencies available for the 1998/99 winter season.

Counsel:  United and Kirkland Ellis, Jeffrey Manley, 202-879-5000


Allocation of Chicago-London Combination Service Frequencies

OST-98-4341 | August 31, 1998

pdficon.gif (87 bytes)Answer of American Airlines

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In this proceeding, a total of 129 additional Chicago-London 1998-99 winter season frequencies are available for allocation. American is seeking an equitable allocation of 64 frequencies for itself, leaving 65 for United. United, however, is seeking all 129. The Department should deny United's overreaching request and, for the reasons shown below, divide the additional frequencies equally between the two applicants.

Counsel:  American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com

pdficon.gif (87 bytes)Answer of United Air Lines

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United needs all 129 of the available frequencies in order to operate a three daily nonstop Chicago-London flight pattern. United's present entitlement is limited to 324 frequencies. American already has 390 frequencies, enabling it to operate three daily services during most of the Winter season. Moreover, American has entered into a cooperation arrangement with British Airways ("BA") that allows it to supplement its own services with BA's two daily flights. The Department has consistently used frequency allocations to enable relatively new entrants, such as United is in the Chicago-London market, to become more competitive with incumbent carriers such as American and BA. Moreover, United will operate its new frequencies with larger equipment, offering more public benefits than American with the same number of opportunities United will use existing slots which it holds at Heathrow to operate a third daily Chicago-London flight. In these circumstances, United urges that its request for 129 Chicago-London frequencies be granted and American's application for 64 frequencies be denied.

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


Allocation of Chicago-London Combination Service Frequencies

OST-98-4341 | September 2, 1998

pdficon.gif (87 bytes)Reply of United Air Lines and Motion for Leave to File

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An equal allocation of the 129 available frequencies, as advocated by American, would merely perpetuate the imbalance not only in Winter frequencies but on a year around basis as well. If American's proposal were adopted, that carrier would have 1310 frequencies vs. United's 846, a margin of more than 55 percent!

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


Allocation of Chicago-London Combination Service Frequencies

OST-98-4341 | September 8, 1998

pdficon.gif (87 bytes)Motion for Leave to File and Response of American Airlines

The Department should deny United's motion. As is all too typical, United apparently believes that it is entitled to the last word, even where, as here, the Department did not provide for replies, and United's unauthorized pleading either repeats what United has already said, or adds arguments that United could have made, but chose not to make, in its initial submission and its answer. In these circumstances, the Department should decline to accept United's reply.

Counsel: American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com


Allocation of Chicago-London Combination Service Frequencies

Order 98-10-23
OST-98-4341
Issued and Served October 21, 1998 pdficon.gif (87 bytes)Order to Show Cause Chicago-London document.gif (123 bytes)HTML

By this order we tentatively allocate 32 round-trip frequencies to American Airlines and 97 round-trip frequencies to United Air Lines for service in the Chicago-London market for the 1998/99 winter season.

By:  Patrick Murphy


Allocation of Chicago-London Combination Service Frequencies

OST-98-4341 October 26, 1998 pdficon.gif (87 bytes)Objections of American Airlines to Order 98-10-23 Chicago-London Frequencies

By giving United 97 additional frequencies -- or 32 more than an even split -- and by affording American only 32 additional frequencies -- or 32 fewer than an even split --the capacity imbalance between the two carriers would shift even more markedly in United's favor. The public would be far better served by a competitive mix of more frequent service provided by American, competing with more capacity provided by United.

Counsel:  American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com


Allocation of Chicago-London Combination Service Frequencies

OST-98-4341 October 28, 1998 pdficon.gif (881 bytes)Answer of United Air Lines
pdficon1.gif (224 bytes)Answer of United Air Lines
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American raises as an objection one of the same arguments it raised in its answer. According to American, because United will use larger aircraft, the Department should award relatively more frequencies to American so that American, with its smaller aircraft, can outschedule United.

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


Allocation of Chicago-London Combination Service Frequencies

Order 98-11-4
OST-98-4341
Issued and Served November 4, 1998 pdficon1.gif (224 bytes)Final Order Chicago-London Combination Frequencies

By this order we make final or tentative decision in Order 98-10-23 and llocate 32 round-trip frequencies to American and 97 round-trip frequencies to United for the 1998/1999 winter traffic season

By:  Patrick Murphy


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