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OST-01-8948

 


In the Matter of American Airlines, Inc., US Airways, Inc. and United Air Lines, Inc.-- Unfair Methods of Competition in Violation of 49 U.S.C. $ 41712

OST-01-8948 February 21, 2001 Third-Party Complaint of AirTran Airways and Request to Commence Enforcement Proceeding

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Unfair Methods of Competition in Violation of 49 U.S.C. Section 41712
    Attachment:  Docket Complaint OST-01-8949  
    Service List  

Pursuant to Rule 404(a), AirTran Airways, Inc. submits this formal complaint against American Airlines, Inc., United Airlines, Inc., and US Airways, Inc. for engaging in unfair methods of competition in violation of 49 U.S. C. 41712, and respectfully requests that the Assistant General Counsel promptly commence an expedited formal Rule 407(a) enforcement proceeding to prevent respondents from carrying out their scheme to jointly monopolize and divide the Washington area business traffic market. Unless ameliorated by vigorous corrective action, the arrangements in place between United and US Airways, and now including American, will: (1) eliminate US Airways as a viable competitor, whether or not they are permitted to ripen into actual acquisitions; (2) permit United, which already controls more than 85 % of the flights at Washington Dulles International Airport (" IAD "), to continue to accrue monopoly rents in the Washington area business traffic market; and (3) ensure that the public assets - take-off and landing slots -- essential to competitive entry at Washington Reagan National Airport ("DCA") and the possible limitation of monopoly rents, are locked away from AirTran Airways, and other bonafide competitors, either by being vested in a United-American duopoly, or left with a crippled, non-competitive US Airways. If the United-US Airways-American deal closes, time-sensitive business travelers and public officials using DCA and IAD will be forced to provide hundreds of millions of dollars per year in supra-competitive prices to fund the monopoly premium United (now in combination with American) is offering to US Airways. Even if the pending review at the Department of Justice forecloses these anticompetitive acquisitions, Washington area business travelers still may be forced to pay supra-competitive prices in tribute to United's ingenuity in putting the bulk of DCA slots out of competitive play.

Counsel:  Wiley Rein, Bert Rein, 202.719.7045


In the Matter of American Airlines, Inc., US Airways, Inc. and United Air Lines, Inc.-- Unfair Methods of Competition in Violation of 49 U.S.C. $ 41712 and In the Matter of American Airlines, Inc. and Trans World Airlines, Inc.--Unfair Methods of Competition in Violation of 49 U.S.C. $ 41712

OST-01-8948
OST-01-8949
February 27, 2001 Grant of Extension of Answer Date Unfair Methods of Competition in Violation of 49 U.S.C. Section 41712
    Service List  

Counsel:  American, Carl Nelson, 202.496.5647, carl_nelson@aa.com


AirTran Airways, Inc. v American Airlines, Inc. United Air Lines, Inc. and US Airways, Inc. - Unfair Methods of Competition in Violation of 49 U.S.C. $ 41712

OST-01-8948 March 23, 2001 Answer of American Airlines Unfair Methods of Competition in Violation of 49 U.S.C. Section 41712
    Service List  

The transactions about which AirTran has complained fairly remedy each of the potential competitive concerns set forth by opponents of the initially proposed merger of United and US Airways. Moreover, these transactions will increase the scope, efficiency, and desirability of American's network in the Northeast. American will consequently become a far more effective competitor against established rivals in a region in which American presently accounts for a small share of passengers on key business routes.

Under the proposed transaction with American, the initial arrangements involving DC Air will be replaced by a DC Air/American joint venture. There is virtually no competitive overlap between American and DC Air. American's operations at DCA are primarily to its hubs at Chicago, Dallas/Ft. Worth, and Miami, while DC Air will serve a number of cities, including small communities, up and down the East Coast. The two route systems will be highly complementary, both for pas-sengers traveling to and from the Washington area, and for passengers traveling along the East Coast who will be able to connect at DCA. The relationship with American will enable DC Air to compete even more aggressively against the merged United/US Airways entity, as well as against other major East Coast carriers such as Delta and Continental, and low-fare competitors such as Southwest, Jet Blue, and AirTran.

An airline that operates as part of a large network usually is better able to attract and retain the patronage of passengers. An extensive network offers customers efficient on-line service to a large number of destinations, and in-creases the value of its frequent flyer program. The proposed marketing arrangement with American will provide DC Air's passengers with access to a large domestic and international route system. DC Air, through its relationship with American, will also be associated with shuttle services in the DCA-LGA and DCA-BOS markets. The shuttle is crucial to creating and maintaining a strong Washington area presence. The shuttle is also important in generating flow passengers for DC Air's North/South connecting services at its DCA hub.

The proposed DC Air/American operations will achieve the size and scope necessary to establish dynamic and independent competition to the merged United/US Airways entity. DC Air will hold 222 slots at DCA, two-thirds of the 332 slots (jet and commuter) currently held by US Airways. As a result, DC Air will account for about 29% of DCA slots, compared to US Airways' current 43%. DC Air will have the resources to mount an effective competitive challenge to United, Delta, and other leading carriers at DCA and other Washington area airports.

Counsel: American, Carl Nelson, 202.496.5647, carl_nelson@aa.com

OST-01-8948 March 23, 2001 Answer of United Air Lines Unfair Methods of Competition in Violation of 49 U.S.C. Section 41712
    Service List  

Noticeably absent from AirTran's Complaint, however, is any evidence whatsoever to substantiate its claims of unlawful conduct. Rather, AirTran relies on misinformation, innuendo and conspiracy theories in an effort to leverage itself into these transactions, all the time being fully aware that there is no basis in fact or law for its Complaint. AirTran's real motivation is abundantly clear -- having failed in each of its previous attempts to acquire slots at DCA for free, AirTran seeks another front in its campaign to persuade Congress to intervene in the slot marketplace on its behalf.

AirTran offers absolutely no evidence to support its irresponsible, perhaps even actionable, claim that United and American are unlawfully conspiring to monopolize a self-defined Washington-area business travel market because no such evidence exists, even assuming there is a relevant market of Washington area business travelers as AirTran claims. AirTran has simply resorted to wholly unsupported allegations to try to leverage these transactions to obtain entry to DCA at below-market cost. When the pejorative name calling is removed, no substance remains.

The transactions AirTran seeks to portray as a conspiracy are, in fact, legal and valid, arms-length business transactions that are currently undergoing thorough HSR review by DOJ, in full compliance with all applicable legal requirements. Notwithstanding AirTran's predilection to assume the role of judge, jury and executioner, the DOJ -- not AirTran or the Department -- is tasked with assessing the potential competitive impact of the United/US Airways and American transactions, and with securing such remedial changes as may be necessary to ensure consistency with the antitrust laws in order to clear the transactions.

Counsel:  Wilmer Cutler, Bruce Rabinovitz, 202.663.6960, brabinovitz@wilmer.com 

OST-01-8948 March 23, 2001 Answer of US Airways Unfair Methods of Competition in Violation of 49 U.S.C. Section 41712
    Service List  

US Airways categorically denies AirTran's baseless allegations and further rejects the purported conclusions and erroneous assumptions underlying its Complaint. When stripped of all the hyperbole and rhetoric, AirTran's Complaint boils down to the argument that like JetBlue Airways, which was able to build its operations around a bulk of slots it received from the Government, AirTran is entitled to similar treatment because it is a new entrant, low-fare carrier. AirTran is asking the Government to interfere with the contractual arrangements designed to provide DC Air, a viable new entrant carrier, with the number of slots necessary to commence operations at Reagan National and successfully replace US Airways' existing services there. While AirTran's arguments certainly advance the airline's own self-interests, the consequences would be devastating for the traveling public. By its own admission, AirTran recognizes the need to provide slots to new entrant carriers, which is exactly what the proposed transactions would do in the creation of DC Air. However, by seeking a redistribution of slots so that AirTran can add frequencies to its existing network, AirTran's proposal would result in an abrupt loss of service for many smaller communities throughout the eastern United States that DC Air has publicly and consistently committed to serving. This would not be in the public interest.

Counsel:  O'Melveny Myers, Joel Stephen Burton, 202.383.5300


In the Matter of American Airlines, Inc., US Airways, Inc. and United Air Lines, Inc.-- Unfair Methods of Competition in Violation of 49 U.S.C. $ 41712

OST-01-8948 April 4, 2001 Motion for Leave to File and Reply of AirTran Airtran Airways Unfair Methods of Competition in Violation of 49 U.S.C. Section 41712
    Service List  

Counsel: Wiley Rein, Bert Rein, 202.719.7045


AirTran Airways, Inc. v American Airlines, Inc. United Air Lines, Inc. and US Airways, Inc. - Unfair Methods of Competition in Violation of 49 U.S.C. $ 41712

OST-01-8948 April 10, 2001 Opposition of US Airways to AirTran Airways Motion for Leave to File Unfair Methods of Competition in Violation of 49 U.S.C. Section 41712
    Exhibit A:  Letter form U.S. House of Representatives to AirTrans Airways  
    Exhibit B:  News Articles on Support of Representative  
    Exhibit C:  Follow-up Emails  
    Service List  

Counsel:  O'Melveny Myers, Joel Stephen Burton, 202.383.5300


AirTran Airways, Inc. vs. American Airlines, Inc., US Airways, Inc., and United Air Lines, Inc.

OST-01-8948 April 13, 2001 Answer of United Air Lines in Opposition to Motion for Leave to File of AirTran Airways Third-Party Complaint
    Service List  

Counsel:  United and Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, brabinovitz@wilmer.com


In the Matter of American Airlines, Inc., US Airways, Inc. and United Air Lines, Inc.-- Unfair Methods of Competition in Violation of 49 U.S.C. $ 41712 and In the Matter of American Airlines, Inc. and Trans World Airlines, Inc.--Unfair Methods of Competition in Violation of 49 U.S.C. $ 41712

OST-01-8948
OST-01-8949

April 9, 2001
Docketed May 11, 2001
Letter for the Air Carrier Association Concerning the High Density Rule Unfair Methods of Competition in Violation of 49 U.S.C. Section 41712

While airlines may agree to take steps to share, combine, or merge operations, those airlines still need appropriate governmental approval to implement those business decisions if they involve government authority or assets. For example, they could not transfer international authorities without the specific approval of the Department of Transportation. Nor do they have the right to do as they wish with slots.

Counsel:  Air Carrier Association of America, Edward Faberman


Order 03-10-7
OST-01-8948 - Unfair Methods of Competition in Violations of 49 U.S.C. Section 41712
OST-01-8949 - Unfair Methods of Competition in Violations of 49 U.S.C. Section 41712

Issued and Served October 7, 2003

Order | Word

Although our broad authority under 49 U.S.C. §41712 does give us jurisdiction over the matters alleged in AirTran's complaints, we dismiss them, in part as moot and in part for failing to establish a basis for further investigation. Because we are dismissing the complaints, we do not reach the issue of our power to order divestiture of slots.

As a threshold matter, we reject the respondent carriers' assertions that with the sunset of section 408 of the Federal Aviation Act of 1958, as amended, the source of our former authority to review and rule on mergers and acquisitions before they could be consummated, the Department lost all jurisdiction over such transactions. Congress has given us a mandate to foster and encourage legitimate competition and prohibit unfair methods of competition in 49 U.S.C. §40101 and the authority to do the latter in 49 U.S.C. §41712. Section 41712 (formerly §411 of the Federal Aviation Act of 1958, as amended), which Congress modeled on §5 of the Federal Trade Commission Act, 15 U.S.C. §45, empowers us to prohibit anticompetitive conduct (1) that violates the antitrust laws, (2) that is not yet serious enough to violate the antitrust laws but may well do so if left unchecked, or (3) "[that], although not a violation of the letter of the antitrust laws, is close to a violation or is contrary to their spirit," E.I. Du Pont de Nemours and Co. v. Federal Trade Commission, 729 F.2d 128, 136-137 (2d Cir. 1984); see United Air Lines, Inc., v. Civil Aeronautics Board, 766 F.2d 1107, 1112, 1114 (7th Cir. 1985) and cases cited therein; see also H.R. Rep. No. 98-793, 98th Cong., 2d Sess. (1984) at 4-5.

By: Samuel Podberesky


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