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OST-01-9853

 


New U.S.- Argentina Combination Service Opportunities and Continental Airlines, Inc.

OST-99-6210
OST-01-9853
June 6, 2001 Application for Exemption U.S.- Argentina Combination Service
Opportunities

Counsel:  Continental and Crowell Moring, Bruce Keiner, rbkeiner@cromor.com


New U.S.- Argentina Combination Service Opportunities and Continental Airlines, Inc.

OST-99-6210
OST-01-9853
June 21, 2001 Answer of Delta Air Lines U.S.- Argentina Combination Service
Opportunities
    Service List  

Delta strongly opposes Continental's application for an exemption from the start-up conditions the Department imposed when it granted the award of the seven New York/Newark-Buenos Aires frequencies at issue. Continental's request for an exemption is not justified. To condone Continental's default of the route case award and to permit it to hold these valuable frequencies in limbo until Continental eventually decides it is ready to use them would be contrary to the public interest.

Moreover, the dramatic recent developments affecting the ability of Aerolineas Argentinas to offer service and the recent bankruptcy of LAPA make it imperative that the Department immediately institute an expedited proceeding to redetermine the best public interest allocation of the frequencies previously awarded to Continental. Ordinarily, the Department's remedy would be to revoke the defaulting primary carrier's award and activate the backup carrier's authority. In this case, that would result in transfer of the frequencies at issue to United, one of the dominant incumbents that the award to Continental for new New York/Newark-Argentina service was designed to challenge. The Department's reasoning in its original award of these frequencies to Continental and the extraordinary recent developments in Argentina affecting service between New York and Argentina therefore provide a powerful justification based upon the unique circumstances of this case for the Department to reconsider its back-up award of these seven frequencies de novo, and to redetermine the best public interest allocation of these seven frequencies in light of the current reality.

Accordingly, to provide New York area passengers with critically needed Argentina service to replace that lost due to Continental's default and to the current turmoil affecting the Argentine carriers, Delta is today filing an application for a certificate and seven frequencies to operate daily New York (JFK)-Buenos Aires service. Delta is fully prepared to introduce New York-Buenos Aires service on December 1, 2001, the effective date of the seven new frequencies, and to make full use of this valuable authority to benefit travelers and shippers.

Counsel:  Shaw Pittman, Robert Cohn, 202.663.8060, robert.cohn@shawpittman.com

OST-99-6210
OST-01-9853
June 21, 2001 Answer of United Air Lines and Request to Activate Backup Authority U.S.- Argentina Combination Service
Opportunities
    Service List  

With Continental already experiencing a decline in both load factor and yield and a decrease in system-wide passenger revenue per available seat mile of approximately 9 to 11 percent between May 2000 and May 2001, Continental cannot now risk its employees' future by instituting long-haul service between the U.S. and a country with far worse economic conditions than those in the U.S.

In other words, given the present uncertainties with respect to the future of the Argentine economy and the softness in its own network, Continental is unwilling to accept the risk of starting U.S.-Argentina services six months from now.

The Department has covered this eventuality by awarding United backup authority to operate daily U.S.-Argentina services should Continental default on its own service startup obligations. United is ready, willing and able to start new daily nonstop service between the U.S. and Argentina on December 1, 2001, pursuant to the backup authority awarded to it by Order 01-1-14. In order to meet this startup date, United needs to have its backup authority activated now so that it can begin taking the actions required to begin marketing its new service to be effective December 1, 2001 well in advance of that startup date. Because Continental has announced unconditionally in advance that it cannot meet its December 1, 2001, startup obligation, the Department should act immediately to make United's backup frequency allocation effective now for services to begin on December.1, 2001, in order to assure that there is no unnecessary delay in United's service. This can be achieved by quickly denying Continental's requested exemptions so that United's frequency allocation can be allowed to become effective immediately.

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


1999 U.S.- Argentina Combination Service Case and Continental Airlines, Inc.

OST-99-6210
OST-01-9853
June 25, 2001 Motion of American Airlines for Leave to File Late and Answer to Continental Airlines U.S.- Argentina; New York/Newark- Buenos Aires Start Up Delay
        Service List   

Answers to Continental's application were due on June 21, 2001. American chose not to submit an answer on the due date in light of the existence of United's back-up authority for the Los Angeles-Buenos Aires route. If United had sought to activate its back-up authority by committing to implement service on December 1, 2001 between Los Angeles and Buenos Aires, that might have precluded the submission of applications by other carriers to replace Continental. Instead, in its response to Continental on June 21, 2001, United made a new proposal to serve the Washington (Dulles)-Buenos Aires route. In these circumstances, there is good cause for American's late filing, which should be accepted in the interest of a complete record for the Department's consideration.

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


1999 U.S.- Argentina Combination Service Case and Continental Airlines, Inc. and American Airlines, Inc.

OST-99-6210
OST-01-9853
OST-01-10008
June 26, 2001 Consolidated Answer of the Dallas/ Ft. Worth International Airport and Motion to File Late U.S.- Argentina; New York/Newark- Buenos Aires Start Up Delay; Dallas/Ft. Worth- Buenos Aires
        Exhibits:  Proposed Route, Passenger Gateway    
        Service List    

If given the opportunity, American and DFW Airport will show that they have the superior proposal. DFW has become a major U.S. gateway to South America from the U.S. interior with nonstop flights to Sao Paulo, Santiago, Lima and Caracas (Exhibit 1). DFW-Buenos Aires is already one of the largest U.S.-Buenos Aires O&D markets without nonstop service. DFW would be a new mid-continent U.S. gateway, and the only U.S. carrier gateway west of the Mississippi. Service via the DFW gateway would open up convenient, one-stop service to Argentina for thousands of passengers living in Texas, the Sunbelt States and across the western U.S. American at DFW offers behind gateway travelers 760 daily departures, versus 348 for United at Dulles, and just 71 for Delta at New York/JFK (Exhibit 2). New B-777 daily nonstop service from the DFW gateway to Buenos Aires as proposed by American would bring considerably more benefits to U.S. travelers than would more flights from congested East Coast cities.

Counsel:  Silverberg Goldman, Michael Goldman, 202.944.3305, mgoldman@sgbdc.com  


New U.S.- Argentina Combination Service Opportunities and Continental Airlines, Inc.

OST-99-6210
OST-01-9853
June 27, 2001 Reply of the Metropolitan Washington Airports Authority U.S.- Argentina Combination Service
Opportunities
    Exhibit:  Traffic Potentials of Proposed Services  
    Service List  

Counsel:  MWAA, Edward Faggen, 703.417.8615, faggene@mwaa.com 


1999 U.S.-Argentina Combination Service Case / Delta Air Lines, Inc. / Continental Airlines, Inc. / American Airlines, Inc.

OST-01-9984
OST-01-9853
OST-01-10008
OST-99-6210
June 28, 2001 Consolidated Response of Delta Air Lines and Motion to Consolidate 1999 US-Argentina Combination Service Case / New York-Buenos Aires / Dallas/Ft. Worth-Buenos Aires

The requirement for a carrier selection case is unavoidable: (1) Continental has stated unequivocally that it will default on its route case award by not instituting New York/Newark – Buenos Aires service until December, 2002 -- a full year after the new opportunities become effective. (2) United is unwilling to implement its backup award for Los Angeles service; instead, United has submitted an entirely new proposal for Washington Dulles service -- a route that United has never before proposed, and for which it has never received any backup award. (3) Delta and American have each submitted competing applications for New York and Dallas/Ft. Worth authority, respectively.

The seven frequencies that become available for use on December 1, 2001 are extraordinarily rare and valuable public resources, which the Department should not allow to be wasted. Under the important frequency phase-in schedule negotiated by the United States with the Government of Argentina, the new service opportunities will become available just in time to benefit U.S.-Argentina travelers and shippers during the busy year-end travel season.
To avoid squandering these valuable opportunities – and for the United States to received its bargained-for benefit under the frequency phase-in provisions of the bilateral agreement -- it is vitally important that the Department immediately establish the required selection case and an expedited procedural schedule that will allow for a final decision by no later than September 1, 2001.

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


New U.S.-Argentina Combination Service Opportunities and Continental Airlines, Inc.

OST-01-9853
OST-99-6210
July 2, 2001 Reply of Continental Airlines U.S.- Argentina Combination, New York/Newark- Buenos Aires

Since United has no intention of using its backup authority to operate Los Angeles-Buenos Aires B-777 service by December 1, 2001, “activation” of United’s backup authority would be a meaningless act. United in fact proposes to operate a different aircraft on a different route and to start service on December 1, 2001, only if the Department acts immediately to “activate” backup authority United does not yet hold for Washington Dulles. United says “[r]ecent cost increases as well as the softening of the market have so significantly eroded the economics” of the B-777 aircraft it touted as the only suitable aircraft in the New U.S.-Argentina Combination Service Opportunities Case that “it is no longer efficient for the introduction of new nonstop U.S.-Argentina services.” (United Answer at 5) United now proposes to use instead B-767 aircraft, an aircraft type it criticized in Continental’s proposal. Similarly, United now abandons the Los Angeles-Buenos Aires route it claimed was absolutely critical to its route system and the public interest in the New U.S.-Argentina Combination Service Opportunities Case in favor of Washington Dulles, a potential Argentina gateway it never even mentioned in that case. In fact, United argued forcefully that no more than one new gateway in the eastern United States should be selected for Argentina service to preserve the opportunity to open a critically important Argentina gateway in the western United States. In sharp contrast, Continental has retained all of the features of the Argentina service it proposed except for a deferral of the startup date.

Like United, Delta is now proposing service it never proposed in the New U.S.-Argentina Combination Service Opportunities Case and asking for wholly new authority. Delta’s argument for New York (JFK)-Buenos Aires authority is predicated on the temporary suspension of New York (JFK)-Buenos Aires service by Aerolineas Argentinas. Although Aerolineas Argentinas has suspended its New York (JFK)-Buenos Aires service June 8, 2001, some Argentine airline is likely to be operating daily nonstop New York (JFK)-Buenos Aires service in December 2001.

Delta is proposing a different aircraft on a different route than any proposal it made in the New U.S.-Argentina Combination Service Opportunities Case. Although Delta made much of its proposal to operate MD-11 aircraft between Atlanta and Buenos Aires, it has now opted for smaller B-767 aircraft on that route and proposed New York-Buenos Aires service it opposed in the New U.S.-Argentina Combination Service Opportunities Case. Continental, the only carrier with a hub in the New York/Newark region, would offer far more public benefits on the New York/Newark-Buenos Aires route than Delta could provide at JFK. In addition to meeting the demand for local New York/Newark-Argentina service, Continental would also compete with Delta, American and United hubs for connecting traffic as well as offering the New York/Newark region the benefit of an alternative to JFK. The long-term benefits of Continental’s proposed service far outweigh any benefit that might derive from Delta’s offer to institute service sooner than Continental would.

Only Continental is proposing to operate U.S.-Argentina service on the same route using the same aircraft it proposed in the New U.S.-Argentina Combination Service Opportunities Case.

Counsel:  Crowell Moring, Bruce Keiner, 202.624.2500 

OST-01-9853
OST-99-6210
July 2, 2001 Consolidated Reply of United Air Lines U.S.- Argentina Combination, New York/Newark- Buenos Aires
    Exhibit:  O&D Traffic  
    Service List  

If the Department were to accept the invitation of Delta and American to reopen the 1999 Argentina proceeding, these frequencies would be subject to wastage and the public would lose their benefit just as surely as if Continental's deferred startup relief were granted. It is highly unlikely that another three-way carrier selection case such as American and Delta are proposing could be concluded by December 1, 2001, even if an instituting order were issued tomorrow. Indeed, the 1999 Argentina case itself took over a year to decide, as did the 1999 U.S. -Brazil Combination Service Case, Docket OST-99-6284, which was heard contemporaneously. This experience amply demonstrates the Department's wisdom in awarding backup authority to a carrier such as United that is ready, willing and able to make timely use of that authority without the need to resort to "further procedures" and the delay inherent in such procedures.

Neither Delta nor American chose to seek the seven frequencies they now request in the 1999 Argentina case when they had the opportunity to do so. Delta requested only seven frequencies in that proceeding. Delta's application was granted in full and it was allocated seven frequencies for its Atlanta-Buenos Aires services, which it started in April.21 American did not apply for any frequencies in the 1999 Argentina case.

To reopen that case as these carriers now belatedly request in order to allow them to prosecute what are essentially late-filed applications is not only inconsistent with the Department's backup authorization policy, but wholly unnecessary in circumstances where United is prepared to use its backup frequencies in a timely manner. The public should not be deprived of the benefit of additional U.S.-Argentina services merely to enable Delta and American to have their late-filed applications heard by reopening a carrier selection case that has already been concluded.

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


1999 U.S.- Argentina Combination Service Opportunities and Continental Airlines, Inc.

OST-99-6210
OST-01-9853
Served July 5, 2001 Notice Requiring Supplementary Information U.S.- Argentina Combination Service
Opportunities

By Order 2001-1-14, in the captioned proceeding, the Department awarded Delta Air Lines, Inc. and Continental Airlines, Inc. seven weekly frequencies each to operate U.S.-Argentina scheduled combination services. Delta's award was effective for services from Atlanta commencing April l, 2001, and Continental's award was effective for services from Newark commencing December 1, 2001, the dates on which the frequencies become available under the November 2000 U.S.-Argentina Exchange of Notes. In addition, the order selected Continental, for services from Houston, as the backup to Delta's award and United Air Lines, for services from Los Angeles, as the backup to Continental's award.

On June 6, Continental requested an exemption from the startup provisions of its award in order to delay implementation of its Newark-Buenos Aires service until December 1, 2002. Delta, American, and United filed answers opposing Continental's request. Delta and American have stated that they are prepared to use the frequencies when they become available December l, and they respectively request that Continental's frequencies be reallocated for services from New York and Dallas/Ft. Worth.' United notes that it was selected as the backup for Continental's Newark award and requests that its backup authority be activated. United states that it is "ready, willing, and able to start new daily nonstop service on December 1, 2001, pursuant to the backup authority awarded to it by Order 01-1≠14." (United answer at 3). It also notes that its backup authority is for Los Angeles-Buenos Aires service (United answer at 4). It requests, however, that in activating the backup award, the Department afford United the flexibility to use the frequencies for new service at any U.S. gateway consistent with the terms of the U.S.-Argentina aviation agreement, or at the very least, Washington Dulles as an alternative to Los Angeles.

Delta, American, Continental, and Dallas/Ft. Worth all argue that United has changed its proposal and therefore that its backup award is no longer valid. To the extent that the Department determines not to grant Continental's request, they maintain that the applications of Delta, American, and United are mutually exclusive and require comparative consideration in an expedited carrier selection proceeding.

Given various statements by United in its answer and its consolidated reply, the record is unclear whether United would accept and implement on December 1, 2001, its backup award as granted by Order 2001-1-14 for services at Los Angeles. Order 2001-1-14 is unequivocal that the backup authority awarded is for United to serve Los Angeles-Buenos Aires, and the frequencies awarded were specifically awarded for services from Los Angeles. Order 2001≠1-14 at 11, ordering paragraph 7.

So that we may determine how to proceed with respect to Continental's request, we require that United clarify the record by answering the following questions regarding its backup authority:

Given the December 1 start-up date and the need for carriers, for planning purposes, to know the resolution of this matter well in advance of that date (a need the commenters have themselves acknowledged), we believe that the public interest calls for our making a decision promptly. Accordingly, we will require that United submit its response to the information requested in this notice no later than one business day from the date of service of the notice. Its response should be filed in the captioned dockets and served on all parties to those dockets by facsimile or by email if acceptable to the parties involved. We will require that any answers to United's response be filed within one business day thereafter and similarly served on all parties by facsimile or email. 

By:  Paul Gretch


New U.S.-Argentina Combination Service Opportunities and Continental Airlines, Inc.

OST-01-9853
OST-99-6210
July 6, 2001 Supplementary Information of United Air Lines U.S.- Argentina Combination, New York/Newark- Buenos Aires
    Service List  

Q. Will United accept and implement the backup authority granted to it in Order 2001-1-14 for services in- the Los Angeles-Buenos Aires market if its backup authority is activated?

A. No, United will start service using its U.S. Argentina backup frequency allocation awarded by Order 01-1-14 at Washington Dulles International Airport rather than at Los Angeles, for the reasons stated in its Answer dated June 21, 2001, in Dockets OST-99-6210 and OST-01-9853.

Q. If so, will United commence services at Los Angeles under that authority on December 1, 2001, when the frequencies become available for U.S.-Argentina service?

A. United will start services using its backup frequency allocation on December 1, 2001, but the services will operate at Washington Dulles International Airport rather than Los Angeles.

Q. Assuming an affirmative answer to question 2, will United be introducing service on December 1, 2001, at a level that makes full use of the seven frequencies allocated to it?

A. Yes, United will use all seven (7) of the backup frequencies allocated to it by Order 01-1-14 for daily services between Washington Dulles and Buenos Aires.

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

OST-01-9853
OST-99-6210
July 5, 2001 Reply of the Washington Task Force U.S.- Argentina Combination, New York/Newark- Buenos Aires
    Service List  

Counsel:  Stephen Gelband


New U.S.-Argentina Combination Service Opportunities and Continental Airlines, Inc.

OST-01-9853
OST-99-6210
July 9, 2001 Answer of American Airlines, Inc. to Supplementary Response of United Air Lines, Inc. U.S.- Argentina Combination, New York/Newark- Buenos Aires
Service List

In light of United's response, the Department should promptly institute a carrier-selection proceeding to choose a carrier to utilize the seven U.S.-Argentina frequencies that take effect on December 1, 2001. Clearly, the request by Continental Airlines OST-01-9853 to defer the startup date of its primary award of New York/Newark-Buenos Aires authority for a full year, until December 1, 2002, should be denied. As the Department has stated, "[i]t is not [our] policy to permit valuable limited-entry rights to go unused" (Notice (undocketed), U.S.-India Third-Country Codeshare Services, July 22, 1998, p. 1).

Just as clearly, United cannot utilize its backup authority to serve Buenos Aires from Los Angeles by starting service from a different U.S. gateway. As the Department stated in its Notice of July 5, 2001, "Order 2001-1-14 is unequivocal that the backup authority awarded is for United to serve Los Angeles-Buenos Aires, and the frequencies awarded were specifically awarded for services from Los Angeles. Order 2001-1-14 at 11, ordering paragraph 7" (p. 2).

In its Notice, the Department asked United whether it will "accept and implement the backup authority granted to it in Order 2001-1-14 for services in the Los Angeles-Buenos Aires market if its backup authority is activated" (p. 2). United's answer was: "No. United will start service ... at Washington Dulles International Airport rather than at Los Angeles"

Accordingly, with Continental's default on its primary award, and United's default on its backup award, the Department should institute a carrier-selection proceeding. In that proceeding, American will show why its application for seven weekly frequencies to serve the Dallas/Ft. Worth-Buenos Aires market, submitted on June 25, 2001 in OST-01-10008, should be granted. American will open Dallas/Ft. Worth as a new gateway hub to Argentina, drawing on traffic from the central and western regions of the United States, and providing convenient on-line routings to a number of U.S. cities.

American's application should be granted at the earliest possible date, so that American may undertake preparations to commence service from Dallas/Ft. Worth to Buenos Aires on December 1, 2001, the date these frequencies become effective. Continental's request to defer startup of its primary award until December 1, 2002, and United's request to activate its backup award at Washington (Dulles) instead of Los Angeles, should be denied.

Counsel:  American Airlines, Inc., Carl B. Nelson, Jr.

OST-01-9853
OST-99-6210
July 9, 2001 Answer of Continental Airlines U.S.- Argentina Combination, New York/Newark- Buenos Aires

United has now confirmed without equivocation that it will not use the Los Angeles-Buenos Aires authority it holds as backup to Continentalís New York/Newark-Buenos Aires authority. Only Continental now holds authority for a new U.S.-Argentina route it actually proposes to operate, and the Departmentís decision selecting Continental for New York/Newark-Buenos Aires service is still correct. The only relief sought by Continental is a temporary deferral of its startup date, and the supplementary information submitted by United confirms why Continentalís request should be granted.

Although a delay in the institution of additional Argentina services is now inevitable, the extraordinarily unfavorable conditions in Argentina Ė recognized explicitly by Unitedís decision to propose smaller aircraft and service in a region of the U.S. with more Argentina traffic than the far west and Deltaís use of smaller aircraft on its Atlanta-Buenos Aires route Ė mean that delay will not harm the travelling and shipping public. By granting Continentalís request, the Department can avoid the time and expense required for a complex new comparative proceeding without delaying the institution of service beyond the startup date which would result from a hotly-contested comparative proceeding revisiting many of the same issues already addressed in the 1999 U.S.-Argentina Combination Service Case in which Continental was selected to provide New York/Newark-Buenos Aires service.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2500

OST-01-9853
OST-99-6210
July 9, 2001 Answer of Dallas/Fort Worth International Airport to Supplementary Information of United Air Lines, Inc. U.S.- Argentina Combination, New York/Newark- Buenos Aires
Service List

United's Supplementary Information makes crystal-clear that United will not exercise the backup authority awarded it by Order 2001-1-14. In answer to Question 1 posed by the Department's July 5 Notice, United states without equivocation that it would "start service ... at Washington Dulles International Airport rather than at Los Angeles...." The Department was emphatic in its July 5 Notice that United's backup authority is restricted to Los Angeles: "Order 2001-1-14 is unequivocal that the backup authority awarded is for United to serve Los Angeles-Buenos Aires..." Notice at 2. Clearly, United does not plan to exercise its Buenos Aires backup authority.

With United's intentions clarified, the Department now has little choice but to deny Continental's exemption request seeking to delay service for a year until December 2002, and to institute a comparative gateway/carrier selection case for the seven U.S.-Buenos Aires frequencies available December l, 2001. 

The three gateway/carrier combinations seeking the December 2001 award are: Dallas-Fort Worth/American, New York (JFK)/Delta and Washington-Dulles/United. For the reasons stated in Dallas/Fort Worth's answer dated June 26, 2001 and elsewhere, we submit that selection of Dallas/Fort Worth service with B-777 wide bodied aircraft as proposed by American will maximize benefits for the traveling public -- in Texas and across the western United States. The East Coast is well-served today with numerous daily flights from New York, Atlanta and Miami to Buenos Aires.

DFW Airport therefore urges the Department to act expeditiously to deny Continental's request, and institute the necessary comparative gateway/carrier selection case.

Counsel:  Silverberg Goldman, Michael F. Goldman, 202.944.3305, mgoldman@sgbdc.com 

OST-01-9853
OST-99-6210
July 9, 2001 Answer of Delta Air Lines U.S.- Argentina Combination, New York/Newark- Buenos Aires
Service List

In these circumstances, the Department should immediately consolidate the pending applications for U.S.-Argentina frequencies and institute a highly expedited carrier selection proceeding to ensure that a qualified applicant is able to take advantage of the important new opportunities that become available on December 1. Delta incorporates by reference all of the legal and policy reasons contained in Deltaís June 28 Consolidated Response and Motion to Consolidate, which require the Department to take prompt action to avoid wasting these valuable U.S. bilateral rights.

Contrary to Unitedís claims, the Department can conclude a carrier selection case sufficiently in advance of the December 1 start date to provide for a timely implementation of services. From Deltaís perspective, the carrier selection issues at hand are relatively simple: (1) the Department can award Delta the opportunity to provide New York area travelers and shippers with the immediate benefits of new entrant competition at New York that Continental promised, but failed to deliver, or (2) the Department can award additional frequencies to one of "two long term incumbents" in a marketplace that "has been closed to new entry for over 50 years" (Order 2001-1-14 at 8).

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


2001-U.S.-Argentina Combination Service Proceeding

Order 01-7-12
OST-01-10198
OST-99-6210
OST-01-9984
OST-01-9853
OST-01-10008
Issued July 20, 2001
Served July 21, 2001
Order Denying Exemption and Instituting Proceeding 2001-U.S.-Argentina Combination Service Proceeding
    Appendix A Evidence Request  

Order 2001-7-12 denies the application of Continental Airlines, Inc. in the captioned docket to delay institution of its authorized New York/Newark-Buenos Aires scheduled combination services, and institue an expedited carrier selection proceeding to determine which carrier should be authorized to use seven weekly frequencies for U.S.-Buenos Aires service that become available on December 1, 2001.

By:  Susan McDermott


2001 U.S.-Argentina Combination Service Proceeding / 1999 U.S.-Argentina Combination Service Case / American Airlines, Inc. / Delta Air Lines, Inc.

OST-01-10198
OST-01-9984
OST-01-9853
OST-01-10008
OST-99-6210
July 23, 2001 Petition of Continental Airlines 2001 U.S.-Argentina Combination Service Proceeding / 1999 U.S.-Argentina Combination Service Case / American Airlines, Inc. / Delta Air Lines, Inc.

Although American and United together experienced losses of $799 million for the second quarter of 2001 alone, they are apparently willing to accept even greater losses instituting seven additional weekly Argentina flights to protect themselves from competition by a new, fourth airline on U.S.-Argentina routes over the long term. Although Delta is apparently facing large losses on its Atlanta-Buenos Aires route despite the termination of LAPAís flights and codesharing with LAPA, Delta is prepared to add to the $90 million in overall losses it experienced in the second quarter by instituting New York (JFK)-Buenos Aires flights which would divert traffic from its Atlanta flights and lack the support of a true hub at JFK. Why? To protect its Atlanta flights from Continentalís New York/Newark-Buenos Aires competition. Although American, United and Delta have each announced that they anticipate further losses this year and expect to retire aircraft and reduce their planned capacity,3 they each claim to be prepared to institute new Argentina flights December 1, 2001. Rather than abetting these carriersí plans to limit U.S.-Argentina competition in the long run, the Department should reconsider its decision and grant Continentalís request for an exemption to institute New York/Newark-Buenos Aires service December 1, 2002. Only by granting Continentalís request can a fourth network be added to U.S.-Argentina routes for the benefit of competition in the long run. Even if the Department does not grant Continentalís request on reconsideration, however, it should at least give comparative consideration to Continentalís proposal to institute service December 1, 2002.

Given the complexity of deciding between at least three applicants and at least three gateways, Continental questions whether the Department can lawfully base any decision on the truncated procedures it proposes to use, particularly after it concluded only last year that full evidentiary procedures were required for a virtually-identical Argentina case. Even with truncated procedures, however, history suggests that the Departmentís own decision-making process will take so much time that service is unlikely to commence by December 1, 2001, in any event. Nonetheless, the additional information requirements Continental seeks and the additional issue of evaluating the public benefits of deferring the institution of new services for 12 months or less to secure new entry will not delay the proceeding.

Counsel:  Continental and Crowell Moring, Bruce Keiner, 202-624-2615


2001 U.S.-Argentina Combination Service Proceeding; 1999 U.S.-Argentina Combination Service Case; American Airlines, Inc.; and Delta Air Lines, Inc.

OST-99-6210
OST-01-9853
OST-01-9984
OST-01-10008
OST-01-10198
July 25, 2001 Answer of American Airlines U.S.-Argentina Combination Service Proceeding 
    Service List  

Continental presumes that it somehow knows better than American, Delta, or United that new service to Argentina cannot be viable until December 1, 2002. Continental has recently pulled service from markets in South America, including Brazil and Chile, while American and other carriers have kept their service levels intact. American does not need advice from Continental on the "wisdom" of serving Argentina or any other market, nor does the Department. Finally, Continental contends that Order 2001-7-12 "does not explicitly preclude Continental from applying for seven frequencies to institute service on December 1, 2002". That is nonsense. The Department denied Continental's request for an exemption to delay its start-up until December 2002. Order 2001-7-12 set a highly expedited procedural timetable "so that we can complete this case in sufficient time for the selected carrier to promote and commence its services on December 1; withdrew Continental's frequencies "so that they will be available for use by another carrier for services commencing this December"; and stated the Department's desire "to ensure that the selected carrier can commence its services in time for a December start-up" Continental should not be allowed to appear as an applicant with a start-up proposal of December 1, 2002. That would only burden the record in a highly expedited case, and serve no purpose in the Department's process of choosing a replacement carrier willing to start service on December 1, 2001.

Counsel:  American, Carl Nelson, 202.4965647, carl.nelson@aa.com 

OST-99-6210
OST-01-9853
OST-01-9984
OST-01-10008
OST-01-10198
July 25, 2001 Answer of the Dallas/Fort Worth International Airport U.S.-Argentina Combination Service Proceeding
    Attachments:  Yahoo News 01/07/23  
    Service List  

That American, Delta and United may be losing money and curtailing service on some routes, while proposing to offer new U.S.-Buenos Aires service, is not because each seeks to block Continental's entry into the Argentina market. Rather it reflects the fact that each of these carriers believes that (unlike Continental) it can operate a new Buenos Aires service from the selected U.S. city profitably over the long run. In the case of American's DFW-Buenos Aires proposal, with which DFW Airport is most familiar, this is almost self-evident. American operates its major U.S. hub at DFW, with over 750 daily departures, and it already operates daily nonstop flights most successfully from DFW to four other South America cities - Sao Paulo, Caracas, Santiago and Lima. These flights all experience high load factors. Both DFW Airport and American are confident that American's proposed service in the larger DFW-Buenos Aires market will be similarly successful.

Continental while intimating that carriers should avoid new international services in this time of "huge losses" is itself starting up new international service. Just this week Continental announced that it would resume a second daily nonstop flight between Newark and Tel Aviv.

Counsel:  Silverberg Goldman, Michael Silverberg, 202.944.3305, mgoldman@sgbdc.com 

OST-99-6210
OST-01-9853
OST-01-9984
OST-01-10008
OST-01-10198
July 25, 2001 Answer of Delta Air Lines U.S.-Argentina Combination Service Proceeding
    Service List  

The most basic requirement for maximizing the public interest benefits from the available frequencies is to ensure that they are fully and promptly used. In that regard, the Department was entirely correct in its determination to place the frequencies resulting from Continental's December 1, 2001 service default at issue, and to consider only December 1, 2001 replacement proposals.

The Department's current evidence request contains all the information that is necessary and relevant to select a new Argentina carrier for December 1, 2001 service. Continental's call for additional evidence concerning alternative aircraft deployments, profitability analysis, and the like are unprecedented and Continental itself admits that "such information has not normally been required in the Department's route proceedings." Petition at 6. Contrary to Continental's contentions, further requirements to gather, submit and debate these superfluous issues will inevitably add complication and delay to the proceeding, and would compromise the Department's ability to reach a final decision by September 1. Since Continental does not appear to be a viable December 1 participant in this proceeding, the Department should not entertain Continental's request to heap additional superfluous evidentiary requests upon the viable applicants.

Counsel:  Shaw Pittman, Alexander Van der Bellen, 202.663.8060

OST-99-6210
OST-01-9853
OST-01-9984
OST-01-10008
OST-01-10198
July 25, 2001 Answer of United Air Lines U.S.-Argentina Combination Service Proceeding
    Service List  

Given its own unwillingness to start service on December 1, 2001, Continental has made its primary goal the delay of any other carrier's efforts to do so in an attempt to secure the benefits for Continental at a later date when that better suits its own corporate purposes. To that end, Continental single-mindedly has advocated in its petition for reconsideration every conceivable measure in its, by now, well-developed repertory of route case delaying tactics aimed at preventing the Department from quickly deciding this case under the aggressively expedited schedule it has adopted in Order 01-7-12.

The Department should confirm the expedited schedule it has adopted and act decisively to deny the various requests of Continental. The Department's schedule provides that the last submissions are due on August 6, 2001. This schedule is designed to enable the Department to reach a final decision in time for the successful applicant to promote new U.S.-Argentina services scheduled to begin on December 1, 2001. There is nothing new in Continental's petition that would support a different and less expedited procedure, and that petition should be denied for the reasons set forth below.

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


2001 U.S.-Argentina Combination Service Proceeding; 1999 U.S.-Argentina Combination Service Case; American Airlines, Inc.; and Delta Air Lines, Inc.

Order 01-7-16
OST-99-6210

OST-01-9853
OST-01-9984
OST-01-10008
OST-01-10198
Issued July 27, 2001 
Served July 27, 2001
Order on Reconsideration U.S.-Argentina Combination Service Proceeding 

We have decided to grant Continental's petition for reconsideration, and, on reconsideration, to affirm our decision to deny Continental's request to delay startup of the New York/NewarkBuenos Aires authority awarded Continental in Order 2001-1-14. We will also deny the other relief sought by Continental in its petition.

As noted in our instituting order, the frequencies at issue constitute valuable rights that we do not believe should be wasted. While Continental is not prepared to use the authority it was awarded when the rights become available, three other carriers have reaffirmed their plans to use the frequencies should they be selected in the 2001 Argentina Proceeding. Moreover, these three carriers have done so with the full understanding of our expectation that the carrier we select implement such service when the rights become available this December. In these circumstances, and given our desire to ensure the maximum levels of service possible to the public and to make full use of the rights available under our agreement with Argentina, we are not persuaded that the public interest is better served by withholding the re-awarding of these rights. Therefore, we affirm our decision to deny Continental's request in the captioned docket for an exemption from the startup conditions on its award in Order 2001-1-14.

These same considerations persuade us that it is not in the public interest to permit Continental's 2002 proposal to compete in this proceeding for either the primary or backup award. Our goal in this case is to authorize service to the public commencing this December, when the frequencies become available under the U.S.-Argentina aviation agreement. Continental's proposal for 2002 service is not consistent with that objective. Further consideration of such a proposal would serve only to complicate and delay unnecessarily a case that is already being processed in an expedited manner to ensure timely reallocation of the frequencies.

We will also deny Continental's request that we expand the evidentiary information requested in this case. We have made clear in the instituting order that we are prepared to consider only proposals for service commencing this December. The supplemental evidentiary material that we requested in our instituting order calls for evidence concerning the carriers proposed routings, traffic forecasts, traffic diversion and service changes, as well as information from the carriers about their aircraft availability and service implementation plans to demonstrate their commitment and ability to commence the services proposed. Continental has not demonstrated that information beyond that which we requested is needed to generate an adequate record for decision.

By:  Susan McDermott


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