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Updated: Friday, October 16, 2009 7:48 AM

OST-2003-15993 - US-Israel Third Country Codeshare Opportunites


OST-2001-8726 U.S.- Israel Third-Country Codeshare Opportunities (2001)


US-Israel Third-Country Codeshare Opportunities

Served August 22, 2003

OST-2003-15993

Notice | Word

By this notice we invite U.S. certificated air carriers interested in using third-country code-share opportunities in the U.S.-Israel market to file applications as specified below in the captioned docket.

Under a Memorandum of Consultations (MOC) signed on January 10, 2001, representatives of the United States and Israel reached an ad referendum agreement on the text of a Protocol amending the 1950 U.S.-Israel Air Transport Agreement, as amended. Under the terms of the Protocol, the U.S. may authorize, on a phased-in basis, up to four code-share arrangements between U.S. and third-country airlines for service between the U.S. and Israel. Authorized U.S.-third country code-share arrangements may provide services in the U.S.-Israel market in phases as follows: Phase 1 - Up to two arrangements until March 31, 2002; Phase 2 - Up to three arrangements from April 1, 2002, through March 31, 2003; and Phase 3 - Up to four arrangements from April 1, 2003, through March 31, 2004.1 The limitations on the number of third-country codeshare arrangements will not apply to any code-share arrangement in which airlines of the United States, Israel, and a third country are all participants. The Protocol provides that, until March 31, 2004, designated U.S. airlines may serve Tel Aviv, plus seven additional points to be selected by the United States on a code-share basis, only, without local traffic rights between third-country points and points in Israel when the U.S. airline is not the operating carrier.

By: Paul Gretch



August 29, 2003

Supplement to Application of American Airlines

American Airlines, Inc., in response to the Department's Notice in this docket served on August 22, 2003, hereby supplements its application, submitted on June 26, 2003 in OST-2003-15516, with the following information. American proposes to serve Israel via London Heathrow under its codesharirig arrangement with British Airways Plc.

Markets to be served American and British Airways will provide nonstop-to-nonstop connections, via London Heathrow, between five gateway cities in the United States and Tel Aviv. The U.S. gateway cities are Boston, Chicago, Los Angeles, Miami, and New York (JFK).

British Airways operates two daily frequencies between London Heathrow and Tel Aviv. American operates 16 daily peak-season frequencies (and 15 offpeak) between U.S. gateways and London Heathrow.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com


August 29, 2003

Supplement of Continental Airlines

Continental proposes to institute its U.S.-Israel codeshare service with KLM on October 4, 2003, or within 30 days of obtaining foreign governhient approvals. Continental proposes to institute service initially by providing nonstopto-nonstop on-line Continental connections between Houston and New York/Newark (Liberty International) and Tel Aviv via Amsterdam serving local Houston and New York/Newark passengers as well as passengers connecting at these Continental hubs. The total elapsed travel time (including layover time) for New York/NewarkAmsterdam- Tel Aviv roundtrip flights is 37 hours, 30 minutes (20 hours, 15 minutes eastbound; 17 hours, 15 minutes westbound); for Houston-Amsterdam-Tel Aviv, the total roundtrip elapsed time is 43 hours, 50 minutes (22 hours eastbound, 21 hours, 50 minutes westbound).2 Continental operates its Houston and New York/Newark-Amsterdam flights daily, and KLM currently operates its Amsterdam-Tel Aviv flights five days per week. Continental's New York/NewarkAmsterdam flights are operated with B-767-400 (235 seats) or B-777 (283 seats) aircraft, while its Houston-Amsterdam flights are operated with B-767-200 (174 seats) or B-767-400 (235 seats) aircraft.

The remaining information requested by the Department has already been submitted in Continental's June 26, 2003 application in Docket OST-03-15519.

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


August 29, 2003

Supplement No. 1 to Application of Delta Air Lines for a Third-Country Codeshare Opportunity

Only Delta is proposing to open two new third-country gateways for service to Israel. Thus, Delta and Alitalia would operate service between the United States and Tel Aviv via both Rome and Milan. This will maximize use of the single available opportunity, since "[a] codeshare arrangement between a U.S. carrier and a third-country carrier that entails code-share services on more than one route would be counted as one arrangement."

Delta's proposed service will provide nonstop-to-nonstop connections to Israel from six (6) U.S. cities. Moreover, since Delta's major Atlanta hub and its JFK connecting complex are nonstop U.S. gateways to Italy, the benefits of improved Israel third-country codeshare service will extend to scores of additional U.S. cities served by Delta behind Atlanta and New York. Delta plans to operate seven (7) weekly round-trip frequencies between Milan and Tel Aviv, and seven (7) frequencies between Rome and Tel Aviv.

Delta and Alitalia hold a blanket statement of authorization that allows the carriers to display Delta's "DL" designator code on any flight operated by Alitalia between points in Italy and points in third countries, subject to the Department's standard 30 days notice condition. See, Statement of Authorization Approval, Docket OST-2001-10417. On June 17, 2003, Delta and Alitalia filed notice in that docket of their intent to perform the proposed service, subject to the necessary award of the third-country codeshare opportunity at issue in this proceeding.

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


August 29, 2003

Application of US Airways for Phase 3 US-Israel Third-Country Codeshare Opportunity

US Airways asks for allocation of the U.S.-Israel third-country code-share opportunity in order to place its "US" designator code on Lufthansa operated flights between Frankfurt and Munich, Germany and Tel Aviv, Israel.

US Airways proposed code-share services would open up two new nonstop to non-stop U.S.-Israel markets. US Airways proposes new non-stop to non-stop service between Tel Aviv, Israel and both Pittsburgh, PA and Charlotte, NC. Neither of these markets is currently served by any of the existing third-country code-share arrangements or via direct flights. In addition, US Airways proposes new non-stop to non-stop service between Tel Aviv, Israel and Philadelphia, PA, a market that is currently served only by United Air Lines, Inc.

At this time Lufthansa offers only connecting service between Munich and Tel Aviv, although they have offered non-stop service between these points in the recent past. If Lufthansa resumes non-stop service between Munich and Tel Aviv, US Airways would be able to offer additional code-share service between Philadelphia and Tel Aviv via Munich. The possibility of this additional non-stop to non-stop route strengthens the merits of US Airways application for this code-share opportunity.

By joint application dated August 13, 2003, US Airways and Lufthansa have applied for code-sharing authority. See Docket OST-2003-15946. US Airways anticipates rapid approval of its code-share arrangement with Lufthansa and will provide official notice in this docket once it has received such authority. US Airways will also, at the appropriate time, submit the requisite notice to add the U.S.-Germany-Israel routes proposed in this application to its underlying code-share authority with Lufthansa.

Counsel: US Airways and Mayer Brown, John Schmitz, 202-263-3000, john.schmitz@mayerbrownrowe.com



September 5, 2003

Answer of American Airlines

There are four applicants in this proceeding for the one remaining U.S. -Israel third-country codeshare opportunity. American is seeking to provide U.S. -Tel Aviv codeshare service with British Airways via London Heathrow; Continental, with ElM via Amsterdam; Delta, with Alitalia via Milan and Rome; and US Airways, with Lufthansa via Frankfurt. As we show below, American's proposal with British Airways will provide the greatest public benefits and should be promptly selected.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com


September 5, 2003

Consolidated Answer of Continental Airlines

With American and Swiss, Delta and El Al, United and Lufthansa and Northwest and KIM already codesharing between the U.S. and Israel, the Department is faced with selecting a codeshare partnership including either a U.S. carrier already offering codeshare service between the U.S. and Israel (American or Delta) or a foreign carrier already offering such service (Lufthansa or KLM). Whatever codeshare partnership is selected will to a significant extent duplicate existing service. Continental, the only U.S.-flag carrier operating flights between the U.S. and Israel, requires third-country codeshare authority to supplement and support its nonstop New York (Liberty International) -Tel Aviv service, which provides far more public benefits than the duplicative third-country codeshare service proposed by the other applicants.

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


September 5, 2003

Consolidated Answer of Delta Air Lines

Delta's six-gateway proposal, operated under an antitrust-immunized codeshare arrangement with Alitalia, will produce the greatest possible service and competitive benefits. Accordingly, Delta should be the Department's first choice for the award of the "Phase 3" U.S.-Israel codeshare opportunity.

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


September 5, 2003

Consolidated Answer of US Airways

The Department has repeatedly found that the public benefit of adding a new competitor to an existing market is a decisive factor in awarding limitedentry opportunities such as this. See, e.g., Order 2001-1-14 (1999 U.S-Argentina Combination Service Case) (awarding limited frequencies to Delta and Continental because "both Delta and Continental would be new entrants to Argentina and thus would offer consumers two additional airline choices for service to Argentina"); Order 99-3-26 (1998 U.S.-Brazil Combination Service Case) (awarding limited frequencies to Continental because "the selection of Continental would also enhance the ability of a relatively new entrant to compete and to reduce concentration").

Counsel: Mayer Brown, John Schmitz, 202-263-3000, jschmitz@mayerbrownrowe.com



September 9, 2003

Reply of American Airlines

US Airways, like Delta, concludes by asserting that to grant American's application "would substantially weaken the U.S. bargaining position in its attempt to negotiate open skies with the United Kingdom" (p. 9). There is no credibility to such a statement. The Department concluded in Order 2003-5-33 that behind-and-beyond codesharing by American and BA is fully consistent with the public interest. There is no basis for the Department to revisit that decision in the context of codesharing in an individual beyond market such as Israel. US Airways failed to submit a single pleading in the AA/BA codeshare docket (OST-2002-13861), and should not be heard to complain in this docket about the U.S.-U.K. bilateral relationship.

Counsel: American, Carl Nelson, 202-496-5647, carl.nelson@aa.com


September 9, 2003

Consolidated Reply of Continental Airlines

American claims it should be given half of the U.S.-Israel third-country codeshare opportunities because it "requires a stronger presence in the U.S.-Israel market" and would serve the largest U. S.-Israel markets, despite the fact that it could achieve these objectives overnight be simply switching its Israel codeshare from Swiss to British Airways. Delta claims that placing the DL* code on existing Alitalia U.S.-Israel connections at five U.S. gateways and two Italian connecting points justifies ignoring Delta's current codeshare with El Al and Delta's ability, because of its antitrust-immunized alliance with Alitalia, to achieve all the purported benefits of its codeshare with Alitalia without using one of the valuable third-country codeshare opportunities to duplicate Delta's codeshare with El AL US Airways claims that duplicating the US* code with the United and Lufthansa codes on routes which are or will be served by Lufthansa/Lufthansa and United/United connections in very small U.S. -Israel markets justifies an award to US Airways.

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


September 9, 2003

Consolidated Reply of Delta Air Lines

Hereby replies to the answers filed by American, Continental, and US Airways. No carrier has effectively challenged the numerous service and competitive advantages of Delta's proposal, which include: (1) service from the most U.S. gateways, (2) superior connecting schedules with the shortest round-trip elapsed travel times, (3) the availability of two new European connecting gateways and stop-over options, and (4) the only new fully immunized and integrated alliance for service to Israel.

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


September 9, 2003

Consolidated Reply of US Airways

US Airways is the only applicant that would bring competition from a new carrier into the U.S.-Israel market. American's own exhibit AA-R-2 proves this point. That exhibit lists the current carriers in the U.S.-Tel Aviv market: US Airways is the only applicant that does not appear on the list. Rather than using this last opportunity into Israel to increase the market share of a current market participant, the Department should increase overall competition by adding a new competitor to the marketplace. Because US Airways is the only applicant that is a "new entrant to [Israel] and thus would offer consumers [an] additional airline choice for service to [Israel]" (Order 2001-1-14), its application would provide the most public benefits and should therefore be selected by the Department.

Counsel: US Airways and Mayer Brown, John Schmitz, 202-263-3000, jschmitz@mayerbrownrowe.com



US-Israel Third-Country Codeshare Opportunity / US Airways, Inc.

Order 2004-3-24
OST-2003-15993 - US-Israel Third-Country Codeshare / US Airways

Issued and Served March 23, 2004

Order to Show Cause

We have tentatively decided to award the fourth third‑country code‑share opportunity for service to Israel to US Airways. We tentatively believe, after a careful review of the pleadings in this case, that US Airways' proposal would offer greater benefits than those of the other applicants.

We tentatively find that the selection of US Airways, which does not now serve Israel, constitutes an important opportunity to maximize the number of U.S. carriers serving Israel and the level of competitive services offered, thereby furthering the development of the market. US Airways would be a new entrant in the U.S.‑Israel market, and thus the authorization of US Airways' services will enhance the overall level of U.S. carrier competition in the market. Furthermore, US Airways proposes to serve two new U.S. gateways, Pittsburgh and Charlotte. We tentatively find that this holds the promise of offering travelers in these markets significantly improved service opportunities. US Airways proposal will provide new non‑stop to non‑stop U.S.‑Israel service via a third country to travelers and shippers who have not had the benefit of such service in the past. US Airways would also offer the Philadelphia passenger the benefit of intra‑gateway competition with other services now available to Israel from that point. We note that US Airways' overall elapsed times are not significantly different from those of the other applicants in this proceeding, and to the extent differences might exist, we tentatively believe they are outweighed by other factors. Thus, we tentatively find that US Airways' proposal in this proceeding would represent a realistic competitive alternative in the market place.

By: Susan McDermott



OST-2003-15946 - US Airways and Lufthansa - US-Germany Codesharing
OST-2003-15993 - US-Israel Third-Country Codeshare Opportunities

March 29, 2004

Re: 30-Day Notice of US Airways

Pursuant to the blanket statement of authorization issued in this docket, US Airways hereby notifies the Department that, commencing on May 1, 2004 or upon receipt of a final DOT Order, whichever is later, US Airways will begin code sharing on Lufthansa's daily nonstop services between Frankfurt, Germany and Tel Aviv, Israel These code-share services are consistent with the 2001 U.S.-Israel Memorandum of Consultation amending the 1950 U.S.-Israel Air Transport Agreement.

Counsel: US Airways, Howard Kass, howard.kass@usairways.com



March 30, 2004

Objections of Delta Air Lines

The Department has consistently held that nonstop-to-nonstop gateway service benefits are of critical decisional significance in third-country codeshare cases. See, e.g., Order 98-11-14; Order 97-9-18; Order 97-7-8. US Airway's proposal fall well short in terms of these key service benefits. The Show Cause Order erred in selecting US Airways' on the basis of its "new entrant" status, because the alleged benefits of introducing US Airways as a competitor are seriously undermined by the poor quality of its service proposal.

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



April 5, 2004

Answer of US Airways

Delta's objections are even more misplaced, given its already high level of service in the U.S‑Israel market, and the additional services it provides through its code‑share arrangement with the Israeli national carrier EL AL. Delta's suggestion that the DOT reverse itself and award Delta the final code‑share opportunity in a market where Delta already has a strong presence would undermine the Department's efforts to promote competition amongst carriers, particularly when limited international routes are involved.

Counsel: US Airways and Mayer Brown, John Schmitz, 202-263-3000



U.S.-Israel Third-Country Codeshare Opportunity

Order 04-07-18
OST-03-15993 - U.S.-Israel Third-Country Codeshare Opportunity

Issued and Served July 21, 2004

Final Order | Word

By this order we make final our tentative decision to select US Airways to operate third-country code-share service via Frankfurt with Lufthansa in the U.S.-Israel market.

Delta has not provided any new arguments or evidence that persuades us to modify our tentative decision. Rather, Delta has reiterated arguments already raised and considered in our show‑cause order. Delta essentially asserts the benefits of its own proposal. However, in our tentative decision we expressly acknowledged that "While the proposals of the other three applicants would provide public benefits, we tentatively do not believe that those benefits outweigh the important positive elements of US Airways' proposal." Order 2004‑3‑24 at 5. Having reviewed the record in light of Delta's objections, this remains our position. Thus, in the circumstances presented, we find that grant to US Airways of the exemption authority described herein is consistent with the public interest.

By: Susan McDermott



May 17, 2006

Application for Renewal of an Exemption

US Airways applies for renewal of its exemption authority to engage in scheduled foreign air transportation of persons, property, and mail between points in the United States and Tel Aviv, Israel, pursuant to its code-share relationship with Lufthansa.

US Airways currently provides scheduled air service between points in the United States and Tel Aviv, Israel, pursuant to a code-share relationship with Lufthansa. Renewal of US Airways’ exemption will enable US Airways to continue developing its presence in Israel. Moreover, it will enhance competition for the benefit of United States consumers and shippers.

Counsel: US Airways, Howard Kass, 202-326-5153, howard_kass@usairways.com



Filed May 17, 2006 | Issued July 27, 2006

Notice of Action Taken

Scheduled foreign air transportation of persons, property, and mail between points in the United States and Tel Aviv, Israel pursuant to its code-share with Lufthansa.

By: Paul Gretch



May 13, 2008

Application for Renewal of an Exemption

US Airways applies for renewal of its exemption authority to engage in scheduled foreign air transportation of persons, property, and mail between points in the United States and Tel Aviv, Israel, pursuant to its code-share relationship with Lufthansa.

US Airways currently provides scheduled air service between points in the United States and Tel Aviv, Israel, pursuant to a code-share relationship with Lufthansa.

Counsel: US Airways, Howard Kass, 202-326-5153, howard_kass@usairways.com



Filed May 13, 2008 | Issued October 15, 2009

Notice of Action Taken

Renewal of scheduled foreign air transportation of persons, property, and mail between points in the United States and Tel Aviv, Israel, pursuant to its codeshare arrangement with Lufthansa German Airlines/

By: Paul Gretch


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