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Updated: Wednesday, July 27, 2005 11:03 AM

OST-04-17373 - US-Ukraine Third-Country Codeshare Services

US-Ukraine Third-Country Codeshare Services

OST-04-17373 - US-Ukraine Third-Country Codeshare Services


March 19, 2004

Notice to File Applications | Word

By this notice we invite U.S. certificated air carriers interested in using the service opportunity available in the U.S.-Ukraine market to file applications as specified below in the captioned docket.

Under the U.S.-Ukraine Air Transport Agreement designated airlines of each Party may operate a total of four code-share opportunities pursuant to code-sharing arrangements between an airline of one Party and an airline of a third country over intermediate points and to destinations specified in Annex I of the Agreement.  A code-sharing opportunity is defined in the Agreement as a combination of one pair of code-share partners and one city-pair.  Operations by the selected U.S. carriers are limited to a total of 18 round-trip frequencies per week for combination services.

In addition to the designation limitations, third-country code-share authorizations are limited under the Agreement to service to two Ukraine points, Kiev and Odessa, via a total of four European intermediate points, up to a total of four Europe-Ukraine city-pair markets.  Four U.S. carriers have been selected by the United States to provide scheduled combination service on a code-share basis with specified third-country carrier partners, via specified intermediate points, to Kiev (American with Swiss via Zurich; Northwest with KLM via Amsterdam; Delta with Air France via Paris, and United with Lufthansa via Frankfurt).  However, Swiss notified the Department on August 1, 2003, (Docket OST-2002-12001) that it and its partner American would cease operations in the U.S.-Ukraine third-country market as of October 26, 2003.  As a result, and for the reasons set forth in a Notice of Action Taken being issued concurrently in Dockets OST-2003-15021 and OST-2002-12550, the fourth code-sharing opportunity is available.

Northwest, Delta, and United collectively now operate 10.5 weekly frequencies in the market. We note that American and United have already filed applications, in Dockets OST-2002-12550 and 2003-16445, respectively, for the available designation.  We will consolidate these applications and any responsive pleadings into the proceeding established by this Notice.  These carriers, however, are free to supplement or amend their applications by the date specified in this Notice for new applications.

By: Paul Gretch


March 19, 2004

Motion of American Airlines to Extend Answer and Reply Dates

American Airlines, Inc. hereby moves to extend the answer date from March 31, 2004 to April 2, 2004, and the reply date from April 5, 2004 to April 7, 2004 in the captioned proceeding, which the Department instituted by Notice in this docket on March 19, 2004. We have contacted counsel for United Air Lines – the only other prior applicant for U.S. -Ukraine third-country codeshare services - who advises that United has no objection to the requested extension.

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


Issued and Served March 19, 2004

Notice Extending Procedural Dates

On March 19, 2004, American Airlines filed a motion requesting an extension of the period for filing answers from March 31, 2004, to April 2, 2004, and the date for filing replies from April 5, 2004, to April 7, 2004.  American states that United Air Lines, the only other prior applicant for U.S.-Ukraine third-country code-share services, and Continental Airlines have no objections to the extension of the answer and reply dates as proposed. We see no prejudice to any party or to the public interest from this extremely limited delay, and accordingly, we have decided to grant American Airlines’ motion and will extend the answer and  reply dates as requested. Therefore, acting under authority assigned to the Director, Office of International Aviation, 14 CFR Part 385, we establish a date of April 2, 2004, for the filing of answers and the date of April 7, 2004, for filing replies.

By: Paul Gretch


OST-04-17373 - US-Ukraine Third-Country Codeshare Opportunities


Supplement to Application of American Airlines

American and British Airways will start codeshare service to Kiev, Ukraine on June 1, 2004, or within 21 days of receiving all necessary govern- mental authorizations. British Airways operates five weekly frequencies between London Heathrow and Kiev. American operates 16 daily peak-season frequencies (and 15 off-peak) between U.S. gateways and London Heathrow. Details of available connections between U.S. gateways and Kiev via London Heathrow

Counsel: American, Carl Nelson, 202-496-5647


March 26, 2004

Application of Continental Airlines for US-Ukraine Third-Country Codeshare Opportunities

Continental applies for the one available U.S.-Ukraine third-country codeshare opportunity, and allocation of 3.5 weekly codeshare frequencies, to be used in connection with Continental's codeshare arrangement with KLM on flights between the U.S. and Kiev, via Amsterdam. Continental plans to begin using the requested allocation immediately upon receipt of foreign approvals and asks the Department to grant the requested allocation for an indefinite period.

The proposed codeshare operations will enable Continental to offer online U.S.-Ukraine service for the first time and will increase travel and shipping options available to U.S. travelers and shippers. KLM's daily Amsterdam-Kiev nonstop flights will be linked to Continental's extensive U. S. network, and U.S.-Ukraine passengers will enjoy the benefits associated with the Continental/KLM codeshare arrangement, including one-stop check-in, frequent flyer program enhancements, improved interline service for baggage and coordinated connections. The new travel options Continental can open through this authority, combined with the efficiency of codesharing on KLM flights, will maximize the use of valuable bilateral rights available for U.S. carriers and introduce Continental as a new competitor on U.S.-Ukraine routes.

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


OST-03-16445 - US-Ukraine Third-Country Codeshare Opportunity and Frequency Allocation and Notice of Route Integration (Munich-Kiev)
OST-04-17373 - US-Ukraine Third-Country Codeshare Services

March 26, 2004

Supplemental Application of United Air Lines

United proposes to start code-share services between the U.S. and Kiev via Munich as soon as all necessary governmental authorities have been received. To that end, United will move to seek the necessary approvals from the government of Ukraine immediately upon receipt of the authorizations it has requested in this proceeding. United will offer daily code-share service between the U.S. and Kiev via Munich on a year-round basis, except at Miami which is seasonal and less than daily. United requires 3.5 frequencies under the U.S.-Ukraine bilateral air services agreement to offer these services.

Counsel: United and Wilmer Cutler, Jeffrey Manley, 202-663-6670


OST-03-16445 - US-Ukraine Third-Country Codeshare Opportunity and Frequency Allocation and Notice of Route Integration (Munich-Kiev)
OST-04-17373 - US-Ukraine Third-Country Codeshare Services

March 30, 2004

Re: Supplemental Attachment - Errata Notice

Please note that footnote 4 on p. 4 of the referenced Supplemental Application erroneously states that flights between Newark, NJ, and Munich, Germany are operated by PrivatAir GmbH. In fact, those flights are operated by PrivatAir, SA, a Swiss company. Accordingly, the text of section (g) of the Supplemental Application should be revised to read as follows:

"(g) United has performed safety audits of Lufthansa, CityLine and PrivatAir, SA and those audits have been reviewed and cleared by the FAA. United will re-audit these carriers as necessary and report the results to the FAA."

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmer.com


April 2, 2004

Answer of American Airlines

American Airlines, Inc., under the Department's Notice of March 19, 2004, hereby answers in opposition to the U.S.-Ukraine third-country codeshare applications submitted by Continental Airlines, Inc. and United Air Lines, Inc.

The Department should promptly conclude this proceeding by granting the application initially filed by American on October 31, 2003 in OST-2002-12550, and supplemented in this docket on March 26, 2004, to provide U.S.-Ukraine service via London Heathrow with British Airways PIc. This service will be American's only on-line access to Ukraine, and will provide far greater public benefits than the operations proposed by Continental via Amsterdam with KLM, or by United via Munich with Lufthansa CityLine, as we explain in detail below.

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


April 2, 2004

Answer of Continental Airlines

Continental urges the Department to grant its application for the one available U.S.-Ukraine third-country codeshare opportunity and allocation of 3.5 weekly codeshare frequencies to be used in connection with Continental's codeshare arrangement with KLM on flights between the U.S. and Kiev, via Amsterdam, and to deny the applications by United for a second Ukraine codeshare opportunity with Lufthansa and by American to codeshare with British Airways through London Heathrow, a restricted airport at which Continental and other U.S. airlines are explicitly precluded from operating.

By: Crowell & Moring, Bruce Keiner, 202-624-2615


April 2, 2004

Consolidated Answer of United Air Lines

Only one third-country code-share opportunity remains available under the U.S./Ukraine Air Services Agreement and there are three applicants for that opportunity. Of the three applicants, United would offer the most number of same-day, nonstop to nonstop connections to the greatest number of U.S. gateways. Indeed, United would serve more gateways than American or Continental combined. In addition to United's superior connectivity, United's immunized alliance with Lufthansa would also offer passengers more service benefits at lower prices than would either of the other carriers operating under their non-immunized alliances. United, therefore, urges that it be awarded the one available U.S.-Ukraine third-country code-share opportunity and 3.5 frequencies to allow it to implement daily code-share services between the U.S. and Kiev via Munich. The competing applications of American and Continental, which offer far fewer benefits to consumers, should be denied.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmer.com


OST-04-17373

April 7, 2004

Reply of American Airlines

American will provide the competitive option of a fourth U.S. carrier on-line service to Ukraine via a fourth European connection point. Northwest (Continental's global alliance partner) already serves Kiev via Amsterdam with KLM, and United already serves Kiev via Frankfurt with Lufthansa. In U.S.-Israel Third-Country Codeshare Opportunity Order 2004-3-24, March 23, 2004, the Department concluded that maximizing the number of U.S. carriers with access to a restricted foreign point is an overriding selection factor.

An award to American will be consistent with the public interest goal of competitive balance among the oneworld, Star, and SkyTeam global alliances. American's selection will provide oneworld with its first U.S. carrier on‑line access to Kiev, whereas Star already has UA* on‑line service to Kiev via Frankfurt on Lufthansa, and SkyTeam already has DL* on‑line service to Kiev via Paris on Air France (while NW* has on‑line service to Kiev via Amsterdam on KLM). As prospective members of SkyTeam, Northwest and Continental would be the second and third U.S. carriers in SkyTeam with on‑line service to Kiev if the Department were to grant Continental's application here.

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


April 7, 2004

Reply of Continental Airlines

Continental replies as follows to the answers of American and United and urges the Department to grant Continental's application for the one available U.S. - Ukraine third-country codeshare opportunity and 3.5 weekly codeshare frequencies to be used in connection with Continental's codeshare arrangement with KLM on flights between the U.S. and Kiev, via Amsterdam, and to deny the American and United applications.

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


April 7, 2004

Consolidated Reply of United Air Lines

After several rounds of pleadings, the conclusion is now inescapable that United's proposal to code share between the U.S. and Kiev via Munich offers services that are far superior to those proposed by American and Continental. Indeed, neither American nor Continental urge their selection over United based on any claim that they offer superior services for consumers. Rather, they argue that consumers should be forced to use their inferior services because United is already offering services to Kiev via Frankfurt and they are entitled to a preference as "new entrants."

It is true that United already serves Kiev via Frankfurt but, as it stated at the outset of this proceeding, United needs to operate via Munich in order to optimize its U.S.-Kiev connections. For example, United's San Francisco and Los Angeles services do not connect to Kiev at Frankfurt either eastbound or westbound. Only by adding connections at Munich can United offer its West Coast customers convenient same-day nonstop-to-nonstop connecting service to Kiev.

Counsel: United and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmer.com


US-Ukraine Third Country Codeshare Opportunities

Order 2005-4-18
OST-2004-17373

Issued and Served April 18, 2005

Order to Show Cause - Bookmarked

By this order we tentatively select United Air Lines, Inc., to serve Kiev, Ukraine, under a code‑share arrangement with Lufthansa German Airlines and tentatively allocate it 3.5 weekly frequencies to perform that service.

We tentatively find that the relative merits of United's proposal are on balance superior when compared to American's, especially because American proposes no daily service from any of its gateways. Rather, American would offer only five flights a week. From the standpoint both of relative convenience in service, and of the corresponding enhancement in competitiveness, we tentatively find that the public interest favors the proposal of United, which, as indicated previously, in nearly every proposed market would provide the advantage of year‑round daily service. In this regard, we note that United, with its proposed daily service, makes maximum use of the available U.S‑Ukraine frequencies under the bilateral, whereas American, with its less than daily service, would leave some of these valuable bilateral rights unused.

By: Karan Bhatia


May 2, 2005

Objections of American Airlines, Inc. to Show Cause Order 2005-4-18

The show-cause order fails to acknowledge that the Department previously denied a prior attempt by United (and Star) to gain a second codeshare designation to Ukraine at the expense of American (and oneworid). Five years ago, when American applied for authorization to codeshare to Kiev with Swissair in OST-2000-7227, United applied to codeshare to Odessa with Lufthansa, even though United already held a designation to codeshare to Kiev with Lufthansa. In choosing American over United, the Department found that "[t]he selection of American, which does not now serve Ukraine, would increase the number of competitors on the most significant Ukraine market and would enhance competition among the codeshare partnerships serving that city." See U.S.-Ukraine Third-Country Codeshare Opportunities Order 2000-8-11, August 15, 2000

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


May 2, 2005

Objections of Continental Airlines

Continental objects to the Department's tentative decision to deny Continental's request for the one remaining Ukraine codeshare opportunity so it can enter the U.S.‑Ukraine market for the first time by codesharing with KLM and to grant United a second Ukraine codeshare opportunity. To provide new entry and genuine new competition in the U.S. ‑Ukraine market, Continental urges the Department to reverse its decision and award the Ukraine codeshare opportunity to Continental.

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


May 9, 2005

Reply of American Airlines, Inc. to Objections of Continental Airlines

In American's objections to the show‑cause order filed on May 2, 2005, we showed why the one available U.S.Ukraine codeshare opportunity should be granted to American. By codesharing with British Airways via London, American will provide daily U.S.‑Ukraine service from five U.S. gateways, and promote competitive balance among the oneworld, Star, and SkyTeam alliances. Otherwise, Star would have two opportunities (UA/LH via Frankfurt and UA/LH via Munich), SkyTeam would have two (DL/AF via Paris and NW/KL via Amsterdam), and oneworld would be shut out.

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


May 9, 2005

Answer of Continental Airlines

Although Continental concurs in American's objections to the extent they oppose an award of a second Ukraine codeshare opportunity to United/Lufthansa, Continental objects to American's argument that the codeshare opportunity should instead be awarded to American/British Airways. Continental urges the Department to award the remaining codeshare opportunity to Continental for codesharing with KLM rather than to United/Lufthansa or American/British Airways.

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


May 9, 2005

Consolidated Answer of United Air Lines

Consistent with its policy and precedent, the Department should reject American's efforts to selectively reopen the record and belatedly amend its application. As noted above, American would have the Department consider the daily service now offered by BA without considering either the further degradations that the new schedule causes in BA's connectivity or the service improvements offered by other carriers. If American's new schedules were to be considered, the Department would have to reopen the record for amended applications, new exhibits and full responses by all applicants. Such action would cause unacceptable further delay in a case that has been pending since October 2003 and the loss of use of this valuable opportunity for yet another summer.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com


US-Ukraine Third Country Codeshare Opportunities

Order 2005-7-17
OST-2004-17373 - US-Ukraine Third-Country Codeshare Services

Issued July 25, 2005 | Served July 25, 2005

Final Order

Our tentative decision concluded that United's proposed service offered qualitative benefits to the consumer that the other two proposals did not: United proposed service from eight geographically diverse U.S. gateways, whereas American would serve only five gateways and Continental just two. United would serve all eight of its proposed gateways with same-day service in both directions. American and Continental, on the other hand, would offer services requiring longer layovers for the consumer for some of their respective third-country points and, in a number of instances, overnight layovers in at least one if not both directions. While we recognized that United was not a new entrant, whereas American and Continental would be, we said that the weaknesses of the American and Continental proposals vis-à-vis that of United raised serious doubts about whether or not the procompetitive public benefits normally associated with a new entrant would actually be gained with the selection of either American or Continental. Furthermore, we noted that United's Munich proposal promised to generate meaningful improved service options at certain gateways where United already held out Ukraine service with Lufthansa over the Frankfurt routing. All these various factors led to our tentative conclusion that United represented the best choice in the proceeding.

By: Karan Bhatia


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