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OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations



Letters in Support


2005/2006 US-China Air Services Case and Designations

Order 2004-9-5
OST-2004-19077

Issued and Served September 3, 2004

Order Instituting Proceeding and Inviting Applications | Word

We invite all U.S. carriers interested in providing scheduled combination and/or all-cargo service between the U.S. and China to submit applications for certificate authority as well as for frequencies to perform such scheduled service. To the extent that carriers require new certificate authority to implement their proposed service, we will award the U.S.-China route authority at issue in the form of temporary, experimental certificates of public convenience and necessity under 49 U.S.C. section 41102(c).  The duration of the authority will be five years for the primary carrier and one year for the backup carrier (should one be selected), unless the latter authority is activated during that time, in which case it will continue in effect for five years.

  • DOT Information Responses:  September 10, 2004   
  • Petitions for Reconsideration:  September 10, 2004
  • Answers to Petitions:  September 14, 2004
  • Certificate Applications:  September 22, 2004               
  • Direct Exhibits:  October 13, 2004
  • Rebuttal Exhibits:  November 3, 2004
  • Briefs:  November 15, 2004

By: Karan Bhatia


 

Order 2004-9-5
OST-04-19077

Issued and Served September 9, 2004

Order Instituting Proceeding and Inviting Applications- Erratum | Word

Footnote 3 on page 3 of the Appendix should read: The base year for traffic forecasting purposes should be the 12 months ended March 2004, instead of December 2004.

Further, we clarify that the due date for Carrier Information Responses is the same date as DOT Information Responses – September 10, 2004.

By: Karan Bhatia


 

September 10, 2004

Petition of American Airlines for Reconsideration of Order 2004-09-05

American requests that the Department, on reconsideration, specifically require combination applicants by September 22 to identify their proposed routings between the U.S. and China, as well as their proposed weekly frequencies, departure and arrival times, and equipment type and configuration. Moreover, the Department should require combination applicants by September 22 to state whether they are seeking entry in 2005 or 2006. If combination applicants are seeking entry in either year, they should state which year they would prefer, and whether they would accept an award for the other year in the event they do not receive their preference.

Such fundamental information should be required at the application stage, and should not be deferred to Direct Exhibits, in order to inform the public and all participating parties of the nature of each combination applicant's proposal at the outset of the proceeding, particularly given the highly expedited timetable the Department has established.

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


September 10, 2004

Petition for Reconsideration of Evergreen International

The designation and frequencies at issue do not become available for approximately one and one-half years. With nearly 18 months until the designation and frequencies become available, it is premature for the Department to select an additional carrier and allocate such frequencies. Specifically, the Department's own precedent holds that an evidentiary record remains relevant for a limited period of time and, for this reason, it has limited the issuance of even backup authority for a period of one year. In this regard, the Department has recently stated that one year is "the standard period in which [the Department has] determined the record remains relevant for another carrier to assume a route without further evidentiary procedures." The rationale for such a policy is clear. The Department has not relied on information that would likely become rendered invalid by the passage of time. It is a break with Department precedent to rely on evidentiary proceedings that took place more than one year prior to the issuance of the award. Order 2003-5-27, at 6; Order 2001-10-15, at 7. See also, Order 97-4-13.

Counsel: Glenn Wicks and Lisa Harig, 202-457-7790, gpwicks@wicks-group.com and lharig@wicks-group.com


September 10, 2004

Response of Federal Express to Information Request

In response to the Information Request, Federal Express Corporation submits the attached Exhibit FX‑1. The subject flights are not "seasonal" and are not operated under "code‑share arrangements."

Counsel: Federal Express, G. Bailey Leopard, 901-434-6664, gbleopard@fedex.com


September 10, 2004

Information Responses of Northwest Airlines

Hereby submits the following incumbent carrier information responses pursuant to III.A.2. of the Appendix to the Department’s Order Instituting Proceeding and Inviting Applications, Order 2004-9-5, and Erratum. Northwest did not engage in code-sharing on any U.S.-China operations during the twelve months ending June 2004.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


September 10, 2004

Re: Information Response of United Air Lines

Page 1 of United's response reflects the number of flights and type of aircraft operated by United in the U.S.-China market for the twelve-month period ended June 2004. Page 2 reflects United's U.S.-China code-share services on flights operated by Air China for the period beginning October 31, 2003, through June 2004.

United has included this information regarding its code-share services on flights operated by Air China although it does not believe that this information is required. See, Information Response of Northwest, dated February 1, 2000, in Docket OST-99-6323.

Counsel: Wilmer Cutler, Jonathan Moss, 202-663-6655, jonathan.moss@wilmerhale.com


September 10, 2004

Re: Information Response of United Parcel Service

Counsel: Kelley Drye, David Vaughan


 

September 13, 2004

Answer of Gemini Air Cargo in Support of Petition for Reconsideration of Evergreen International

The Department should first determine whether it will select a combination carrier or a cargo carrier in 2006. The Department can then select from the combination carriers or the cargo carriers that apply for the 2006 designation based upon that decision. The Department should not, for example, require cargo carriers interested in the 2006 designation to undergo the substantial effort to prepare complex responses to the Department's evidentiary requests, only to learn that the Department has decided to select a combination carrier, and vice versa.

Although Gemini does not object to Evergreen's suggestion that the Department wait until after the 2005 designation to decide whether the 2006 designee will be combination or cargo, Gemini believes that the Department could profitably address that decision at present ‑‑ concurrently with the process to select a combination carrier for 2005.

Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com


 

September 14, 2004

Answer of American Airlines to Petition of Evergreen International

American Airlines, Inc., pursuant to Order 2004-9-5, September 3, 2004, hereby answers in opposition to the petition for reconsideration submitted on September 10, 2004 by Evergreen International Airlines, Inc.

The lead time for a new entrant to start service to China requires that awards be made on an expedited basis. The 2005 entrant will have only a few months to complete preparations. There is no sound reason to place the same burden on the 2006 entrant. A combined 2005/2006 proceeding is far more efficient than two separate proceedings, and will minimize administrative burdens on both the Department and the partici-pating parties.

Contrary to Evergreen's argument, the Department has solicited applications for route awards up to 20 months in advance of the effective date for entry, a longer period than the 18 months between applications (September 22, 2004) and 2006 entry (March 25, 2006) at issue here. See, e.g. Notice, U.S.-Colombia Scheduled Combination Service Opportunities February 16, 2001 (OST-2001-8910), inviting applications for new entry opportunities effective October 1, 2001 and October 1, 2002.

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


September 14, 2004

Answer of Continental Airlines

Continental supports American's request that applicants be required to provide in their certificate applications their proposed routings, weekly frequencies, departure and arrival times, equipment type and configuration, proposed years of service and acceptability of alternative awards if their primary applications are not granted. Although American requests such information only from applicants for combination-carrier authority, Continental believes this information should be required of all applicants, including those seeking all-cargo authority, if the award of all-cargo authority continues to be considered in this proceeding. Providing such information at the application date will provide all parties with information on the nature and scope of each applicants' proposal and facilitate expedition of the proceeding. American has presented no justification for imposing such requirements only on combination-carrier applicants, and all-cargo applicants, having just participated in an all-cargo proceeding on China, have already had an opportunity to develop specific proposals. Continental also supports American's request to adopt a single traffic forecast for the year ended March 31, 2006, regardless of the year or years in which the applicant proposes to institute service, for the reasons stated by American. Similarly, Continental agrees with American that carrier traffic forecasts in the proceeding should not require cumbersome confidentiality procedures and that carriers should be permitted to make public references to the various carrier forecasts throughout this proceeding to the extent the historic data shown are not carrier-specific.

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


September 14, 2004

Answer of Delta Air Lines to Objections

The Department would be well justified in finding that the public interest clearly requires additional combination service in 2006 - and, accordingly, to entertain applications in this proceeding only for combination service. Evergreen argues that the Department should streamline selection for the 2006 designation by deciding first, what type of service is needed; then, secondly which specific carrier to authorize. Given the current and obvious imbalance in favor of all-cargo service, Delta believes that the Department can and should find upon reconsideration additional combination service is most needed in 2006, thereby alleviating the "free for all" of entertaining superfluous all-cargo applications.

Counsel: Shaw Pittman, Alexander Van der Bellen, 202-663-8060


September 14, 2004

Answer of Evergreen International Airlines

Given Evergreen's status as an all-cargo carrier, there is no way for the Department to adopt Amerrican's suggeted solution that combination carriers rely on evidence for the 2005 designation without creating further confusion as to how to compare all-cargo projections with combination projections. As Evergreen pointed out in its Petition for Reconsideration, the 2005 combination carrier should be selected prior to the proceeding for the 2006 designation. Evergreen again encourages the Department to carefully reconsider its own precedent on the period of validity of an evidentiary record. Such a record would only support a decision on the type of service to be offered and the actual carrier to be selected to have validity for a period of one year.

Order 2003-5-27 | Order 2001-10-15 | Order 97-4-13

Counsel: Evergreen and The Wicks Group, Glenn Wicks, 202-457-7790, gpwicks@wicks-group.com


September 14, 2004

Answer of Federal Express to Petition of American Airlines for Reconsideration

FedEx Express agrees with American that the parties will be able to develop the strongest evidentiary record if they have as complete an understanding of the desires of each carrier as possible. In addition, given the expedited nature of the proceeding, the Department should encourage a full and early sharing of information. This would allow the Department, e.g., to alert applicants to any inconsistencies of their proposals with bilateral requirements. Moreover, it would preserve fairness among applicants by precluding applicants from changing their proposals after reviewing those of others.

FedEx Express has become increasingly concerned about regulatory burdens being imposed by other applicants to carrier‑selection cases. These extra burdens are being imposed at a time when the Department itself is cutting the burden it places on private parties, which FedEx Express applauds. Indeed, in this large, complex case, American's suggestion could impose such a burden on applicants that it could discourage their participation in such cases, rather than encourage new entry.

Counsel: Federal Express, G. Bailey Leopard, 901-434-6664


September 14, 2004

Answer of Gemini Air Cargo in Support of Petition for Reconsideration of Evergreen International

Gemini Air Cargo, Inc., agrees with Evergreen International Airlines, Inc., that "the selection of a new entrant to the U.S.-China market as of March 25, 2006, is a twostep analytical process." Evergreen Petition, page 3. The Department should first determine whether it will select a combination carrier or a cargo carrier in 2006. The Department can then select from the combination carriers or the cargo carriers that apply for the 2006 designation based upon that decision. The Department should not, for example, require cargo carriers interested in the 2006 designation to undergo the substantial effort to prepare complex responses to the Department’s evidentiary requests, only to learn that the Department has decided to select a combination carrier, and vice versa.

Although Gemini does not object to Evergreen’s suggestion that the Department wait until after the 2005 designation to decide whether the 2006 designee will be combination or cargo, Gemini believes that the Department could profitably address that decision at present -- concurrently with the process to select a combination carrier for 2005.

Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com


September 14, 2004

Answer of United Air Lines to the Petition for Reconsideration of American

United objects to the Petition only to the extent its grant would prevent United or any other carrier from submitting passenger traffic forecasts for the 12 months ending March 31, 2006, for the 2005 selection and March 31, 2007, for the 2006 selection.

United has requested seven of the weekly U.S.-China combination service frequencies that will be available for allocation in either 2005 or 2006 to introduce daily roundtrip service between San Francisco and Guangzhou. If awarded frequencies for service in 2005, United would initially operate the route on a one-stop basis via Tokyo and after 12 months upgrade the service to nonstop. If awarded the frequencies for service commencing in 2006, United would immediately introduce daily nonstop service from the onset on March 25, 2006. In light of this proposal, by which United is proposing distinctly different services in each of the two forecast years, United must be allowed to submit traffic forecasts both for the 12 months ending March 31, 2006, and for the 12 months ending March 31, 2007, reflecting the results of these differing services and their impact on the marketplace. This information is necessary to allow the Department to evaluate fairly and fully the merits of United's proposal and would not prejudice other parties, such as American, who should be free to file one or two forecasts as they see fit (so long as they are prepared to take the risk that their single year forecast may not be fully comparable with those of other carriers which have separately forecast each year).

United Air Lines, Inc., for Frequency Allocation dated August 30, 2004, Docket OST-2004-19026

Counsel: Wilmer Cutler, Jonathan Moss, 202-663-6960, jonathan.moss@wilmerhale.com


 

September 17, 2004

Motion to Compel and Motion to Shorten Answer Period of Federal Express

Federal Express Corporation, pursuant to 14 C.F.R. § 302.11, hereby moves the Department for an order compelling Northwest Airlines, Inc., United Airlines, Inc., and United Parcel Services, Inc. to fully and completely respond to the Information Request included in the Department's Order Instituting Proceeding and Inviting Applications at pages 2-3 of the Appendix. Considering the procedural schedule in this case, FedEx Express respectfully requests that the Department consider this motion on an expedited basis, shorten the ordinary time period for filing answers provided for in 14 C.F.R. § 302.6(d) from seven (7) days to one (1) business day, and require Northwest, United and UPS to fully and completely respond to the Information Request by no later than September 28, 2004.

Counsel: FedEx, G. Bailey Leopard, Jr., 901-434-6664, gbleopard@fedex.com


 

September 21, 2004

Opposition of Northwest Airlines to FedEx Motion to Compel

On September 17, 2004, Federal Express Corporation filed a Motion to Compel with a request that answers to its motion be filed by no later than September 21, 2004. Northwest does not oppose FedEx’s request to shorten the response time, but fully disputes FedEx’s interpretation of the incumbent carrier data request set forth in ¶ III.A.2. of the Appendix to the Department’s Order Instituting Proceeding and Inviting Applications, Order 2004-9-5.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


Served September 21, 2004

Notice Shortening Answer Period | Word

On September 17, 2004, Federal Express Corporation filed a motion in the captioned proceeding requesting that the Department (1) compel Northwest, United and UPS to "fully and completely" respond to the Information Request by providing the complete itinerary for the subject flights, including the flight number, each flight’s complete routing, each flight’s day(s) of operation, and each flight’s departure and arrival times; and (2) shorten the answer period for filing answers to this motion from seven to one business day. Under the Department’s regulations (14 CFR 302.6) answers to the motion would normally be due September 28, 2004.

Federal Express polled all parties served with the application and notified the Department that United and UPS have objected to Federal Express’ request for a shortened answer period.

As the resolution of this matter will have a bearing on the preparation of Direct Exhibits, due October 13, we have decided to grant, in part, Federal Express’ request to for a shortened answer period.

Therefore, acting under authority assigned in 14 CFR 385.3, we will shorten the answer period and require that answers be filed no later than noon on September 23, 2004, and replies to any answers be filed by noon on September 24, 2004. We believe this revision strikes a proper balance between the needs of all interested parties and will not prejudice any party to the proceeding.

By: Paul Gretch


 

Order 2004-9-20

Served September 22, 2004

Order on Reconsideration

In this Order we are addressing petitions filed by American Airlines, Inc. and Evergreen International Airlines, Inc., for reconsideration of Order 2004-9-5 in the above-captioned proceeding. We grant in part and deny in part the relief requested by American, and deny the relief requested by Evergreen.

By: Karan Bhatia



September 22, 2004

Application of American Airlines for a Certificate of Public Convenience and Necessity and Allocation of Frequencies

American Airlines, Inc., pursuant to Order 2004-9-5, September 3, 2004 instituting the 2005/2006 U.S.-China Air Services Case and Designations hereby applies under 49 USC 41102 for a certificate of public convenience and necessity to engage in scheduled foreign air transportation of persons, property, and mail between points in the United States, on the one hand, and Shanghai, Guangzhou, Beijing, and two additional points in the People's Republic of China to be selected by the United States, on the other hand, either nonstop or via intermediate points. American also applies for the allocation of seven weekly U.S.-China combination frequencies. Finally, American requests route integration with its other certificates and exemptions to conduct scheduled foreign air transportation of persons, property, and mail.

American proposes to initiate daily nonstop service between Chicago and Shanghai effective May1, 2005 with B777-223 aircraft. We request that our application be processed through non-hearing, show-cause procedures under 14 CFR 302.207. American does not presently operate service to China.

American's application should be promptly granted in the public interest. United Air Lines, Inc. and Northwest Airlines, Inc. already have an enormous head‑start in U.S.-China combination service, with 28 weekly frequencies held by United, and 20 by Northwest. American's entry is essential and the most effective option to challenge the longstanding dominance of these two incumbent combination carriers in the U.S.‑China market

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


September 22, 2004

Application of Continental Airlines for a Certificate of Public Convenience and Necessity and a Frequency Allocation

Applies for a certificate of public convenience and necessity authorizing Continental to provide scheduled foreign air transportation of persons, property and mail on daily New York/Newark-Beijing B--777 flights beginning on or about March 25, 2005, and on daily New York/Newark- Shanghai B-777 flights beginning on or about March 25, 2006, an allocation of seven weekly U.S.-China frequencies in 2005 and seven additional frequencies in 2006 and authority to integrate this authority with Continental's other certificate and exemption authority.

Continental proposes to institute daily nonstop service between its New York/Newark Liberty International Airport hub and Beijing in 2005 and Shanghai in 2006 with 283‑seat (48 BusinessFirst, 235 Economy) B‑777 aircraft to provide new competition between New York/Newark and Beijing/Shanghai, offering the first daily nonstop service between New York's Newark Liberty International Airport and both Beijing and Shanghai as well as offering online connecting service between Beijing and Shanghai and points throughout North America, Europe and Latin America served through Continental's New York/Newark hub.

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


September 22, 2004

Application of Delta Air Lines for a Certificate and Frequency Allocation

Applies for a Certificate of Public Convenience and Necessity to provide scheduled foreign air transportation of persons, property and mail between the United States and the People's Republic of China., Delta also applies for an allocation of seven (7) U.S.-China combination frequencies to fund its Atlanta-Beijing service.

Despite the improvements in terms of nonstop gateway service to China, service options for network passengers East of the Mississippi remain very poor. With Northwest's cancellation of its nonstop Detroit-China service, network passengers have even fewer nonstop-to-nonstop service choices than before – and many have no online service options at all. Delta's proposal will dramatically improve the U.S.-China competitive service landscape, and is essential to maximizing the public benefits in this proceeding.

Counsel: Delta and Shaw Pittman, Robert Cohn, 202-663-8060, robert.cohn@shawpittman.com


September 22, 2004

Application of Evergreen International for a Certificate of Public Convenience and Necessity, Integration of route Authority and Allocation of Frequencies

Evergreen hereby applies for a certificate of public convenience and necessity authorizing Evergreen to engage in scheduled foreign air transportation of property and mail between a point or points in the United States, via intermediate points, and the co-terminal points of Beijing and Shanghai, China. Evergreen also seeks authority to integrate this authority with its existing certificate and exemption authority and to commingle traffic consistent with applicable aviation agreements. Further, Evergreen seeks the new designation to China available March 25, 2006 along with an allocation of seven weekly round trip frequencies available beginning on March 25, 2006.

Evergreen's interest in and commitment to serving the AsiaPacific region is wellestablished. Evergreen has offices in Beijing, Hong Kong and Seoul. Evergreen's Beijing office is expected to nearly triple in size in the near term (from four employees to 11) and it is also seeking additional warehouse space in Beijing to supplement its capacity in China. Further, over the past two years, Evergreen CEO Delford M. Smith and other senior officers have met with Chinese government officials and companies in China in an effort to increase Evergreen's profile in China. Evergreen has operated in the U.S.-China and U.S.-Hong Kong markets for over 10 years. Between September and December 2003, Evergreen operated 21 multiple shipper charter flights from Shanghai and Hong Kong to the U.S. During calendar year 2004, Evergreen has operated consistently from Hong Kong and Shanghai with 100 multiple shipper charter flights to date, and an additional 22 planned in October.

Counsel: Glenn Wicks and Lisa Harig, 202-457-7790, gpwicks@wicks-group.com and lharig@wicks-group.com


September 22, 2004

Application of Federal Express Corporation

If the Department grants FedEx Express' application, FedEx Express will be able to offer shippers a new daily, bi-directional transpacific flight as a part of its global network. An award of six frequencies to FedEx Express would also enable it to begin building its operations at Guangzhou's new Baiyun International Airport, where it is actively considering building a hub. FedEx Express' proposal would add new capacity to the Pearl River Delta and would offer U.S. shippers and exporters improved and competitive service in this critical region. Such an award would also increase capacity from the United States to Beijing and enhance connectivity within the region to and from China. Thus, by granting FedEx Express' application, the Department would maximize the public benefits resulting from an award of authority in this case and would enable FedEx Express to offer and maintain the best possible service for the shipping public.

FedEx Express seeks six frequencies from the twelve that will become available on March 25, 2006. FedEx Express would use these six frequencies to institute a new transpacific service to and from China, connecting the United States on a non-stop basis with Beijing and Guangzhou in both directions using wide-bodied MD-11 aircraft six times a week. (See Exhibit FX-1.) Additionally, the flight would connect to FedEx Express AsiaOne hub in Subic Bay with a change-of-gauge at Guangzhou to A-310 aircraft six times a week.

Counsel: FedEx, G. Bailey Leopard, Jr., 901-434-6664, gbleopard@fedex.com


September 22, 2004

Application of Gemini Air Cargo for a Certificate of Public Convenience and Necessity and for Designation and Frequencies for US-China All-Cargo Service

Gemini seeks designation as the next U.S. scheduled all‑cargo carrier to China and asks the Department to allocate to Gemini the twelve all‑cargo frequencies that will be available on March 25, 2006. Gemini will serve New York, Chicago, Los Angeles, San Francisco, and Anchorage in the United States, and Shanghai and Guangzhou in China.

Gemini proposes to operate all‑cargo service between the United States and China using its MD‑11F aircraft with a cargo capacity of 205,000 pounds. This service will be convenient, efficient, and economical for U.S. shippers to China as well as for U.S. importers shipping goods from China. Gemini plans to operate two routes to Shanghai (PVG) and two routes to Guangzhou (CAN), two major Chinese industrial centers that have established requirements for the air transportation of cargo to and from the United States.

For Shanghai the proposed routes are: New York (JFK) ‑ Anchorage (ANC) ‑ Shanghai (PVG) ‑ Anchorage ‑ Chicago (ORD) ‑ NewYork; and Los Angeles (LAX) ‑ San Francisco (SF0) ‑ Anchorage ‑ Shanghai ‑ Anchorage ‑ Los Angeles. For Guangzhou the proposed routes are New York ‑ Chicago ‑ Anchorage – Guangzhou (CAN) ‑ Anchorage ‑ Chicago ‑ NewYork; and Los Angeles ‑ San Francisco – Anchorage ‑ Guangzhou ‑ Anchorage ‑ Los Angeles ‑ Chicago. Gemini proposes to operate three weekly frequencies on each of the four routings effective March 25, 2006.

Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com


September 22, 2004

Application of Hawaiian Airlines for Certificate of Public Convenience and Necessity and Allocation of Frequencies

Operate combination service between Honolulu, Hawaii on the one hand and Shanghai, People's Republic of China on the other and points behind the gateway (Honolulu) in the United States, commencing service in 2006.

Hawaiian Airlines, with this application, offers to the United States and its citizens the first non-stop service from Hawaii to China. This developing and as yet untried market holds tremendous promise for the future to not only travelers who heretofore have not been able to reach China, except from the mainland of the United States, but to the State of Hawaii and its citizens. This new service will open markets that have never been served directly from Hawaii, offering significant economic growth to Hawaii and its tourism based economy. China is the largest, least developed consumer economy in the world. Tourism and its related benefits is a large and untapped source of economic stimulus to the State of Hawaii and its citizens.

Hawaiian proposes to operate four (4) frequencies a week using Boeing767-300 ER aircraft with a fleet average of 260 seats. This service will commence on or about May 15, 2006.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com


September 22, 2004

Motion of Hawaiian Airlines for Use and Introduction into Evidence of Additional O & D Survey Data

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com


September 22, 2004

Application of North American Airlines

Requests a temporary, experimental certificate of public convenience and necessity under 49 U.S.C. § 41102(c) to provide scheduled foreign air transportation of persons, property and mail between the United States and the People's Republic of China and allocation of seven weekly U.S. carrier combination frequencies to become effective March 25, 2005, and an additional seven frequencies to become effective March 25, 2006. If awarded this authority, North American will initially operate daily high quality low-fare Oakland/Honolulu/Shanghai service. In March 2006, North American will expand its service to include Guangzhou. North American, with years of experience in international passenger service, will provide the kind of low-fare competitive service today's passengers demand. The proposed service from Oakland and Honolulu will meet the rapidly growing needs of leisure, business and ethnic passengers in these robust markets.

Commencing March 25, 2005, North American proposes to operate daily scheduled combination service from Oakland International Airport (OAK) to Shanghai (SHA) via Honolulu International Airport (HNL), using Boeing 767-300ER equipment. Starting in November 2005, North American would operate some or all of the flights with Boeing 777-200ER equipment. Upon award of the additional seven frequencies available for service commencing March 25, 2006, North American would add service to Guangzhou (CAN), operating as follows: five weekly frequencies serving OAK-HTNL-SHA route, five serving OAK-HNL-CAN, and four serving OAK-HNL-CAN-SHA.

Counsel: Baker & Hostetler, David Kirstein, 202-861-1756, dkirstein@bakerlaw.com


September 22, 2004

Application of Northwest Airlines

Pursuant to the Department’s Order Instituting Proceeding and Inviting Applications, served September 3, 2004 (Order 2004-9-5), Northwest Airlines, Inc. hereby requests: (1) an allocation of eight of the twelve all-cargo frequencies available to designated U.S. carriers effective March 25, 2006 under the recently amended aviation agreement between the United States and People’s Republic of China (PRC); (2) a temporary, experimental certificate of public convenience and necessity under 49 U.S.C. § 41102 (c) authorizing Northwest to provide scheduled foreign air transportation of property and mail between a point or points in the United States, via any intermediate points, to a point or points in China open to scheduled international operations, and beyond to any points outside of China, with full traffic rights; and (3) authority to integrate Northwest’s existing exemption and certificate authority with the new certificate authority sought herein.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


September 22, 2004

Application of Polar Air Cargo for an Allocation of Frequencies

Polar proposes to offer B747 freighter services on three (3) additional weekly frequencies over the following routings:

  1. JFK-ANC-ICN-PEK-PVG-ICN-ANC-JFK
  2. JFK-ANC-ICN-PEK-PVG-ICN-ANC-ORD
  3. ORD-ANC-JCN-PEK-PVG-ICN-ANC-JFK

In conjunction with the service Polar plans to introduce pursuant to its tentative selection under Order 2004‑9‑4, an award of these frequencies will permit Polar to offer a second daily service between the U.S. and Shanghai on six consecutive days each week and introduce service to Beijing on three (3) days each week. A detailed service proposal will be submitted in Polar's Direct Exhibits.

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


September 22, 2004

Application of Tradewinds Airlines for a Certificate of Public Convenience and Necessity and for Allocation of Frequencies for US-China All-Cargo Service

Requests: (1) issuance of certificate of public convenience and necessity authorizing it to provide scheduled foreign air transportation of property and mail from a point in the United States, via intermediate points, to a point or points in the People's Republic of China open to scheduled international operations, and beyond; and (2) allocation of twelve (12) weekly allcargo frequencies that become available March 25, 2006.

TradeWinds proposes to operate scheduled all-cargo service between the United States and China using TradeWinds' B-747-200F aircraft. The proposed routes to be operated by TradeWinds are: Fort Wayne (FWA)-Anchorage (ANC)-Shanghai (PVG)-FWA (daily); FWA-ANC-Guangzhou (CAN)-ANC-FWA (3 times weekly).

Counsel: Pierre Murphy, 202-776-3980, pmurphy@lopmurphy.com


September 22, 2004

Application of United Parcel Service for an Allocation of Frequencies

Hereby applies for an award of three (3) of the twelve (12) round-trip weekly all-cargo frequencies available in 2006. UPS' request is modest but appropriate given the limited number of frequencies. There are twelve (12) frequencies available for four cargo carriers (UPS, Federal Express, Northwest and Polar). UPS is requesting three so that it can improve its full array of air cargo services-especially express which has grown over three hundred percent (300%) since UPS initiated direct air service to China in 2001. This is particularly important because express traffic comprises high value products and items of significant importance to the shippers and consignees of these packages. Aside from the immediate tangible value of the contents of these packages, it is important to recognize the high yield of such express traffic and the economic stimulus that such services bring to a growing economy and its supporting industries. Also, these high yields mean a more profitable operation for the U.S. carrier which, in turn, means that the carrier will be more likely to maintain the service.

Counsel: UPS and Kelly Drye, David Vaughan, 202-955-9864, dvaughan@kellydrye.com


September 22, 2004

Application of World Airways for a Certificate of Public Convenience

World hereby applies for a certificate of public convenience and necessity to engage in scheduled foreign air transportation of property and mail from a point or points in the United States, via intermediate points to a point or points in the People's Republic of China and beyond. World seeks the designation available for all‑cargo services under the US‑China Air Transport Services Agreement as of March 25, 2006.

The services proposed herein will complement World's existing all‑cargo operations in the China market. World already provides all‑cargo services to China on a wet lease basis, in addition to charter flights which it provides to a major U.S. freight forwarder. The designation sought by World will facilitate the expansion of its current services to China to include scheduled all‑cargo operations.

Counsel: World and Zuckert Scoutt, Malcolm Benge, 202-298-8660, mlbenge@zsrlaw.com


 

September 23, 2004

Supplement to the Application of North American Airlines

Pursuant to the Department's Order on Reconsideration, Order 2004-9-20 (September 22, 2004), North American is filing this Supplement to its Application to advise that the configuration for the B76730 ER aircraft it proposes to operate in the Oakland/Honolulu/Shanghai market, commencing March 25, 2005, would have 24 Business Class and 213 Coach seats. As stated in the Application, commencing in November 2005, North American would provide some or all of the service using B777-200ER aircraft with a configuration of 44 Business Class and 242 Coach seats. If North American is awarded additional frequencies for 2006 to initiate service to Guangzhou, as described in the Application it would operate the same equipment with the same configuration.

Counsel: Baker & Hostetler, David Kirstein, 202-861-1756, dkirstein@bakerlaw.com


September 23, 2004

Opposition of United Parcel Service to FedEx's Motion to Compel

United Parcel Service Co. opposes the Motion to Compel filed by Federal Express Corporation on September 17, 2004, and files this Opposition in accordance with the Department of Transportation’s September 21, 2004 Notice Shortening Answer Period. UPS disagrees with FedEx’s interpretation of the information requested in the Order Instituting Proceeding and Inviting Applications, Order 2004-9-5, and states that it has fully provided the information requested by the DOT. It is instructive that all of the other incumbent carriers interpreted the Department’s information request differently from FedEx.

Counsel: UPS and Kelly Drye, David Vaughan, 202-955-9864, dvaughan@kellydrye.com


 

September 24, 2004

Consolidated Reply of Federal Express Corporation

Federal Express Corporation hereby files this consolidated reply to Northwest Airlines, Inc. and United Parcel Service, Co.'s Oppositions to FedEx Express's Motion to Compel dated September 17, 2004, pursuant to the Department's Notice Shortening the Answer Period.

Additionally, FedEx Express's Motion asserted that United Airlines, Inc. had failed to fully and completely respond to the Information Request included in the Department's Order Instituting Proceeding and Inviting Applications at pages 2-3 of the Appendix. As of this filing, United has failed to oppose FedEx Express's Motion. As FedEx Express's Motion with respect to United is unopposed, it is well within the Department's discretion to grant FedEx Express's Motion with respect to United without further deliberation.

Counsel: FedEx, G. Bailey Leopard, Jr., 901-434-6664, gbleopard@fedex.com


September 24, 2004

Supplement to Application of Hawaiian Airlines for Certificate of Public Convenience and Necessity and Allocation of Frequencies

Supplements its Application for Certificate of Public Convenience and Necessity and Allocation of Frequencies filed September 22,2004 to provide a "description of proposed routing" as set forth at page 5 of Order 2004-9-20. Hawaiian's routing behind the gateway, Honolulu, will be a single flight number originating in San Diego.

Additionally, Hawaiian seeks only the 2006 opportunity, and would not be in a position to accept the 2005 designation.

Counsel: Hawaiian and Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com


September 24, 2004

Supplement to Application of Northwest Airlines

Hereby respectfully supplements its Application in response to the Department’s Order on Reconsideration issued September 22, 2004 (Order 2004-9-20), instructing carriers to provide the following information by September 24, 2004:

[A] description of their proposed services, including proposed routings, number of weekly frequencies proposed, and equipment type and configuration…. [T]here is no need for applicants to file at this time more specific information concerning departure and arrival times for their proposed services. As is our
usual practice, we will allow applicants to make necessary modifications to their proposals at the Direct Exhibit stage of this proceeding.

Exhibit A, attached hereto, contains the details relating to Northwest’s service proposal
requested by the referenced Order.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


OST-2004-19077
OST-1997-3020 - Renewal and Amendment of a Certificate of Public Convenience and Necessity for Route 246 - US-People's Republic of China

September 24, 2004

Answer of United Air Lines to Application of Northwest Airlines

United already has pending in Docket OST‑97‑3020 an application to amend its certificate for Route 246 to expand its U.S.‑China certificate authority in a manner similar to what Northwest is now seeking in Docket OST‑2004‑19077. As noted, United has no objection to the Department granting Northwest broad certificate authority to serve China, so long as the Department simultaneously grants United's long‑pending application for expanded U.S. China authority. Both United and Northwest are "incumbents" under the U.S.‑China bilateral, and there is no reason to grant Northwest any broader authority than United.

United does not believe that the current 2005/2006 frequency allocation proceeding is the appropriate docket in which to address the issue of the scope of the certificate authority that should be issued to the incumbent U.S.‑China carriers. This case involves wholly unrelated issues of carrier selection and frequency allocation, and involves numerous parties, including both incumbents and potential new entrants. Moreover, because of the complexity of the issues involved, a final decision in this proceeding is months away.

Counsel: United and Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, bruce.rabinovitz@wilmerhale.com


September 24, 2004

Supplement No. 1 of United Parcel Service to Application

UPS has applied for three (3) additional weekly all-cargo frequencies to China so that it may provide a full array of all-cargo air transportation services between the U.S. and China and between China and the world. If awarded the frequencies, UPS would operate them as follows:

Frequency One: Louisville‑Anchorage‑Shanghai‑Anchorage‑Louisville (SDF‑ANC‑PVG‑ANC‑SDF).
Frequency Two: Louisville‑Anchorage‑Osaka‑Shanghai‑Osaka­ Anchorage‑Louisville (SDF‑ANC‑KIX‑PVG‑KIX‑ANC‑SDF).
Frequency Three: Louisville‑Anchorage‑Guangzhou‑Incheon‑Anchorage­-Louisville (SDF‑ANC‑CAN‑ICN‑ANC‑SDF).

Counsel: Kelley Drye, David Vaughan, 202-955-98-64, dvaughan@kelleydrye.com


September 24, 2004

Supplement No. 1 to Application of World Airways for a Certificate of Public Convenience and Necessity

World requests designation as an all-cargo carrier under the U.S.-China Air Transport Agreement and the issuance of a certificate of public convenience and necessity effective March 25, 2006 in order to engage in all-cargo services as follows: (i) four times weekly on the routing Houston(IAH)-San Jose-Anchorage-Shanghai-Anchorage-San Jose-Houston and (ii) two times weekly on the routing Houston-San Jose-Anchorage-GuangzhouAnchorage-San Jose-Houston. Anchorage will be a tech stop only.

To support its proposed all-cargo services, World requests an allocation of six (6) weekly frequencies. World will operate the proposed services using MD-1 I freighter aircraft with a maximum payload capacity of 205,000 lbs.

Counsel: World and Zuckert Scoutt, Malcolm Benge, 202-298-8660, mlbenge@zsrlaw.com


 

September 27, 2004

Motion for Leave to File and Supplement to Application of Evergreen International Airlines

Counsel: Glenn Wicks and Lisa Harig, 202-457-7790, gpwicks@wicks-group.com and lharig@wicks-group.com


 

October 4, 2004

Request of Hawaiian Airlines for Immediate Ruling on Its Motion

Hawaiian requires that it be promptly notified as to whether the DB1 B database may be used in this proceeding. To clarify Hawaiian's request, no identification of particular or specific carriers will be made and data from this table will be shown in aggregate form only. The purpose and need for
use of the data is to identify (historical) stopover traffic on flights to and from Asia. Therefore, Hawaiian respectfully requests that the Decision Maker immediately grant Hawaiian's motion of September 22,2004 and authorize the use of the DB1B data in this proceeding.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com


Served October 4, 2004

Notice of Revisions to UPS Data

By Order 2004-9-5, the Department instituted the 2005/2006 U.S.-China Air Services Case and invited interested U.S. carriers to file applications for authority to serve the U.S.-China market and for allocations of frequencies effective March 25, 2005, and March 25, 2006. The Order established a procedural schedule and specified September 10, 2004, as the date DOT Information Responses would be available. It also specified October 13, 2004, as the due date for direct exhibits.

Subsequent to September 10, 2004, Counsel for United Parcel Service advised the Department that it needed to make revisions to the data it had provided on which the Department based, in part, its information responses. UPS has submitted the revised data to the Department. The Department has now revised its information responses to take account of the UPS submission and has placed these information responses on computer diskettes. Parties wishing to receive the reissued information responses on these diskettes or by email should contact Michael Lane or Kevin Bryan in the Competition and Policy Analysis Division at (202) 366-2352 and (202) 493-0183, respectively.

By: Paul Gretch


 

October 8, 2004

Notice of Withdrawal of Application of Tradewinds Airlines for a Certificate of Public Convenience and Necessity

Tradewinds Airlines, Inc. respectfully withdraws its pending application dated September 22, 2004 for a certificate of public convenience and necessity to operate scheduled foreign air transportation of property and mail from a point in the United States, via intermediate points, to a point or points in the People’s Republic of China open to scheduled intermediate operations, and beyond. Thus, Tradewinds will not be submitting Direct Exhibits pursuant to the timetable established by Order 2004-9-5.

Counsel: Pierre Murphy, 202-776-3980, pmurphy@lopmurphy.com


 

Served October 13, 2004

Notice Suspending Procedural Schedule

By Order 2004‑9‑5, the Department issued an order instituting the 2005/2006 U.S. –China Air Services Case and invited interested U.S. carriers to file applications for authority to serve the U.S.‑China market and for allocations of frequencies effective March 25, 2005, and March 25, 2006. The Order established a procedural schedule for submissions in this case, including calling for direct exhibits on October 13, 2004.

By this Notice we are suspending all procedural dates in this proceeding until further order of the Department. We will establish a revised procedural schedule as soon as possible.

By: Paul Gretch


 

October 13, 2004

The Port Authority of New York and New Jersey Support of Continental Airlines | Word

Continental Airlines is strongly qualified to operate nonstop air service to China and sustain this service with a high level of commitment.  This is evidenced in the fact that, over the past two years, Continental has added seven new nonstop international markets to its Newark-Liberty operation and has sustained service in over 140 nonstop markets.  We are confident that the addition of nonstop air service to China will further enhance what is not only the strongest local traffic base in the United States but also provide a substantial number of connections to a broad part of this country.  Such an operation will benefit our communities, our economy and our region.

From the 2006 frequency pool, several all-cargo carriers have proposed services originating at JFK.   We strongly support the continued growth of New York/New Jersey's vitally important air cargo industry.   Due to the limited number of frequencies available in 2006, we are unable to support any one carrier, however, we strongly support granting the maximum allocation to NY/NJ connected routes.  Clearly, the strength of the market warrants such a decision.

By: Port Authority of NY/NJ, William DeCota and Bradley Rubinstein, 212-435-3741, brubinst@panynj.gov


 

2005/2006 US-China Air Services Case and Designations

Order 2004-10-07
OST-2004-19077

Issued and Served October 15, 2004

Order | Word

By this Order (1) we grant, in part, and deny, in part, the motion filed by Federal Express Corporation to compel other applicants to comply with the Information Request included in the Department’s Order instituting this proceeding; (2) we deny the motion filed by Hawaiian Airlines, Inc. requesting the Department to release, in this proceeding, additional O & D Survey Data under 14 CFR §241.19-7(d)(2); and, (3) we amend the procedural schedule in this proceeding to reflect our decision to require United Parcel Service Co. to file additional information.

  • Revised UPS Information Response: October 18, 2004
  • Direct Exhibits: October 20, 2004
  • Rebuttal Exhibits: November 10, 2004
  • Briefs: November 22, 2004

By: Karan Bhatia


 

October 14, 2004

Re: Complaint of North American Airlines about Extension of Time

As you are aware, North American filed its China exhibits on time yesterday, only to discover one hour later that the deadline had been indefinitely extended.

In accordance with DOT rules we also notified the entire list of other airlines interested in the subject. Since North American filed its application in a timely manner and was the only airline to submit it's exhibits, the result of your extending the deadline let all North American's information become available to all the other interested parties. I believe the result was to compromise and prejudice our application for the route rights.

By: Dan McKinnon


October 18, 2004

Revised Information Response of United Parcel Service

United Parcel Service Co. respectfully submits its Revised Information Response as required by Department of Transportation Order 2004-9-5 and clarified in Order 2004-10-7. Concurrent with this filing, UPS is submitting a copy of its Revised Information Response in electronic form to the Competition and Policy Analysis Division and is serving a copy on all parties to this proceeding.

Counsel: Kelley Drye, David Vaughan, 202-9955-9792, dvaughan@kelleydrye.com


 

October 20, 2004

Direct Exhibits of American Airlines:

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


October 20, 2004

Direct Exhibits of Continental Airlines:

Counsel: Continental and Crowell & Moring, Bruce Keiner


October 20, 2004

Re: Certificate of Service for Continental Airlines

Enclosed is a CD‑Rom containing the complete Direct Exhibits of Continental Airlines in this proceeding. This CD‑Rom has also been served upon all parties on the attached service list by overnight delivery.

Counsel: Crowell & Moring, Bruce Keiner, Jr., 202-624-2615, rbkeiner@crowell.com


October 20, 2004

Direct Exhibits of Delta Air Lines

Counsel: Delta and Shaw Pittman, Robert Cohn


October 20, 2004

Direct Exhibits of Evergreen International

Re: Errata of Evergreen International Airlines

Counsel: Glenn Wicks and Lisa Harig, 202-457-7790, gpwicks@wicks-group.com and lharig@wicks-group.com


October 20, 2004

Direct Exhibits of Federal Express:

Counsel: FedEx, Nancy Sparks, 202-756-2461, nsparks@fedex.com


October 20, 2004

Direct Exhibits of Gemini Air Cargo

Counsel: Morton Beyer, Michele Dixey and Roller & Bauer, Moffett Roller


October 20, 2004

Direct Exhibits of Georgia and Atlanta Parties

By: Georgia and Atlanta Parties


October 20, 2004

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2728, jhill@dhlaw.com


October 20, 2004

Re: City of Houston and the Greater Houston Partnership Direct Exhibits

Counsel: Zuckert Scoutt, Rachel Trinder, 202-298-8660


October 20, 2004

Direct Exhibits of the New Jersey Parties

Re: Certificate of Service for The New Jersey Parties

By: The New Jersey Parties


October 20, 2004

Direct Exhibits of North American Airlines

Counsel: Baker & Hostetler, David Kirstein


October 20, 2004

Direct Exhibits of Northwest Airlines

Counsel: Northwest, Megan Rae Rosia, 202-842-3950


October 20, 2004

Direct Testimony and Exhibits of Polar Air Cargo

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


October 20, 2004

Re: Direct Exhibit of The City of San Jose

Counsel: Zuckert Scoutt, Richard Mathias


October 20, 2004

Direct Exhibits of United Air Lines

Counsel: United and Wilmer Cutler, Jonathan Moss, 202-663-6655


October 20, 2004

Direct Exhibits of United Parcel Service

Counsel: UPS and Kelley Drye, David Vaughan


October 20, 2004

Direct Exhibits of World Airways

By: World Airways


 

October 26, 2004

Motion of City of Chicago for Leave to File in Support of Application of American Airlnes for a Certificate of Public Convenience and Necessity and Frequency Allocation

Currently, United is the only U.S. combination carrier operating nonstop service between Chicago and China, with existing service between Chicago and Beijing and new service between Chicago and Shanghai scheduled to begin October 31, 2004. American's application presents the first and only opportunity for competitive service, which stimulates the market and offers further price discipline. Granting American's application will enhance inter‑airline competition for service to China, benefiting business and leisure travelers and enhancing Chicago's status as the nation's only dual international hub city.

Unlike the proposals by Continental and Delta to provide more service to Beijing (in 2005 and 2006, respectively), American's proposal links China's leading financial and commercial center and gateway to China with economic centers in the midwestern, southern and eastern United States. Continental's proposed service between Newark and Beijing and Delta's proposed service between Atlanta and Beijing in 2006 merely envision more single‑hub, single U.S. carrier service. American's proposal, on the other hand, provides real head‑on competition with United's U.S.‑China operations.

Counsel: Pillsbury Winthrop,Kenneth Quinn, 202-775-9800


 

November 5, 2004

Motion of the City and County of San Francisco for Leave to File Statement of Position in Support of the Application of United Air Lines to Serve the San Francisco-Guangzhou Market

No participant in this case appears to take issue with SFO's long role as a focus for China service. Yet our neighbor, the San Jose airport, has submitted in this docket a lengthy set of exhibits - nominally in support of World Airways' desire for all-cargo service, but including considerable material apparently aimed at comparing San Jose to SFO as an international gateway. The overall purport of the San Jose submission appears to be that it, rather than SFO, lies at the "heart" of Silicon Valley and prosperous Santa Clara County, and so is some minutes' shorter "drive time" from the airport for some high tech travelers and businesses.

Counsel: City Attorneys Office, Robert Maerz, 640-794-5065


 

November 10, 2004

Rebuttal Exhibits of American Airlines

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


November 12, 2004

Re: American Airlines Revised Exhibit

American Airlines, Inc. hereby submits revised Exhibit AA‑R‑114 (page 1) in order to correct an inadvertent error on lines 6, 7, 15, and 17 of column 1.

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


November 10, 2004

Rebuttal Exhibits of Continental Airlines

Counsel: Continental and Crowell & Moring, Bruce Keiner


November 10, 2004

Rebuttal Exhibits of Delta Air Lines

Counsel: Delta and Shaw Pittman, Robert Cohn


November 10, 2004

Rebuttal Exhibits of Evergreen Airlines

Counsel: Glenn Wicks and Lisa Harig, 202-457-7790, gpwicks@wicks-group.com and lharig@wicks-group.com


November 10, 2004

Rebuttal Exhibits of Federal Express

Counsel: FedEx, Nancy Sparks, 202-756-2461, nsparks@fedex.com


November 10, 2004

Rebuttal Exhibits of Gemini Air Cargo

Counsel: Morton Beyer, Michele Dixey and Roller & Bauer, Moffett Roller


November 10, 2004

Rebuttal Exhibits of Hawaiian Airlines

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2728, jhill@dhlaw.com


November 10, 2004

Rebuttal Exhibits of the City of Houston and the Greater Houston Partnership

Counsel: Zuckert Scoutt, Rachel Trinder, 202-298-8660


November 10, 2004

Rebuttal of Exhibits of The New Jersey Parties

By: The NJP, Chip Hallock


November 10, 2004

Rebuttal Exhibits of North American Airlines

Counsel: Baker & Hostetler, David Kirstein, 202-861-1756, dkirstein@bakerlaw.com


November 10, 2004

Rebuttal Exhibits of Northwest Airlines

Counsel: Northwest, Megan Rae Rosia, 202-842-3950


November 10, 2004

Rebuttal Testimony and Exhibits of Polar Air Cargo

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


November 10, 2004

Re: Summary of Rebuttal Comments of the San Diego County Regional Airport Authority

By: Thella Bowens


November 10, 2004

Rebuttal Exhibits of United Air Lines

Counsel: Wilmer Cutler, Jonathan Moss, 202-663-6655, jonathan.moss@wilmerhale.com


November 10, 2004

Rebuttal Testimony and Exhibits of United Parcel Service

Counsel: UPS and Kelley Drye, David Vaughan


November 10, 2004

Rebuttal Exhibits of World Airways

Counsel: Zuckert Scoutt, Malcolm Benge


 

November 18, 2004

Re: Letter from American Airlines Containing a Chicago Sun-Times Editorial

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


 

November 22, 2004

Brief of American Airlines

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


November 22, 2004

Brief of the City of Chicago - American Airlines

Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-775-9800


November 22, 2004

Brief of Continental Airlines

Re: Additional Letters in Support from Employees an Others

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


November 22, 2004

Brief of Delta Air Lines

Counsel: Delta and Shaw Pittman, Robert Cohn and Alexander Van der Bellen, 202-663-8060, robert.cohn@shawpittman.com and sascha.vanderbellen@shawpittman.com


November 22, 2004

Brief of Evergreen International Airlines

Counsel: Glenn Wicks and Lisa Harig, 202-457-7790, gpwicks@wicks-group.com and lharig@wicks-group.com


November 22, 2004

Brief of Federal Express Corporation

Counsel: FedEx, G. Bailey Leopard, 901-434-6664, gbleopard@fedex.com


November 22, 2004

Brief of Gemini Air Cargo

Counsel: Roller & Bauer, Moffett Roller, 202-331-3300


November 22, 2004

Brief of The Georgia and Atlanta Parties - Delta Air Lines

By: Metro Atlanta Chamber of Commerce, HollyBeth Anderson


November 22, 2004

Brief of Hawaiian Airlines

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2725, jhill@dlalaw.com


November 22, 2004

Brief of the New Jersey Parties - Continental Airlines

By: Regional Business Partnership, Chip Hallock, 973-242-4209


November 22, 2004

Brief of North American Airlines

Counsel: Baker & Hostetler, David Kirstein, 202-861-1756, dkirstein@bakerlaw.com


November 22, 2004

Brief of Northwest Airlines

Counsel: Northwest, Megan Rae Rosia, 202-842-3950, megan.rosia@nwa.com


November 22, 2004

Brief of Polar Air Cargo

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


November 22, 2004

Brief of San Diego County Regional Airport Authority | Word - Hawaiian

Counsel: Stephen Gelband, 202-337-8970, slg@gelbandlaw.com


November 22, 2004

Brief of the City of San Jose - World Airways

Counsel: Zuckert Scoutt, Richard Mathias, 202-298-8660, rdmathias@zsrlaw.com


November 22, 2004

Brief of United Air Lines

Counsel: Wilmer Cutler, Jonathan Moss, 202-663-6655, jonathan.moss@wilmerhale.com


November 22, 2004

Brief of United Parcel Service

Counsel: Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com


November 22, 2004

Brief of World Airways

Counsel: World and Zuckert Scoutt, Malcolm Benge, 202-298-8660, mlbenge@zsrlaw.com


 

2005/2006 US-China Air Services Case and Designations

Order 2005-02-14
OST-2004-19077


Issued and Served February 22, 2005

Order to Show Cause - Bookmarked

By this Order, we tentatively decide to award Continental Airlines, Inc. and American Airlines, Inc. certificate authority to provide combination services in the U.S.-China market and to allocate Continental and American seven weekly combination frequencies, respectively, for their proposed services. The rights would become available to Continental on March 25, 2005, and to American on March 25, 2006. We also tentatively decide to select American as a backup to Continental’s primary award for 2005 and Delta Air Lines, Inc. as a backup to American’s primary award for 2006. Further, we tentatively decide to allocate the 12 weekly all-cargo frequencies available on March 25, 2006, as follows: three weekly frequencies each to Federal Express Corporation, Northwest Airlines, Inc., Polar Air Cargo, Inc., and United Parcel Service, Co.

By: Karan Bhatia


Issued and Served February 22, 2005

Erratum

The third sentence on page 2 of the Order should read:

Further, the restrictions on entry and competition ill-serve the economies, consumers, carriers, and communities of both China and the United States.

By: Paul Gretch


 

March 4, 2005

Comments of American Airlines on Show-Cause Order 2005-2-14

The show‑cause order proposes that American be re­ quired to start service no later than March 25, 2006 American would like to start service on April 2, 2006, which coincides with one of the year's major schedule change dates, when the changeover to Daylight Savings Time occurs.

We therefore request that the final order either specify April 2, 2006 as American's required start date, or in the alternative allow a 14‑day cushion beyond March 25, consistent with recent Department practice.' However, in the event the Department does not do so, American is fully prepared to start Chicago‑Shanghai service on March 25, 2006.

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


March 4, 2005

Comments of Delta Air Lines

Delta does not intend to submit detailed Objections. Rather, Delta submits these comments to reaffirm its keen interest in commencing service to China at the earliest possible date, to emphasize once again the important public interest benefits that would be gained by authorizing the service that Delta has proposed, and to encourage the Department to immediately begin discussions with the Government of China to secure the right to authorize Delta to serve China in 2007. Under the current bilateral air services agreement, a new combination service designation will not become available until 2008. Delta urges the Department to promptly explore on government‑to­ government basis the possibility of advancing that opportunity to 2007. Delta further urges the Department to institute a new carrier selection case by no later than January 1, 2006, so that the successful applicant can begin advance preparation for implementation, marketing, and allocation of fleet resources.

Counsel: Hogan & Hartson, Alexander Van der Bellen, 202-637-8382, sascha.vanderbellen@hhlaw.com


March 4, 2005

Reply of Federal Express to Order to Show Cause

Until we can successfully negotiate an Open Skies agreement with China, FedEx Express, other U.S. carriers, and the Department must operate within the restricted environment of the U. S.-China bilateral. The Department must continue to "choose among competing U.S. carrier applicants in carrier selection cases ... that are difficult and resource-consuming for applicants and communities, as well as for the Department." Indeed, FedEx Express (and, admittedly, the other cargo applicants) committed extensive resources to this case. However, the Department's tentative allocation of the available all-cargo frequencies and its rationale for its allocation imply that this case was over before it started and that the commitment of resources by FedEx Express and the other cargo carriers was unnecessary.

Counsel: Federal Express, G. Bailey Leopard, 901-434-6644, gbleopard@fedex.com


March 4, 2005

Objections of Gemini Air Cargo to Order to Show Cause 2005-2-14

The Department should issue not adopt the tentative findings and conclusions as set forth in Order 2005-2-14. It should instead issue Gemini Air Cargo, Inc., a certificate of public convenience and necessity to operate scheduled foreign air transportation of property and mail from a point or points in the United States; via intermediate points; to a point or points in the People's Republic of China open to scheduled international operations; and beyond, effective March 25, 2006. The Department should also designate Gemini to provide scheduled all-cargo service to China and allocate Gemini twelve all-cargo frequencies.

Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com


March 4, 2005

Objections of Hawaiian Airlines to Order to Show Cause

Hawaiian, like five other applicants, requested the Department to designate it for the 2006 combination service to China. Hawaiian believes that the Department's decision, as reflected in the Show Cause Order, is wrong as it does not discuss or even acknowledge the distinct and unique benefits available to the public from selecting Hawaiian, as opposed to American. The Department chose to ignore the greater, yet more subtle, benefits that Hawaiian's proposal provides to the U.S.-China market. Hawaiian presented unrefuted evidence that its service between San Diego-Honolulu and Shanghai would represent a much more significant benefit to the underserved traveling public than would any other carrier's proposal -the creation of completely new on-line service to China or the creation of a competitive option for such service. Hawaiian's proposal would serve more passengers in markets gaining their first or second on-line option to China than both American and Delta, the two carriers awarded primary and backup authority to serve this route in 2006.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com


March 4, 2005

Objections and Comments of the City of Houston and the Greater Houston Partnership

The Houston Parties fully endorse the Department's decision to award the 2005 designation and accompanying Beijing frequencies to Continental. As was emphasized in Houston's Brief,  Continental - Houston's home town carrier - is the only major combination carrier in this proceeding that does not have the ability to offer service to China, either on its own or through code-sharing and as the Department rightfully concludes, Continental's selection will enhance competition in the overall U.S.-China market. The tentative decision should promptly be finalized with respect to this award. Houston notes that Continental's future plans include services to China from Houston.

The Houston Parties strongly object to the Department's decision to allocate the 2006 designation and related frequencies to American. Houston does not dispute the fact that there have been no new combination entrants in the U.S.-China market since 1986.

Counsel: Houston and Zuckert Scoutt, Rachel Trinder, 202-298-8660


March 4, 2005

Comments of Northwest Airlines to Order to Show Cause

Whatever the Department's final allocation in this proceeding, Northwest will fully utilize the frequencies it is allocated and Northwest intends to seek additional all‑cargo frequencies from the pool of fifteen available effective March 25, 2007. Northwest urges the Department to move forward expeditiously with a final order, and upon completion of this proceeding invite applications for 2007 all‑cargo frequencies in sufficient time to ensure interested carriers will have ample opportunity to engage in advance sales and marketing activities for institution of services on the earliest dates authorized under the U.S. –China Protocol.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


March 4, 2005

Response of Polar Air Cargo to Order to Show Cause

The confidence the Department's tentative decision expresses in the commitment Polar has made to the development of service in the U.S.-China market is deeply appreciated. Yet, it is also well-founded. On October 21, 2004, Polar was designated as a new U.S. all-cargo carrier in the China market under the air services agreement. Five days later it was provided a copy of the diplomatic note and submitted its application to the Civil Aviation Administration of China. By the first week of December, only six weeks after its designation, Polar commenced the operation of all six of the 2004 all-cargo frequencies it was awarded. Polar has already completed preparations for increasing its service on March 25, 2005, using the three additional frequencies it was awarded last year. It is fully prepared to as promptly put to use the additional three frequencies it has just been tentatively awarded once they become available.

Counsel: Polar, Kevin Montgomery, 202-828-1002, kevin.montgomery@polaraircargo.com


March 4, 2005

Objections of San Diego Regional Airport Authority to Order to Show Cause | Word

By emphasizing network "legacy" carriers and traditional gateways in the decision, the DOT eliminates the only real viable competitive carriers offering service from the western USA. The only legacy hubs west of the Rocky Mountains operated by airlines with equipment capable of reaching China are United's at SF0, DEN and LAX, and Delta's at SLC. However, Delta has not shown any interest in building Salt Lake City as a viable international hub. Instead it focused its application on the furthest hub from Beijing in the proceeding, and arguably the hub with the least of the USA behind it. Delta, nevertheless, secured the backup authority in 2006 should American choose to waive their rights. Regrettably, the two carriers who proposed service from western gateways did not even secure backup authorities.

Counsel: Stephen Gelband, 202-337-8970, slg@gelbandlaw.com


March 5, 2005

Objection of United Air Lines

United objects to the Department's failure to select United's proposals for San FranciscoGuangzhou service beginning in either 2005 or 2006. United would provide the first daily service between the U.S. and Guangzhou from its ideally located San Francisco hub. The economic significance of Guangzhou, and the Guangdong province, to the U.S. are undeniable. The public benefits of United's proposal to this burgeoning commercial and manufacturing center clearly outweigh those from all of the other proposals, but especially the proposal from American to do nothing more than duplicate the service United already is offering between Chicago and Shanghai.

Counsel: United and Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, bruce.rabinovitz@wilmerhale.com


March 4, 2005

Response of United Parcel Service to Order to Show Cause

With this tentative award, UPS will now have fourteen China frequencies to be operated at Shanghai. Coupled with its change of gauge operations, these will enable UPS to meet the Agreement's cargo hub definition criterion of 72 weekly aircraft movements. In addition to meeting this criterion, UPS has been working diligently to meet the other qualifying prerequisites needed for cargo hub operations. No other U.S. carrier has yet to affirmatively decide to develop a hub in China.

The commitment of UPS to China goes far beyond building a cargo hub. For example, in February UPS became the first wholly‑owned foreign air express carrier in China with the establishment of its headquarters in Guangzhou. By the end of this year, UPS will have offices in 23 cities serving more than 200 locations. These offices will provide UPS the unique opportunity to provide air express services in China of the same level that are provided by UPS throughout the world.

Counsel: Kelley Drye, David Vaughan, 202-955-9792, dvaughan@kelleydrye.com


March 5, 2005

Comments of World Airways on Order to Show Cause

Given the importance of the China air cargo market to its business plan, World would be tempted to file an objection to the Order to Show Cause were it not for the additional U.S.‑China designation available in 2008. World fully expects to apply for the 2008 designation and to compete aggressively for an award of all‑cargo operating authority. If present trends hold, the factors supporting the use of that designation for all‑cargo service, and the award of all‑cargo rights to World, will be even stronger in the future than they are today.

Counsel: World and Zuckert Scoutt, Malcolm Benge, 202-298-8660, mlbenge@zsrlaw.com


 

March 7, 2005

Motion of Continental Airlines for Expeditious Action

Absent a final award to Continental by mid-March, Continental's ability to institute service during early June to meet the requirements of peak- period U.S.-China travelers would be at serious risk. Although the right to designate an additional U.S. airline and begin utilizing seven additional weekly combination frequencies will become available March 25, 2005, it is now clear that no airline could institute service by that date, given the requirement to secure authority in China, make appropriate arrangements for handling and terminal facilities in Beijing and conduct advance marketing and sales for a new U.S.-China route. Continental is grateful to have been selected to provide the first U.S. –flag nonstop service between New York/Newark and Beijing and the first daily nonstop service on that route by any airline to remedy what the Department has called "the most serious service deficiency" on U.S.-China routes in what is "by far the largest U.S. -China origin and destination market in this proceeding".

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


 

Served March 8, 2005

Notice Shortening Answer Period

In the circumstances presented, including the existing procedural schedule established for the show-cause order, we have determined to shorten the answer period for the Continental motion in Docket OST 2004-19077 to close of business March 9, 2005.

Therefore, acting under authority assigned in 14 CFR 385.3, we will shorten the answer period to the Continental motion and will require that answers to the Continental motion be filed no later than March 9, 2005.

By: Paul Gretch


 

March 9, 2005

Answer of American Airlines to Motion of Continental Airlines for Expeditious Action

American shares Continental's interest in having a final order at the earliest possible date. However, American opposes Continental's suggestion that the Department could finalize Continental's award first, and enter a separate order dealing with American's award later.

Having already found that the public interest would be best served by authorizing American as the back-up selection - to fly to China in 2005 if Continental defaults, there should be no question that the Department would find the case favoring American to be even more compelling for 2006. Accordingly, it would make little sense for the Department to wait any longer to finalize American's 2006 award.

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


March 9, 2005

Answer of American Airlines to Objections to Show-Cause Order 2005-2-14

American Airlines, Inc. hereby answers objections submitted on March 4, 2005 to show‑cause Order 2005‑2‑14, February 22, 2005, in which the Department tentatively granted American's application for Chicago‑Shanghai authority beginning in 2006. None of the objectors have offered any compelling reason for the Department to change its tentative award to American, which should be promptly confirmed by a final order.

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


March 9, 2005

Answer of Continental Airlines

Alone among the 18 parties which submitted briefs in this proceeding, United has objected to the award of New York/Newark-Beijing authority to Continental in 2005. Since United's arguments have already been made to, and rejected by, the Department, the Department should issue a final decision immediately awarding Continental a certificate authorizing New York/Newark- Beijing service and seven 2005 U.s. -China frequencies so Continental can secure the necessary foreign authority and handling arrangements in China and begin marketing and selling its new service well in advance of its June 2005 commencement of service.

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


March 9, 2005

Answer of Polar Air Cargo to Objections to Order to Show Cause | Word

The Objections filed do not focus on the allocation of all-cargo frequencies in 2006 but are raised primarily in connection with the underlying 2006 choice by the Department of a combination versus all-cargo carrier and the allocation of combination service frequencies. This Answer is offered in response only to those comments raised in connection with the Department's tentative award to Polar of three additional all-cargo frequencies in 2006. Continental Airlines, Inc. filed a motion for expeditious action in this case. Polar is fully sympathetic, from its own recent experience, with the urgency of Continental's request to commence service in time for peak seasonal demand. Polar does not object to the request for expedition but does not agree with Continental that the proceeding can or should at this juncture be split and decisions separately finalized for 2005 and 2006 route and frequency awards. One decision could not be rendered without impacting the other. Polar would instead urge the Department to use all means at its disposal to render a final decision in this proceeding as quickly as possible.

Counsel: Polar, Kevin Montgomery, 202-828-1002, kevin.montgomery@polaraircargo.com


March 9, 2005

Answer of United Air Lines

The record is clear that United's proposal for daily San Francisco­ Guangzhou service provides greater public benefits than any other combination carrier proposal, including American's proposal to become the second U.S.‑flag carrier operating nonstop Chicago‑Shanghai service and third U.S.‑flag carrier offering online service on the route. As United detailed in its Objection, United's proposal to offer the first daily nonstop service to Guangzhou would provide vastly superior public benefits by having a greater competitive impact in the U.S.‑China market, providing more balance of trade benefits and generating better passenger service options than any other proposal.

By: Wilmer Cutler, Jonathan Moss, 202-663-6960, jonathan.moss@wilmerhale.com


 

Order 2005-03-24
OST-2004-19077

Issued March 15, 2005 | Served March 17, 2005

Final Order

We have decided to grant Continental's motion and to make final our tentative decision to award Continental Newark-Beijing certificate authority as proposed in Order 2005-2-14. We find that it is in the public interest in the circumstances presented to issue this separate order to facilitate Continental's efforts to inaugurate service by early June. It is important that we utilize these valuable new access rights as soon as possible. Granting Continental's motion will expedite entry of new U.S-flag service and enable it to meet the peak summer season. We will address all other remaining issues in this proceeding, including the selection of an airline to serve the U.S.-China market effective March 2006 and the award of 2006 frequencies, in a subsequent order.

By: Karan Bhatia


 

Order 2005-3-40
OST-2004-19077

Issued March 29, 2005 | Served April 1, 2005

Final Order - Bookmarked

By this Order, we make final the remainder of our tentative findings and conclusions set forth in Order 2005-2-14, and award American Airlines, Inc. certificate authority to provide combination services in the U.S.-China market and allocate to American seven weekly combination frequencies for its proposed Chicago-Shanghai services. Under the U.S.-China bilateral agreement, these rights become effective on March 25, 2006. We also make final our tentative decision to select American as a backup to Continental Airlines, Inc.'s primary award for 2005, awarded by Order 2005-3-24 on March 17, 2005, and Delta Air Lines, Inc. as a backup to American's primary award for 2006. We further make final our tentative decision to allocate the 12 weekly all-cargo frequencies available on March 25, 2006 as follows: three weekly frequencies each to Federal Express Corporation, Northwest Airlines, Inc., Polar Air Cargo, Inc., and United Parcel Service Co.

By: Karan Bhatia


 

OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations

May 2, 2005

Reply of the Port Authority of New York and New Jersey

The Port Authority believes that the Shanghai service proposed by Continental will expand significantly the growth of the economic, social and cultural ties between the United States' largest, more populous metropolitan region and home of the nation's largest financial and banking center, and China, which is the number one trade partner of the New York Customs District. Therefore the Port Authority of New York and New Jersey urges the Department to begin a proceeding now that would lead to nonstop Shanghai service from the New York/New Jersey metropolitan region.

By: Port Authority of New York and New Jersey, William DeCota



OST-2007-28567 - 2007/2008/2009
OST-2004-19077 - 2005/2006

Filed July 30, 2008 | Issued August 13, 2008

Notice of Action Taken

OST-2004-1907 - Conversion of two New York/Newark-Beijing frequencies from year-round service to seasonal service.

OST-2007-28567 - By Order 2005-3-24, the Department allocated to Continental seven frequencies to operate daily New York/Newark-Beijing service. Continental has been operating this service since June 15, 2005. By Order 2007-12-26, the Department allocated to Continental seven frequencies to operate daily New York/Newark-Shanghai service, commencing March 2009. Continental requests authority to operate two of its seven Shanghai frequencies and two of its seven Beijing frequencies on a seasonal basis so that it will have the flexibility to reduce its U.S.-China schedules to five or six weekly flights on a seasonal basis as needed.

By: Paul Gretch



OST-2009-0016 - Polar Air Cargo - Emergency Waiver of Dormancy Conditions
OST-2004-18468 - 2004 Cargo Designation and 2004/2005 All-Cargo Frequencies
OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations

Filed January 22, 2009 | Approved January 23, 2009

Department Approval of Application - Polar Air Cargo

We will grant Polar's request for a waiver of the 90-day dormancy condition. We will require the carrier to resume service no later than October 25, 2009.

We acted on this application without awaiting expiration of the answer period with the consent of all parties served with the application.

We will post this action document in each of the affected dockets as follows: Docket OST-2004-18468 (nine frequencies) and Docket OST-2004-19077 (three frequencies).

By: Thuy Cooper



OST-2005-21781 - Exemptions - Detroit-Mazatlan/Zihuatenejo/Ixtapa; Memphis-Cozumel; Minneapolis-Manzanillo
OST-2003-15699 - Exemption - Los Angeles-Guadalajara Codeshare with Alaska Airlines
OST-2007-29323 - Exemption - Detroit-Monterrey
OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations
OST-2003-15507 - Exemption - US-Mexico Codeshare with Delta Air Lines
OST-2008-0227 - Exemption and Frequencies - US-Brazil
OST-2008-0355 - Exemption - US-Ho Chi Minh City via Tokyo
OST-2008-0300 - Exemption - US-Brazil Codesharing with Delta Air Lines
OST-2005-20646 - Exemption - Detroit-San Jose del Cabo
OST-2007-28567 - 2007/2008/2009 US-China Air Services and Combination Frequency Allocation Proceeding
OST-2006-26106 - Exemption and Statement of Authorization - US-Russia Codesharing
OST-2005-22228 - Streamlining Regulatory Procedures for Licensing US and Foreign Carriers
OST-2008-0294 - Exemption - US-China Same-Country Codesharing

April 20, 2009

Application of Delta Air Lines for Renewal of Exemptions

Hereby requests renewal of the exemption and certificate authorities set forth in Attachment A, which enable Northwest to offer scheduled foreign air transportation of persons, property and mail between the United Sates and various foreign points. As specified in Attachment A, the international services for which renewal is sought are operated either by Northwest or its codeshare partners. Northwest requests renewal of its exemptions for a period of at least two years, and renewal of its certificates for a period of at least five years

Counsel: Delta, Alexander Van der Bellen, 202-842-4184



September 9, 2009

Application of Continental Airlines for Renewal of Certificate Authority

Continental applies for renewal of the authority to provide scheduled air transportation of persons, property and mail between Newark Liberty and Beijing on Segment 1 of its certificate for Route 821. Continental asks that its Newark Liberty-Beijing certificate authority be renewed for a period of no less than five years and that this application be processed by expedited non-hearing procedures.

Continental currently operates daily nonstop B-777 service between Newark Liberty and Beijing. Although Continental has been allowed to convert two of the seven New York/Newark-Beijing frequencies it holds to seasonal service, Continental has not availed itself of the opportunity to operate less than daily flights pursuant to that authority.

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



September 10, 2009

Application of American Airlines for Renewal of Certificate for Route 810

American Airlines, Inc., under 49 USC 41101 and 14 CFR 377, hereby applies for renewal of its certificate of public convenience and necessity for Route 810, authorizing scheduled foreign air transportation of persons, property, and mail between Chicago, Illinois and Shanghai, China, as well as renewal of its allocation of seven associated weekly frequencies. This authority was initially granted to American in the 2005/2006 US-China Air Services Case and Designations, Order 2005-3-40, April 1, 2005.

American has continuously served the Chicago-Shanghai route since April 1, 2006. American presently operates daily nonstop service using B777 aircraft (16F/37C/ 194Y).

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



OST-2007-28567
OST-2004-19077

August 23, 2010

Motion of American Airlines

American Airlines, Inc. hereby moves that the Department convert two of American's Chicago-Beijing frequencies, and two of its Chicago-Shanghai frequencies, from year-round to seasonal use.

The relief sought will provide American with the flexibility to adjust service levels in line with market demand. The identical relief was granted to Continental Airlines, Inc. by Notice of Action Taken, OST-2004-19077 and OST-2007-28567, August 13, 2008 (converting two Newark-Shanghai and two Newark-Beijing frequencies from year-round to seasonal use). Delta Air Lines, Inc. is currently seeking the same relief in OST-2007-28567 with respect to two Detroit-Shanghai frequencies (see Delta's pending motion filed on August 12, 2010). American should have the same flexibility.

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



OST-2007-28567 - 2007/2008/2009 US-China Air Services and Combination Frequency Allocation Proceeding
OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations

Filed August 12 and 23, 2010 | Issued September 29, 2010

Notice of Action Taken

Delta - Conversion of two of Delta’s seven Detroit-Shanghai frequencies from year-round service to seasonal service. Delta states that it is currently operating daily service. However, during the off-peak winter season, Delta plans to reduce service to a level of five weekly flights on or about January 31, 2011. The carrier states that it plans to reestablish daily service in the spring of 2011, before the summer peak.

American - Conversion of two of American’s seven Chicago-Beijing frequencies and two of its seven Chicago-Shanghai frequencies from year-round service to seasonal service.

By: Paul Gretch



OST-2007-28567 - 2007/2008/2009 US-China Air Services and Combination Frequency Allocation Proceeding
OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations

October 1, 2010

Clarification Letter of American Airlines

By Notice of Action Taken in the captioned dockets on September 29, 2010, the Department granted our motion of August 23, 2010 seeking flexibility to operate two Chicago-Beijing frequencies and two Chicago-Shanghai frequencies on a seasonal basis. American requested such relief to have the same flexibility enjoyed by Continental Airlines and Delta Air Lines.

In the “Conditions” in the NOAT, the Department stated that “[s]hould American determine that it will resume year-round operations with the two Chicago-Beijing frequencies and two Chicago-Shanghai frequencies, the carrier must notify the Department” (p. 2).

By directing American to provide notice should yearround operations “resume,” the Department is suggesting that we are not now using all of our frequencies. However, American is currently operating daily nonstop service between Chicago and both Beijing and Shanghai. Our motion asked for flexibility to adjust service on a seasonal basis in the future. The Department stated that “[b]y our action here, American and Delta would have the flexibility to use the frequencies at issue here for seasonal service” (p. 2). Accordingly, if we later decide to operate the subject frequencies seasonally, the NOAT authorizes us to do so.

Counsel: American, Carl Nelson



February 24, 2011

Amendment to Application of American Airlines for Renewal of Certificate

American Airlines, Inc. hereby amends its application for certificate renewal submitted in this docket on September 10, 2009 by (1) changing “Route 810” to “Route 826” throughout and (2) adding the following sentence at the bottom of page 1: “The authority was re-issued as segment 1 of Route 826 (amended) in the 2007/2008/2009 US-China Air Services and Combination Frequency Allocation Proceeding, Order 2007-12-26, December 28, 2007.”

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





OST-2004-19077 - 2005/2006 US-China
OST-2007-28567 - 2007/2008/2009 US-China

October 19, 2018

Application of American Airlines for a Dormancy Waiver

American respectfully requests temporary relief from the 90-day dormancy provisions applicable to its fourteen weekly US-China Zone 1 combination frequencies so that American can manage its service between Chicago, Illinois, and the People’s Republic of China in line with current market conditions. Specifically, American requests:

  1. A dormancy waiver for its seven weekly US-China frequencies used for ORD-Beijing service until November 1, 2019. These frequencies were awarded in 2007. Final Order 2007-12-26.
  2. A dormancy waiver for its seven weekly US-China frequencies used for ORD-Shanghai service until November 1, 2019. These frequencies were awarded in 2005. Final Order 2005-3-40.

American’s ORD-PEK and ORD-PVG services face economic challenges that in this case warrant the grant of a dormancy waiver. A rapid growth in capacity that has outpaced passenger demand has created an environment that has produced weak forward bookings in all cabins. As such, offering daily nonstop ORD-PEK and ORD-PVG service in the current economic environment is not commercially sustainable. Nevertheless, American anticipates that market conditions will improve so that American can resume service on those two routes on or before November 1, 2019. Granting the requested dormancy waiver is in the public interest because it will allow American to resume these services rapidly, without the delay that would result from another frequency allocation proceeding, thus increasing competition and benefitting passengers.

Counsel: Dechert LLP, Paul Denis, 202-261-3300


 

OST-2004-19077 - 2005/2006 US-China
OST-2007-28567 - 2007/2008/2009 US-China

October 30, 2018

Contingent Objection of Delta Air Lines

As a general matter, Delta does not object to the relief sought in the American Application. Delta understands that commercial conditions can fluctuate, necessitating temporary revisions to routes and service. However, given the overall scarcity of available Zone 1 frequencies and the potential of competing proposals to utilize them, Delta does not believe that the Department should grant American’s Application at this time.

Specifically, to the extent that the Department’s grant of American’s Application, in whole or in part, would preclude the Department’s expeditious approval of Delta’s Application for authority to inaugurate new, nonstop service between Minneapolis/St. Paul and Shanghai (see Delta application in OST-2018-0161), Delta would object to the Department’s waiver of the dormancy conditions. There are currently seven unallocated Zone 1 frequencies, which are sufficient to fund Delta’s proposed Application. If these frequencies are allocated to Delta, then Delta has no objection to American’s Application. However, if another US carrier were to file a competing application to use the seven immediately available Zone 1 frequencies for which Delta has applied – thereby prompting a contested route proceeding – Delta would ask the Department initiate a consolidated route proceeding to award all 21 allocable US-China Zone 1 combination frequencies to the carriers that will put the frequencies to the best use. This approach would be consistent with Department policy, maximize benefits to the traveling public, and enhance the overall competitive environment in the US-China market. If no carrier files a competing application contesting Delta’s own Application to use the 7 frequencies, Delta will withdraw this Contingent Objection.

Counsel: Delta, Alexander Krulic, 202-216-0700


 

OST-2018-0179 - US-China Frequency Allocation - Newark-Shanghai
OST-2004-19077 - American - 2005/2006 US-China
OST-2007-28567 - American - 2007/2008/2009 US-China
OST-2018-0161 - Delta - Exemption and Allocation of 7 Frequencies - Minneapolis/St. Paul-Shanghai

Novemver 2, 2018

Answer and Application of United Airlines

Since the spring of this year, there has been a flurry of activity related to Zone 1 US-China frequencies. First, on February 2, 2018, United filed a notice stating that the three frequencies it held for Guam-Shanghai service would return to the pool for reallocation on April 1, 2018. Hawaiian then submitted a notice indicating its last operation between Honolulu and Beijing would occur on October 12, 2018 and the return of its three weekly Zone 1 US-China frequencies to the Department.

Unfortunately, American has not followed United and Hawaiian’s lead. American filed an application on October 19, 2018 for a dormancy waiver for its 14 weekly Chicago-China Zone 1 frequencies to allow it to suspend daily service to Beijing and Shanghai from its Chicago gateway. American filed this notice months after going public about its plans to downsize its Chicago-Asia operations, and after comments from American’s leadership on its recent earnings call about the mounting and unsustainable economic loses of its Chicago-China flights. Given its recent comments, United doubts that American will return to the market in November 2019, and submits that it should not be allowed to warehouse 14 weekly China frequencies when other parties are indicating interest in the frequencies.

Finally, Delta filed an application requesting an allocation of the seven immediately available US-China Zone 1 frequencies for service between Minneapolis and Shanghai to begin in June 2020. United does not object to Delta’s application so long as it does not come at the expense of United’s future China plans, and, as detailed below, United does not believe that has to be the case. United also agrees with Delta’s position that carriers need to start planning now for new China service 18 to 24 months in the future. The US industry’s collective knowledge on the challenges of obtaining competitive and commercially viable slots in China is well understood. Based upon industry experience, it is reasonable for US carriers to seek allocation of frequencies now for services that they will not start for nearly two years in the future.

United respectfully requests that the Department deny American’s dormancy waiver request and instead make American’s 14 Chicago-China Zone 1 frequencies immediately available for allocation to other airlines, bringing the total number of available frequencies to 21. By doing so, both Delta and United can be allocated the frequencies they seek.

With respect to the frequencies, United proposes to commence this enhanced service on or about June 1, 2020, using B777-200 aircraft from its existing fleet, provided all necessary approvals have been secured. As noted above, United agrees with Delta that carriers need to begin work now on plans for a flight that will not operate for 18 to 24 months, principally due to slot challenges in China. For this reason, United also targets a start date for its new China service in the year 2020. United asks that the frequencies it is requesting in this application remain in effect indefinitely.

United’s non-opposition to Delta’s application is contingent, however, upon the Department denying American’s application for a dormancy waiver.

Counsel: Jenner & Block, Abby Bried, 202-639-6073


 

OST-2018-0179 - US-China Frequency Allocation - Newark-Shanghai
OST-2004-19077 - American - 2005/2006 US-China
OST-2007-28567 - American - 2007/2008/2009 US-China
OST-2018-0161 - Delta - Exemption and Allocation of 7 Frequencies - Minneapolis/St. Paul-Shanghai


November 19, 2018

Consolidated Objection and Response of American Airlines

Delta’s and United’s applications to launch new service to China beginning in June 2020 should not be granted at the expense of the relief requested by American. If granted, the effect of their applications will be to allow those carriers to warehouse US-China frequencies for a year and a half and permanently deprive passengers of the competitive alternative that the Department sought to create with its 2005 and 2007 awards to American. Because neither Delta nor United plans to use any new frequencies until June 1, 2020, American respectfully requests that the Department defer action on their service proposals and provide American with the opportunity to submit firm plans to restore its two US-China services on or before June 28, 2019.

Delta’s and United’s brazen attempt to block American from resuming service in 2019 so that they can warehouse frequencies for flights they now claim will be planned for June 2020 would defy Department precedent and would damage competition. Delta and United already offer more US-China service and enjoy stronger positions in China than American, positions that would be further solidified by the permanent loss of American’s dormant US-China services. Moreover, neither Delta nor United proposes to use American’s frequencies at any time during the period covered by American’s requested dormancy waiver. What the two carriers have requested is essentially a dormancy waiver for services they have never flown, for a much longer period than historically has been found necessary, and at American’s and the public’s expense.

The choice between American’s application for a dormancy waiver and Delta’s and United’s applications for more US-China frequencies is simple. The grant of American’s application is consistent with prior grants of dormancy waivers, will enhance US-China competition, and will allow American to restore its two US-China services in 2019. The grant of Delta’s and United’s applications at the expense of American’s requested relief, by contrast, would harm competition, would flout precedent, and would permit Delta and United to warehouse frequencies while depriving the traveling public of any new US-China service until mid-2020. For these reasons, American respectfully requests that the Department grant American a dormancy waiver until June 28, 2019, and defer action on Delta’s and United’s applications for frequencies for their proposed June 2020 services.

Counsel: Dechert LLP, Paul Denis, 202-261-3300




November 19, 2018

Contingent Objection of Delta Air Lines

As a general matter, Delta does not object to the authority sought in the United Application. However, consistent with Delta’s Contingent Objection to American Airlines’ application for a waiver of the 90-day dormancy provisions applicable to the 14 Zone 1 frequencies previously used for American’s now suspended Chicago-Beijing and Chicago-Shanghai service), Delta objects to the United Application to the extent that the Department’s grant of that Application would preclude the Department’s expeditious approval of Delta’s Application to inaugurate new, nonstop service between Minneapolis/St. Paul and Shanghai. As described in Delta’s Application, dated Oct. 22, 2018, Delta’s proposal would provide the only non-stop service between Minnesota and China and would increase connecting service options for consumers across the Upper Midwest and the United States.

There are currently 7 unallocated Zone 1 frequencies, which are sufficient to fund Delta’s proposed request for authority in full. If the Department were to approve Delta’s Application as submitted, then Delta would be indifferent as to how the Department decides to adjudicate and/or reconcile the United and American Applications. However, the Delta and United Applications would become mutually exclusive should the Department fail to deny, at least in part, American’s dormancy request, so Delta is compelled to protect its administrative rights and commercial interests by hereby expressing its contingent objection to the United Application.

Delta reserves comment at this time on the comparative merit of United’s proposal for a second Newark-Shanghai daily flight as opposed to Delta’s proposed new service from Minneapolis to Shanghai, but agrees fully with United’s view that a carrier “should not be allowed to warehouse 14 weekly China frequencies when other parties are indicating interest in the frequencies.” Delta also agrees with United’s assessment, given current operating conditions, that start-up times for new service to China can be significant, and “carriers need to start planning now for new China service 18 to 24 months in the future.” This would be consistent with recent practice and precedent, as described in Delta’s original Application, citing Departmental and US carrier precedent involving the launch of new service to Beijing and Shanghai.

Counsel: Delta, Christopher Walker, 202-216-0700


 

OST-2018-0179 - US-China Frequency Allocation - Newark-Shanghai
OST-2004-19077 - American - 2005/2006 US-China
OST-2007-28567 - American - 2007/2008/2009 US-China
OST-2018-0161 - Delta - Exemption and Allocation of 7 Frequencies - Minneapolis/St. Paul-Shanghai

November 20, 2018

Consolidated Reply of United Airlines

In American’s Consolidated Response, American confirms what United has been stating all along – that American’s Chicago-China service is not economically viable and that it has no firm plans to actually utilize its 14 frequencies. Despite these admissions, American is affirmatively seeking permission to warehouse these valuable frequencies on theoretical future plans.

The issue before the Department is simple: what is the best use of 14 valuable US-China Zone 1 frequencies that are at risk of being squandered by American. The answer is clear: American’s unused frequencies should be returned to the pool and immediately reallocated to other interested carriers who have demonstrated they will make good use of these limited entry route rights. Accordingly, the Department should deny American’s request for a dormancy waiver and reallocate seven weekly frequencies to United.

American tries to deflect legitimate concerns regarding its plans by suggesting that United is intending to warehouse the frequencies it is seeking for Newark-Shanghai service. This is simply false, as United has firm plans to use the frequencies. If awarded the frequencies, United would immediately: (1) begin working with the Chinese government to obtain the necessary approvals; (2) put the flights out for sale as soon as possible, at least 330 days in advance as allowed by the GDS; and (3) begin launching marketing and advertising for the flights in due course.

If the Department grants American’s dormancy waiver request, however, it is American that would be doing nothing with the frequencies in question for at least seven months, until June 28, 2019.

Counsel: Jenner & Block, Abby Bried, 202-639-6877


 

OST-2018-0179 - US-China Frequency Allocation - Newark-Shanghai
OST-2004-19077 - American - 2005/2006 US-China
OST-2007-28567 - American - 2007/2008/2009 US-China
OST-2018-0161 - Delta - Exemption and Allocation of 7 Frequencies - Minneapolis/St. Paul-Shanghai

November 29, 2018

Consolidated Surreply of Delta Air Lines

In addition to embellishing its prospects of a swift turnaround by claiming it will be in a position to submit “new and firm plans” to restore service on or before June 28, 2019 – seven months from now – American describes its intention to revive its dormant “US-China” services – not its “Chicago-Beijing,” “Chicago-Shanghai,” or even “Chicago-China” services. This semantic, but significant nuance was not lost on United, is not lost on Delta, and should not be overlooked by the Department as it evaluates American’s dormancy waiver request.

American also unfairly assails the 19 month startup periods contemplated in the Delta and United Applications, characterizing them as “unprecedented” and a “brazen attempt to block American from resuming service in 2019.” There is nothing brazen or unprecedented about the start-up timelines that Delta and United are proposing. As both carriers indicated in their respective Applications, a June 2020 start-up date is reasonable under current conditions and consistent with recent practice, including by American itself. It is true, as United indicated in its Application, that US “carriers need to start planning now for new China service 18 to 24 months in the future.” Delta also agrees with United’s view that a proposed start-up date of June 1, 2020 is “reasonable and defensible given the commercial challenges of obtaining slots in China” and that a realistic start-up date would have the added benefit of avoiding “wasting valuable Department resources when parties are forced to return on multiple occasions to inevitably seek numerous extensions.”

American uses the word “brazen” to describe Delta’s Application. More brazen, perhaps, is American’s request for a 7-month extension of time to resume its Chicago-China services while it has told its employees and investors that those flights are “colossal loss makers” with no realistic chance of being restored at any time in the near future, much less by November 2019. The evidence available in the public domain strongly suggests American does not intend to reestablish Chicago-China service, but rather to warehouse the frequencies for as long as possible before applying to move the frequencies to a different US gateway. Moreover, Delta notes that should American apply in June 2019 to move the frequencies, it would be highly unlikely that American could commence such service before June 2020, which would render American’s stated concerns about the Delta and United June 2020 start-up dates moot.

Delta’s Application to launch service between Minneapolis/St. Paul and Shanghai Pudong International Airport is not an attempt to block American from resuming service, or to warehouse frequencies. To the contrary, Delta is excited to serve this route and seeks authority from the Department to do so because it expects the service will deliver robust consumer benefits to the traveling and shipping public, including providing Minneapolis and St. Paul area customers with new nonstop service to China and enhancing service at Delta’s hub at MSP – expanding connecting service options for consumers across the Upper Midwest and the United States. Any adverse impact on American resulting from the Department’s grant of Delta’s or United’s Applications, while regrettable, would be self-inflicted collateral damage.

Delta feels strongly that American’s dormancy waiver request should not be granted at the expense of the consumer benefits that would flow from Delta’s and United’s respective applications to serve Shanghai from Minneapolis/St. Paul and Newark. The Department should issue order(s) – without requiring any further filings – that allocate the requested frequencies to United and Delta for their new service. The Department could achieve this result efficiently a number of ways, including by 1) granting the Delta Application in full; 2) granting the United Application in full; and 3) granting the American Application in part (i.e., as to 7 of the 14 frequencies currently at issue in that Application) or by rejecting American’s dormancy waiver application in its entirety.

Counsel: Delta, Alexander Krulic, 202-216-0700


 

OST-2018-0179 - US-China Frequency Allocation - Newark-Shanghai
OST-2004-19077 - American - 2005/2006 US-China
OST-2007-28567 - American - 2007/2008/2009 US-China
OST-2018-0161 - Delta - Exemption and Allocation of 7 Frequencies - Minneapolis/St. Paul-Shanghai

December 3, 2018

Consolidated Response of American Airlines

Delta’s and United’s latest filings confirm that neither carrier has any interest in using American’s US-China frequencies during the period covered by the dormancy waiver sought by American, or for several months thereafter. And neither carrier offers any plausible reason why it requires a nineteen month startup deadline and cannot even attempt to commence service in near future. Granting their applications would foreclose American from resuming service without Delta’s or United’s assuming any obligation of their own to commence service in a timely manner. Their applications and objections to American’s requested relief suffer from numerous deficiencies, which their latest filings fail to overcome.

The current competitive landscape will soon change. China Southern’s recently-announced plan to leave Delta’s SkyTeam alliance effective January 1, 2019, will enable American and China Southern to provide the same hub-to-hub connecting service now offered only by Delta, United, and their partners in China. Contrary to Delta’s claim that “plans for deeper cooperation with China Southern were long known” when American announced its suspension of service, China Southern’s public announcement and formal notice to SkyTeam of its impending departure from the alliance is what made it possible for American and China Southern to begin to plan their future cooperation as partners, as Delta/China Eastern and United/Air China have done for years.

Depriving American of any opportunity to develop those plans, as Delta and United request, will thwart the Department’s objectives in its allocations of frequencies of maximizing public benefits and increasing competition in the US-China market. The Department recognized the benefits to travelers created by American’s US-China services in its prior awards of frequencies to American. The outcome that Delta and United seek would extinguish those benefits in order to allow both carriers to warehouse frequencies until June 2020. Because this outcome will only harm the traveling public, American respectfully requests that the Department defer action on their applications and without further delay grant American’s application for a dormancy waiver.

Counsel: Dechert LLP, Paul Denis, 202-261-3300 / American, Robert Wirick, 817-963-0394


 

OST-2018-0179 - US-China Frequency Allocation - Newark-Shanghai
OST-2004-19077 - American - 2005/2006 US-China
OST-2007-28567 - American - 2007/2008/2009 US-China
OST-2018-0161 - Delta - Exemption and Allocation of 7 Frequencies - Minneapolis/St. Paul-Shanghai

December 10, 2018

Reply of United Airlines

Based on its own experience in the U.S.-China market, United is skeptical that American’s partnership with China Southern will have a substantial impact on the route’s performance. There has been no explanation by American as to how the relationship with China Southern – based in Guangzhou – can fix the shortfalls in the U.S. point of sale market that apparently and materially impacted American’s Chicago – Beijing and Shanghai flights for so long that its leadership can no longer justify operating the flights.

Counsel: United and Jenner & Block, Abby Bried, 202-639-6877


 

OST-2018-0179 - US-China Frequency Allocation - Newark-Shanghai
OST-2004-19077 - American - 2005/2006 US-China
OST-2007-28567 - American - 2007/2008/2009 US-China
OST-2018-0161 - Delta - Exemption and Allocation of 7 Frequencies - Minneapolis/St. Paul-Shanghai

December 11, 2018

Response of American Airlines

United’s latest filing fails to explain why the Department should deny American a dormancy waiver; why United (and Delta) should be allowed to warehouse US-China frequencies until June 2020; and why United (and Delta) require an unprecedented nineteen months to start new service to China. To justify its spurious position, United distorts the importance of American’s new relationship with China Southern by making inaccurate and speculative claims:

First, United falsely asserts that “American, in all likelihood, would have known months in advance of its forthcoming enhanced cooperation with China Southern.” But in fact, American did not learn about China Southern’s decision to leave SkyTeam until its public announcement on November 15, 2018.

Second, as United knows “in all likelihood,” China Southern’s withdrawal was a necessary prerequisite for American and China Southern to begin plans for deeper cooperation. SkyTeam’s rules, like Star’s, put limitations on its members regarding the amount of commercial activity, including codesharing, with non-SkyTeam members.

Third, United claims it “is skeptical that American’s partnership with China Southern will have a substantial impact on the route’s performance,” characterizing China Southern as a carrier “based in Guangzhou,” while omitting the fact that China Southern is the largest airline in China and is the second largest airline in Beijing, behind Air China.

The truth is that American can now, for the first time, begin to work with China Southern to take advantage of China Southern’s extensive China network. Enhanced codesharing with China Southern will provide American with robust connectivity to destinations throughout China, similar to the partnerships that Delta and United have long enjoyed with China Eastern and Air China, respectively. American remains confident its enhanced and expanded relationship with China Southern will offer American the same critical support for its dormant and current US-China services that Delta and United now enjoy.

Counsel: American Robert Wirick, 817-963-0394 / Dechert LLP, Paul Denis, 202-261-3300


 

OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations
OST-2007-28567 - 2007/2008/2009 US-China Air Services and Combination Frequency Allocation Proceeding

January 7, 2019

Motion of American Airlines for US-China Route Flexibility

American respectfully requests that the Department grant all US carriers that hold US-China Zone 1 combination frequencies the flexibility to use their frequencies on any US-China route where they hold underlying route authority. Delta and United currently hold many China Zone 1 frequencies that have this flexibility, while all of American’s China Zone 1 frequencies are route-specific and cannot be moved without the Department’s approval. To ensure that it can respond to changes in the U.S.-China market as effectively as Delta and United can, American seeks to replace the two-tiered licensing regime for China Zone 1 frequencies with uniform China route flexibility.

Delta and United have enjoyed their exclusive China Zone 1 flexibility to make significant changes to their US-China networks without the need for the Department’s approval. For example, in 2018, Delta used its flexibility to relocate its frequencies used for Tokyo (Narita)-Shanghai service to the Atlanta-PVG route (OST-1999-6323 (July 19, 2017)). Likewise, in 2004, United used its flexibility to launch its San Francisco-Beijing service by relocating frequencies previously used for NRT-PEK service. American cannot make similar changes to its own US-China network without filing a motion to transfer its frequencies, likely triggering a lengthy administrative proceeding and risking the possibility that its frequencies would be reassigned to another carrier instead, such as Delta or United.

Delta and United may also use their China Zone 1 route flexibility to respond to short term surges in demand. For example, this month Delta is using its “unrestricted, gateway-flexible US-China Zone 1 frequencies” to offer nonstop service between PVG and Las Vegas for the January 2019 International Consumer Electronics Show (OST-1999-6323 (September 14, 2018)). Again, American cannot launch similar services using its own frequencies without the additional step of seeking prior Department approval and the risk of opposition by other carriers that would delay or moot the request.

Such an uneven policy between American, on the one hand, and the powerful incumbents, Delta and United, on the other hand, further ties American’s hands behind its back and exacerbates its already pronounced competitive disadvantages in the US-China market. Despite its best efforts to catch up to Delta and United since entering the market in 2006, American currently offers fewer US-China seats and serves fewer passengers than either carrier. Moreover, while Delta and United enjoy longstanding alliance relationships with China Eastern and Air China, respectively, American does not have an alliance partner in mainland China. American’s recent bilateral, non-alliance relationship with China Southern is a needed step for American to compete meaningfully in the US-China market, but this relationship is only in its infancy.

American is filing this motion in conjunction with its answer in conditional support of the motion of Delta Air Lines, Inc. for US-Haneda gateway flexibility. Answer of American Airlines, Inc. in Conditional Support of the Motion of Delta Air Lines, Inc. As American explained in its answer to Delta’s motion, the reasons for the Department to grant flexibility to all carriers holding China Zone 1 frequencies are at least as compelling, if not more so, as the reasons for providing similar flexibility with respect to Haneda slots. To the extent necessary, American incorporates its answer to Delta’s motion herein.

Counsel: American, Robert Wirick, 817-963-0394


 

OST-2016-0048 - Haneda
OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations
OST-2007-28567 - 2007/2008/2009 US-China and Combination Frequency Allocation Proceeding

January 14, 2019

Consolidated Objection of United Airlines

United submits the following response to correct American’s errors and mischaracterizations in its recent filings in the above-referenced dockets. United believes once the record is corrected the Department will find no reason to grant the relief requested by American in China. Further, after seeing American’s attempts to make hay out of Delta’s recent motion for gateway flexibility in US-Haneda, United is on record for good cause objecting to the Haneda gateway flexibility request. Access to limited entry route rights should be about consumers and communities and if one route falters, the Department should have discretion in determining when and how the public benefits should be rebalanced. American, Delta, and Hawaiian have it wrong – these carriers seek gateway flexibility for the betterment of their financial performance and give little or no attention to the consumers and communities that win or lose in limited entry route right proceedings. In this light, the Department should reject the requests for gateway flexibility at Tokyo Haneda and China – just as the Department did in reviewing the Havana gateway flexibility request – and continue its long-standing policy of allocating rights based upon its unbiased assessment of public benefits.

Further, United reiterates that American’s 14 Chicago-China frequencies should be withdrawn from American and allocated to Delta and United. Its request for gateway flexibility is nothing more than a last-ditch effort by American to hold 14 China frequencies it clearly has no ability to use.

Just as in Cuba, the recent requests for gateway flexibility in US-China and US-Haneda risk undermining the Department’s process and past selections. Putting passengers and communities first, the public interest supports the existing manner of allocating valuable and restricted frequencies, not carrier-focused gateway flexibility.

United respectfully requests that the Department (1) deny American’s motion for gateway flexibility for all carriers holding US-China Zone 1 frequencies, (2) deny Delta’s motion for gateway flexibility in US-Haneda, (3) deny American’s dormancy waiver application for its 14 weekly frequencies from Chicago-China; and 2) allocate seven US-China Zone 1 frequencies to United to commence additional daily nonstop service from Newark Liberty to Shanghai.

Counsel: Jenner & Block, Abby Bried, 202-639-6877


 

OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations
OST-2007-28567 - 2007/2008/2009 US-China and Combination Frequency Allocation Proceeding

January 15, 2019

Motion of American Airlines for a Dormancy Waiver pendente lite

On October 19, 2018, American applied for temporary relief from the 90-day dormancy provisions applicable to its 14 weekly US-China Zone 1 combination frequencies used for its Chicago-Beijing and ORD-Shanghai services. The Department has yet to rule on the merits of American’s application. Should the Department be unable to issue a decision on the merits on or before January 18, 2019, due to the current government shutdown, the dormancy provision applicable to American’s frequencies used for its ORD-PEK service will be triggered automatically, mooting American’s request for dormancy relief. To ensure that its application for a dormancy waiver can be decided on the merits, American respectfully requests the grant of a dormancy waiver pendente lite for its 14 weekly US-China frequencies from now until 30 days following the conclusion of the current government shutdown.

American’s last westbound ORD-PEK flight was on October 20, 2018, and its last eastbound ORD-PEK flight was on October 22, 2018. American’s last westbound ORD-PVG flight was on October 26, 2018, and its last eastbound ORD-PVG flight was on October 27, 2018.

Counsel: Dechert LLP, Michael Weiner, 202-261-3300


 

OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations
OST-2007-28567 - 2007/2008/2009 US-China and Combination Frequency Allocation Proceeding

January 16, 2019

Answer of Delta Air Lines

Delta respectfully submits this answer to the Motion of American Airlines filed on January 7, 2019 asking the Department to grant US-China route flexibility to all US carriers. As a general matter, Delta does not object to US gateway flexibility for service to China and agrees with American that US carriers should not be competitively disadvantaged or otherwise impaired by a Departmental policy if alternative procedures would provide greater benefit to the traveling public. However, the key factors underlying the need for gateway flexibility for US carriers at Haneda are substantially different from the circumstances of the US-China market. American linked Delta’s proposal for Haneda to other unrelated, limited access markets, such as US-China, which apparently implicated United’s commercial interests and lured the carrier into a debate in which it had previously announced it would not participate. But the factual distinctions between the two markets merit separate consideration, and the Department should not allow American’s Motion regarding US-China service (and United’s subsequent objection in defense of its US-China franchise) to delay a decision on gateway flexibility related to Haneda.

Delta agrees with United that “limited entry route rights should be about consumers and communities….” Allowing gateway flexibility for US carriers at Haneda would serve the public interest by increasing competition for consumers and help US communities served by non-immunized carriers to Japan compete with the UA/ANA and AA/JAL joint ventures flying into Haneda, which between them received 8 of the 12 frequencies awarded in the 2016 proceedings. By contrast, China and the United States have not reached such an agreement and, consequently, ATI between Chinese and US carriers continues not to be permitted as a matter of US Government policy. American in its Motion, and United in its Objection, willfully ignore this distinction between the two markets despite their participation in immunized joint venture agreements with Japanese carriers.

The issue of US-China route flexibility sought in American’s Motion should be decided on the merits of the particular facts and assertions made in that Motion and docket, not as a quid pro quo for a substantively distinct pleading, such as Delta’s Motion related to Haneda. American asks the Department to make the grant of US-China flexibility be a prerequisite for the grant of Delta’s Motion for US-Haneda flexibility, but does not provide any good reason as to why the two should be linked. As Delta described in its Reply in the Haneda docket on January 14 (OST-2016-0048), the issue of gateway flexibility in US-China markets is more appropriately addressed here, in dockets OST-2004-19077 and OST-2007-28567.

in the interest of preserving its administrative rights in the relevant dockets, Delta clarifies that its non-objection to American’s request for US-China gateway flexibility represents neither a withdrawal nor a relaxation of Delta’s Contingent Objection to American’s Dormancy Waiver Request. In particular, Delta reaffirms the positions it stated in its Contingent Objection that it would object to a grant of American’s Dormancy Waiver Request to the extent such a grant would preclude the Department’s approval of Delta’s Minneapolis/St. Paul-Shanghai Application. Likewise, Delta would object to American’s Motion for US-China route flexibility to the extent such a grant would preclude the Department’s approval of Delta’s Application to provide new Minneapolis/St. Paul-Shanghai service and/or delay a decision on Delta’s US-proposal for Haneda gateway flexibility.

Counsel: Delta, Alexander Krulic, 202-216-0700


 

OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations
OST-2007-28567 - 2007/2008/2009 US-China and Combination Frequency Allocation Proceeding

January 23, 2019

Consolidated Reply of American Airlines

Having already been granted numerous gateway-flexible US-China Zone 1 frequencies, United mangles the historical record in an effort to deny that same flexibility to American—the only US carrier holding China Zone 1 frequencies without any flexibility to make changes to its US-China routes. Confronted with the Department’s grant of uniform US-Brazil route flexibility in 2004 to remedy a similar licensing disparity, United dismisses this precedent as “distinguishable since there carriers of focus may have held truly unrestricted frequencies, but...that is not at all the case in China where United for all intents and purposes has zero unrestricted frequencies.” Not so. Delta used its “truly unrestricted frequencies” to launch two new US-China services in the past year alone, including one this month. And despite claiming that it has “zero frequencies that can be freely moved,” United “freely moved” its frequencies from Tokyo to launch two of its nonstop US-China services. Only American lacks the flexibility to make similar changes to its US-China network.

When the Department previously declined to rule on American’s requests for China flexibility, American held no China frequencies and had not yet entered the market. That is no longer the case. American now competes head-to-head against Delta and United in China, but under an unequal regulatory regime that imposes far more restrictions on American.

Because American’s distinct regulatory disadvantage impairs US-Asia competition, the grant of uniform US-China flexibility should be a prerequisite to any grant of Haneda flexibility. Far from being “unrelated” markets, as Delta claims, China Zone 1 and Haneda are core components of American’s and Delta’s transpacific networks, and both markets are subject to similar conditions. As the only US carrier in China without any China route flexibility, China Zone 1 destinations are as closed (i.e. non-open skies) to American as Haneda is to Delta. Fundamental fairness requires that flexibility not be granted to elevate Delta’s position at Haneda unless it is also granted to rectify the two-tiered licensing regime that suppresses American’s ability to compete in China.

Counsel: Dechert LLP, Michael Weiner, 202-261-3300


 

OST-2018-0179 - US-China Frequency Allocation - Newark-Shanghai
OST-2004-19077 - American - 2005/2006 US-China
OST-2007-28567 - American - 2007/2008/2009 US-China
OST-2018-0161 - Delta - Exemption and Allocation of 7 Frequencies - Minneapolis/St. Paul-Shanghai

Filed October 19, October 22, November 22, 2018 | Issued February 6, 2019

Notice of Actions Taken

Having carefully considered the record in this case, we have decided to grant American’s request for a dormancy waiver for its Chicago-Beijing and Chicago-Shanghai services until June 28, 2019. American states that by this date it will provide a proposal for the resumption of its services. No carrier has presented firm plans to use the frequencies at issue during the period covered by American’s request, as Delta and United have each proposed service beginning the following year, in June 2020. In the circumstances presented, we do not believe that the public interest warrants reallocation of American’s authority now for alternative services that would not begin until June 2020. The Department will therefore grant American temporary relief until June 28, 2019, from the 90-day dormancy condition applicable to its Chicago-Beijing and Chicago-Shanghai frequency allocations.

We have also decided to defer action on the applications of Delta and United. As both Delta and United have acknowledged, the US-China market has seen several significant service cuts and other changes in the past year and, considering the record now before us, we believe it is too early to reach any allocation decisions for June 2020. We invite the carriers to update their proposals closer in time to the expiration of the American waiver granted here, and closer to their own anticipated launch dates, when we would be better able to assess the market and make public interest determinations based on the circumstances then prevailing.

Granted - American - Waiver of the 90-day dormancy condition applicable to (1) the seven weekly frequencies allocated to American by Order 2007-12-26 for services between Chicago and Beijing, China; and (2) the seven weekly frequencies allocated to American by Order 2005-3-40 for services between Chicago and Shanghai, China. American’s application requested a waiver until November 1, 2019. In the course of the exchange of pleadings, American stated that it was seeking a waiver until June 28, 2019.

On January 7, 2019, American filed a motion for US-China Route Flexibility. We will consider that matter separately.

Deferred - Delta - Scheduled foreign air transportation of persons, property and mail between Minneapolis/St. Paul, Minnesota, and Shanghai, China.

Deferred - United - Allocation of seven weekly US-China frequencies for scheduled combination services between Newark, New Jersey, and Shanghai, China, beginning June 1, 2020.

By: Joel Szabat


 

OST-2004-19077 - American - 2005/2006 US-China
OST-2007-28567 - American - 2007/2008/2009 US-China

June 28, 2019

Notice of American Airlines of Return of US-China Zone 1 Combination Frequencies

American hereby notifies the Department that it is returning its fourteen weekly US-China Zone 1 combination frequencies allocated for Chicago-Beijing and Chicago-Shanghai service, effective June 28, 2019. The Department allocated American seven weekly frequencies for ORD-PVG service in 2005, and seven weekly frequencies for ORD-PEK service in 2007. In October 2018, American suspended both services due to unfavorable market conditions, and requested a dormancy waiver from the Department. The Department granted American a dormancy waiver for both sets of frequencies until June 28, 2019. Despite American’s efforts, American is unable to resume its two services in the near future. American is therefore returning its frequencies so that they are available for use by other carriers.

Counsel: Dechert LLP, Michael Weiner, 202-261-3300

 


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