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Updated: Friday, September 12, 2008 9:02 AM


US-Russia Third-Country Codesharing - Notice Inviting Applications


Memorandum of Consultations - July 22, 2008

US-Russia Bilaterals and Treaties


OST-2008-0265 - American Airlines - US-Russia Third-Country Codeshare Opportunities and Related Exemption Authority
OST-2008-0267 - Continental Airlines- US-Russia Third-Country Codesharing
OST-2008-0264 - United Air Lines - US-Russia Third-Country Codesharing
OST-2008-0266 - US Airways - US-Russia Third-Country Codesharing


US-Russia Third-Country Codesharing

Served August 12, 2008

Notice Inviting Applications

By this Notice, we invite U.S. air carriers to file applications for the immediately available third-country code-share opportunities set out in Attachment B of the Memorandum of Consultations between the United States and Russia dated July 26, 2008. Applications should be filed no later than 14 days from the service date of this Notice.

The United States and Russia have reached an ad referendum agreement on a new Annex V to the 1994 Air Transport Agreement between the Government of the United States and the Government of the Russian Federation, which provides for code-share opportunities for both combination and all-cargo carriers. The terms of Annex V will be applied on the basis of comity and reciprocity pending its entry into force.

Effective immediately, U.S. air carriers may operate up to eight code-sharing arrangements, not more than six of which may be for combination (passenger/cargo) airlines, on services operated by airlines of the third countries identified in Annex V. Each code-sharing arrangement involving a U.S. airline and an airline of a third country may serve Russia via no more than one European intermediate point and is limited to 14 weekly operations; however, no more than daily service may be provided in the same city-pair market. The revised Annex V no longer requires that U.S. carriers hold frequencies for third-country codesharing; therefore, we do not need to allocate frequencies to U.S. carriers for U.S.-Russia third-country code sharing, and carriers need not apply for such allocations.

We note that a number of U.S. carriers currently have frequency allocations for U.S.-Russia third-country code-share operations. In light of the agreement on the new Annex V, these allocations have become moot because these frequency allocations are no longer needed for third-country codesharing. Therefore, these allocations now revert to the Department.

By: Paul Gretch



August 14, 2008

Re: Northwest Airlines Resumption of US-Russia Third-Country Codeshare with KLM

Northwest applauds the Department’s success in achieving an important new liberalizing agreement with Russia that permits U.S. carriers to resume third-country codeshare services. Pursuant to that agreement, Northwest intends to restart its U.S.-Russia services in conjunction with KLM, via Amsterdam, to Moscow and St. Petersburg.

Northwest understands based on guidance from the Office of International Aviation and the U.S. Carrier Licensing Division, that the Department does not intend to recall designations from carriers, such as Northwest, which are merely resuming previously-approved codeshare activities. The Department clarified that applications in response to the August 12, 2008 Notice are only required in instances where U.S. carriers are seeking to change or add new third-country partners.

The Department has already found Northwest/KLM Russia codeshare services to be in the public interest, and Northwest holds all underlying authority necessary to resume these operations. See, e.g., Docket OST-96-1270 (U.S.-Moscow and St. Petersburg exemption authority via Amsterdam); Docket OST-2003-15191 (Northwest/KLM Blanket Exemption); U.S. State Department Designation to Russia dated January 7, 1994. Accordingly, Northwest plans to immediately resume its third-country codeshare services with KLM in reliance on its existing authorities and designation, and will not submit an application in response to the Department’s Notice.

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



August 22, 2008

Re: Delta Air Lines Intends to Implement Previously Authorized Codesharing with Air France

Delta hereby gives notice that it intends to implement its previously authorized U.S.-Russia third country codesharing arrangement with Air France, offering daily codeshare service from the United States via Paris (CDG) to Moscow and St. Petersburg. Delta will rely upon its existing authorities for this service.

This U.S.-Russia third country codeshare arrangement has already been approved by the Department and Delta holds all necessary underlying authority for the services. See Order 1991-10-33 (Segment 3 of Route 616, authorizing Delta to provide service from various U.S. points to Moscow and St. Petersburg); Order 1995-3-25 (same; timely renewal application filed October 13, 1999 remains pending); Order 2006-1-1 (blanket route integration authority); Order 2000-1-9 (authorizing Delta to operate its existing third country U.S.- Russia code share authorization with Air France); #1998-303 (Aug. 6, 1998) (Delta/Air France blanket statement of authorization); Notice of Delta Air Lines and Societé Air France (Oct. 27, 1999) (30 day notice of codesharing by Delta on flights operated by Air France between Paris and, inter alia, Moscow and St. Petersburg). AF currently provides daily Paris-Moscow and Paris-St. Petersburg nonstop service.

Delta understands based upon guidance from the U.S. Carrier Licensing Division that carriers who seek only to implement currently authorized U.S.-Russia third country codesharing arrangements consistent with the recent revisions to the U.S.-Russia Aviation Services Agreement need only provide notice to the Department of their intent to do so and that applications in response to the August 12, 2008 Notice Inviting Applications are required only in instances where U.S. carriers are seeking to change or add new third-country partners. Accordingly, Delta will not submit an application in response to the Department’s notice.

Counsel: Delta, Scott McClain, 404-773-6514



OST-2008-0265 - American - US-Russia Third-Country Codeshare Opportunities and Related Exemption Authority
OST-2008-0267 - Continental - Exemption - US-Zurich-Moscow/St. Petersburg Codeshare with Swiss International
OST-2008-0264 - United - US-Russia Third-Country Codeshare
OST-2008-0266 - US Airways - Exemption - US-Russia Third-Country Codeshare with Swiss International
Undocketed - Delta
Undocketed - Northwest


September 5, 2008

Answer of US Airways and Motion to Institute Route Proceeding

US Airways, Inc. hereby objects to the Applications and Letters filed by American, Continental, Delta, Northwest and United in response to the Department of Transportation's Notice Inviting Applications, dated August 12, 2008 and Motions the Department to institute a route proceeding in which the merits of all U.S.-Russia third-country codeshare partnerships are evaluated, regardless of whether a U.S. carrier previously held third-country codeshare authority to Russia.

The combination of new requests for Opportunities, plus letters containing presumptions by carriers with previous U.S.-Russia third-country codesharing authority that they are automatically entitled to these new Opportunities, leaves DOT in the position of having to allocate fewer Opportunities than there are Applications. By definition, this makes some Applications mutually exclusive of others. Thus the Department is required to consider the merits of competing applications contemporaneously.

US Airways further submits that any route proceeding established by the Department should include all U.S.-Russia third-country codeshare authority, including that allocated to American, Delta, and Northwest, nearly a decade ago. Fundamental fairness requires this. Moreover, the public interest can only be fully served by allocating Opportunities based on the benefits carriers would bring to consumers today, not the benefits they may have brought a long time ago.

Alternatively, the Department could avoid a route case by equitably granting each of the six carriers that filed an Application one of the six Opportunities, and allowing each carrier to use it in a manner consistent with Annex V of the U.S.-Russia air services agreement. Under this scenario, only one of the six carriers that filed an Application would receive fewer Opportunities than it requested.

The Department should not allow American, Delta, and Northwest to resume previous third-country codeshare service until such time as they have been officially allocated one of the six available Opportunities. Alternatively, if DOT allows these carriers to use an Opportunity to immediately resume previous service, it should make clear that such usage is only pending final allocation of the Opportunities, and that such temporary use will carry no decisional weight in a selection proceeding.

Counsel: US Airways, Howard Kass, 202-326-5153


September 9, 2008

Consolidated Response of Northwest Airlines

Northwest hereby responds to the answers submitted in the above-captioned proceeding. Northwest already holds the necessary economic authority to resume its U.S.-Russia services with KLM, and the Department staff recently confirmed, with respect to its Notice inviting applications, that the Department does not intend to place previously-authorized services at issue. As stated in Northwest’s letter of August 14, Northwest intends to promptly and fully utilize its existing codeshare authorization.

Northwest notes with amusement American’s suggestion that the allocation of Northwest single and longstanding codeshare authorization with KLM should be reconsidered – when American has filed for three authorizations for itself in this proceeding, including its grandfathered Finnair opportunity.

The recent amendments to the U.S.-Russia Air Transport Services Agreement resolve these impediments, thereby permitting authorized carriers to resume their third-country codeshare services, and also providing new opportunities for allocation. The Department’s Notice soliciting new applications did not withdraw any designations applicable to previously-authorized codeshare partnerships. Indeed, it would be unprecedented to withdraw carriers’ existing authority when further new bilateral rights are negotiated.

Northwest takes no position on the allocation of the newly available and unallocated rights among the competing applicants.

Counsel: Northwest, Sascha Van der Bellen, 202-842-4184



OST-2008-0265 - American - US-Russia Third-Country Codeshare Opportunities and Related Exemption Authority
OST-2008-0267 - Continental - Exemption - US-Zurich-Moscow/St. Petersburg Codeshare with Swiss International
OST-2008-0264 - United - US-Russia Third-Country Codeshare
OST-2008-0266 - US Airways - Exemption - US-Russia Third-Country Codeshare with Swiss International
Undocketed - Northwest

September 10, 2008

Consolidated Answer and Reply of Delta Air Lines

The suggestion by US Airways, American, and United that Delta or any other incumbent carrier’s existing U.S.-Russia codesharing authority should be revoked and that these incumbent carriers should be required to compete all over again on a blank slate with anyone else now interested in providing third-country codeshare service to Russia flies in the face of decades of Department precedent. It has never been the practice of the Department to revoke all existing incumbent carrier authority in a limited entry market and force all carriers (new entrants and incumbents alike) to compete on a blank slate for all available authority every time a bilateral agreement is liberalized to create new opportunities for U.S. carriers. Carriers like American and United who enjoy privileged status as incumbents with extensive grandfathered service rights in highly restricted markets like Japan, China, and Brazil are not required to defend their existing rights in these markets every time new frequencies or service opportunities become available. That occurs only in the most extreme situations, such as the Department’s recent decision to place seven U.S.-Colombia frequencies previously allocated to American at issue in a route case after American squandered the frequencies by allowing them to lay dormant without excuse for years, then presented a series of pre-textual service plans in an effort to retain them only after Spirit and Delta had applied for their reallocation. See DOT Order 2008-5-27.

Delta takes no position with respect to the argument of United that it should be treated as an incumbent despite its request to substitute a new third-country codesharing partner. However, Delta notes that it has been the Department’s practice in the past to grant incumbent carriers the flexibility to substitute different third-country codesharing partners using their existing designations. See Order 2000-1-9 (authorizing Delta to exercise its existing third-country codesharing authorization with either Swissair or Air France). If this same flexibility is now granted to United, it should be accorded on equal terms to all carriers.

Since Delta, Northwest, and American have all given notice of their intention to implement their incumbent third-country codesharing arrangements as soon as the Government of the Russian Federation permits them to do so, there are at most three available third-country codesharing arrangements available for allocation under the new agreement. If United is accorded incumbent status despite its request to substitute a new third-country codesharing partner, then there are two. Continental and US Airways have each requested one arrangement. But for American’s rather optimistic request that it be allocated two additional arrangements in addition to the incumbent designation it already has, no carrier selection proceeding would be required at all to satisfy all carrier requests. However, given American’s request, the Department must convene a proceeding to allocate the two (or three) remaining unallocated arrangements. There is no merit to the suggestion that Delta or any other incumbent who seeks no additional designation must also participate simply to keep what it already has.

Counsel: Delta, Scott McClain, 404-773-6514


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