BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

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1 BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Applications of : : AIR FRANCE : OST SCANDINAVIAN AIRLINE SYSTEM : OST LUFTHANSA GERMAN AIRLINES : OST JAPAN AIRLINES CO., LTD. : OST ALL NIPPON AIRWAYS CO., LTD. : OST COMPANIA MEXICANA DE AVIACION,: S.A. DE C.V. : OST IBERIA LÍNEAS AÉREAS : DE ESPAÑA, S.A. : OST CZECH AIRLINES (CSA) : OST : for exemptions from Subparts K and S : of Part 93 of Title 14, Code of Federal : Regulations pursuant to 49 U.S.C (b)(1) : : MOTION FOR LEAVE TO FILE AND CONSOLIDATED ANSWER OF THE CITY OF CHICAGO Communications with respect to this document may be sent to: Mary Rose Loney, A.A.E. Kenneth P. Quinn Commissioner John E. Gillick Department of Aviation WINTHROP, STIMSON, PUTNAM City of Chicago & ROBERTS O Hare Int l Airport 1133 Connecticut Avenue, NW Terminal 2 Mezzanine Level Washington, DC P.O. Box (202) Chicago, IL (202) (fax) quinnk@winstim.com Eduardo Cotillas Deputy Corporation Counsel Counsel for the City of Chicago City of Chicago Department of Law 121 N. La Salle St., Room 511 Chicago, IL (312) January 20, 1999

2 BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Applications of : : AIR FRANCE : OST SCANDINAVIAN AIRLINE SYSTEM : OST LUFTHANSA GERMAN AIRLINES : OST JAPAN AIRLINES CO., LTD. : OST ALL NIPPON AIRWAYS CO., LTD. : OST COMPANIA MEXICANA DE AVIACION,: S.A. DE C.V. : OST IBERIA LÍNEAS AÉREAS : DE ESPAÑA, S.A. : OST CZECH AIRLINES (CSA) : OST : for exemptions from Subparts K and S : of Part 93 of Title 14, Code of Federal : Regulations pursuant to 49 U.S.C (b)(1) : : MOTION FOR LEAVE TO FILE The City of Chicago ( Chicago ), owner and operator of O Hare International Airport ( O Hare ), respectfully requests leave to file this consolidated answer beyond the maximum time provided for answers in accordance with Rule 4(f) of the Department of Transportation ( the Department ) Rules of Practice (14 C.F.R (f)). Acceptance of this consolidated answer will provide the Department with additional perspective and a more complete record upon which it can evaluate the merits of the above-referenced applications. 2

3 CONSOLIDATED ANSWER OF THE CITY OF CHICAGO For several reasons, Chicago strongly urges the Department to grant expeditiously the slot exemptions requested in these eight applications for the purpose of initiating or continuing air service at O Hare. First, grant of these exemptions is in the public interest, providing both inter- and intra-gateway competition, while benefiting the traveling and shipping public. Chicago conservatively estimates the collective economic benefit of this international air service to be over $964 million for the Chicago region in terms of increased jobs, trade, and tourism. 1 Second, unlike the only occasion in which the Department turned down a foreign air carrier application for a slot exemption at O Hare, each of the carriers in the instant proceedings except Czech Airlines filed a timely request for slots with the FAA. And, in the case of Czech Airlines, it filed a late application with the FAA only because it was unable to finalize plans to obtain the necessary equipment to serve the flight. Third, as required by the Department and supported by Chicago, each carrier will operate the service in question only with Stage 3 aircraft. Fourth, grant of the applications is consistent with the authority granted each carrier by appropriate governmental agencies, and is consistent with the bilateral air service obligations of the United States. Finally, although Chicago appreciates the concerns of some U.S. air carriers about slot restrictions in France, Germany, and Japan, the City respectfully suggests that the Department address these longstanding slot concerns by initiating consultations with the respective governments, rather than denying or 1 Sources: (1) T-100 passenger data through May 31, 1998 (Air France: 195 per arrival or departure; SAS: 149 per arrival or departure; JAL: 248 per arrival or departure; Lufthansa: 295 per arrival or departure; Mexicana: 107 per arrival or departure); (2) projected traffic using aircraft type and load factor of 70 percent (Iberia: 188 per arrival or departure; CSA: 119 per arrival or departure); and (3) Booz, Allen and Hamilton, Chicago Aviation Policy, Nov. 12, 1998 (which concludes that $2,310 of economic benefit is generated by each international passenger enplanement). 3

4 deferring the current applications. Chicago continues to support strongly the liberal use of the Secretary s slot exemption authority to ensure the highest and best use of O Hare s available capacity. Given that most of the applicants proposed a start-up date near April 1, 1999, Chicago respectfully requests immediate, favorable action. Summary of Applications On December 1, 1998, both Societe Air France ( Air France ) and Scandinavian Airlines System ( SAS ) applied for slot exemptions. Air France seeks to add a second daily roundtrip combination flight to operate between Chicago and Paris, France beginning on March 28, SAS seeks to continue a new daily roundtrip combination service between Chicago and Copenhagen, Denmark effective April 4, On December 7, 1998, Lufthansa German Airlines ( Lufthansa ) applied for a slot exemption to enable Lufthansa to reintroduce, on March 28, 1999, an additional daily roundtrip combination service between Chicago and Frankfurt, Germany. 3 On December 9, 1998, Japan Airlines Co., Ltd. ( JAL ) applied for an exemption to permit JAL to operate a new service consisting of five weekly nonstop combination round-trip flights between Chicago and Osaka, Japan. On December 11, 1998, All Nippon Airways Co., Ltd. ( ANA ) applied for an exemption to permit ANA to begin a new daily roundtrip service between Chicago and Tokyo, Japan on April 3, The Department granted SAS a slot exemption to permit it to maintain its existing Chicago-Copenhagen frequency of ten flights only, which expires April 3, Order (Aug. 20, 1998). The Department previously had granted Lufthansa an exemption so that Lufthansa could operate this service during the recently concluded 1998 summer traffic season. Order (Apr. 27, 1998). 4

5 On December 24, 1998, Compania Mexicana de Aviacion, S.A. de C.V. ( Mexicana ) applied for an exemption to continue the operation of its existing daily roundtrip flight between Chicago and Mexico City. 4 On January 8, 1999, Iberia Líneas Aéreas de España, S.A ( Iberia ) applied for an exemption to continue its daily roundtrip flight between Chicago and Madrid. 5 Finally, on January 12, 1999, Czech Airlines ( CSA ) applied for two slots to serve Chicago-Prague on a twice-weekly basis. Discussion Subparts K and S of 14 C.F.R. Part 93 designate O Hare, among others, as a high density traffic airport and prescribe certain air traffic rules for the operation of aircraft at this airport. These regulations limit the number of allocated Instrument Flight Rule (IFR) operations (takeoffs or landings) for specified classes of users during certain periods of the day. Sections and (a)(3) of the high density rule provide that slots may be allocated to foreign air carriers. Moreover, Section (a)(6) provides that the FAA shall allocate additional slots at O Hare for international scheduled air carriers and commuter operations, if a request is submitted to the FAA chief counsel s office by May 15 for operations to commence during the following winter season, and by October 15 for operations to commence during the following summer season. Slots requested in this manner are to be allocated within one hour of the time period requested. 4 5 The Department granted Mexicana a slot exemption to operate this service during the winter season, which expires on April 3, Order (Oct. 23, 1998). The Department granted Iberia the authority to operate this service during the 1998 summer season, and the winter season. Order (June 8, 1998), and Order (Oct. 9, 1998). 5

6 Finally, pursuant to 49 U.S.C (b)(1), the Secretary may, by order, grant exemptions from the requirements of Subparts K and S to enable air carriers and foreign air carriers to provide foreign air transportation using Stage 3 aircraft, if he finds such action to be in the public interest. The Department should grant these eight slot exemption requests because they are clearly in the public interest. 6 The applicants will use their exemptions to provide service pursuant to the provisions of their countries respective bilaterals, and in accordance with the underlying economic authority previously granted by the Department based upon a finding that the service was in the public interest. In the case of SAS, Lufthansa, Mexicana and Iberia, the applicants are merely seeking the renewal of previously-granted exemptions for new service between Chicago, on the one hand, and Copenhagen, Frankfurt, Mexico City and Madrid, respectively, on the other. Air France is applying for new service pursuant to the recently-liberalized U.S.-France bilateral agreement, and ANA and JAL are applying for new service resulting from the new U.S.-Japan bilateral. CSA is applying to resume its prior Chicago-Prague service pursuant to the phased open skies agreement between the U.S. and the Czech Republic. The service to be provided will expand the opportunities available to the traveling and shipping public, thereby providing important public benefits. Each of the applicants except CSA has followed and exhausted all appropriate procedures for slot acquisition, including all appropriate industry practices for slot allocation, prior to the filing of its exemption request. Although CSA filed its application after the deadline of October 15, 1998, CSA explained that it was not able to finalize plans for obtaining the necessary Airbus 6 See Kuwait Airways Corporation (Order ); Turkish Airlines (Order ); Polski Linie Lotnicze LOT, S.A. (Order ); Lufthansa German Airlines (Order ); Iberia Lineas Aereas de Espana, S.A. 6

7 A until January, Even if CSA had filed a timely application, FAA may have denied it for lack of slots, as evidenced by the FAA s comment to CSA that CSA s application was late, and that in any event the FAA had no slots to allocate. Application of CSA at 3. Each of the applicants has agreed to operate only Stage 3 aircraft to provide the services under the exemption, and to comply with the standard conditions imposed by the Department in granting such exemptions. Chicago is aware that certain carriers have filed answers urging the Department to delay or deny the requested exemptions until problems encountered by these carriers in obtaining slots at Paris, Tokyo and Frankfurt are resolved. Chicago is sympathetic to the concerns raised by these carriers, and urges the U.S. government to move expeditiously to resolve these matters. For the reasons stated below, however, we do not believe that it is appropriate on either a legal or policy basis to withhold grant of these exemptions until these other matters are resolved. First, as the Department is aware, Section (a)(6) of the regulations provides that slot requests at O Hare are to be granted within one hour of the time requested. Second, although Congress limited the Department s ability to transfer slots from U.S. carriers to foreign air carriers if the relevant foreign country does not provide equivalent access to airports (49 U.S.C (b)(3), Congress chose not to limit DOT s ability to grant exemptions to foreign air carriers in similar circumstances. Third, most of the slot concerns raised by U.S. carriers relate to particular slot times or prices, not their absolute access to the market. Fourth, it is important to remember that at least some of these applicants are themselves constrained by the availability of slots at certain of these airports, and do not, generally, have any power over the allocation of the slots. (Order and ); Scandinavian Airlines System (Order ); Compania Mexicana de Aviacion, 7

8 Under these circumstances, Chicago urges the Department to grant the requested exemptions as soon as possible, and to pursue, with an equal vigor within the bilateral process, the difficulties that have been raised with respect to the grant of slots to U.S. carriers at Paris, Frankfurt and Tokyo. Just as the Department pursued this approach in a similar situation (Turkish Airlines, Order ), the Department should use this approach in the dockets at issue here. WHEREFORE, for the foregoing reasons, Chicago respectfully requests that the Department grant expeditiously these eight foreign air carrier applications for exemptions from Subparts K and S of 14 C.F.R. Part 93. Respectfully submitted, January 20, 1999 _/s/ Kenneth P. Quinn Kenneth P. Quinn WINTHROP, STIMSON, PUTNAM & ROBERTS 1133 Connecticut Avenue, NW Suite 1200 Washington, DC (202) (202) (fax) quinnk@winstim.com Counsel for the City of Chicago S.A. (Order ) (in which the Department granted exemptions under similar circumstances). 8

9 Certificate of Service I hereby certify that I have on this date served a copy of the foregoing answer by U.S. mail on all persons named on the attached service list. Washington, D.C. January 20, 1999 /s/ Mären D. Lee Mären D. Lee 9

10 SERVICE LIST James Devall Zuckert, Scoutt, & Rasenberger th Street, N.W. Suite 600 Washington, DC Donald T. Bliss Joel Stephen Burton O Melveny & Myers th Street, N.W. Suite 400 West Washington, DC Miroslav Belovsky, Director Czech Airlines North America 1350 Avenue of the Americas New York, NY James S. Campbell J. Edward Cox WILMER, CUTLER & PICKERING 2445 M Street, N.W. Washington, DC Robert E. Cohn Katherine M. Aldrich Shaw, Pittman, Potts & Trowbridge 2300 N Street, N.W. Washington, DC Michael F. Goldman Bagileo, Silverberg & Goldman, L.L.P th Street, N.W., Suite 120 Washington, DC Bjorn Hagen, Director Scandinavian Airlines System Frösundaviks Alle 1, Solna S Stockholm SWEDEN Dr. Karin Kammann-Klippstein Embassy of the Federal Republic of Germany 4645 Reservoir Road, N.W. Washington, DC William Karas Benjamin R. Achenbach Steptoe & Johnson 1330 Connecticut Avenue, N.W. Washington, DC R. Bruce Keiner, Jr. Crowell & Moring 1001 Pennsylvania Avenue, N.W. Washington, DC David Marchick Deputy Assistant Secretary for Transportation Affairs U.S. Department of State Room C Street, N.W. Washington, DC Jeffrey Manley Kirkland & Ellis 655 Fifteenth Street, N.W. Suite 1200 Washington, DC Allan I. Mendelsohn Mendelsohn & Szymkowicz th Street, N.W., Suite 800 Washington, DC Carl B. Nelson, Jr. Associate General Counsel American Airlines, Inc th Street, N.W., #600 Washington, DC

11 Robert D. Papkin Charles F. Donley II Squire, Sanders & Dempsey, LLP 1201 Pennsylvania Avenue, N.W. 5 th Floor Washington, DC Lorelei Peter Manager, Air Space & Air Traffic Law Branch Office of Chief Counsel Federal Aviation Administration 800 Independence Avenue, S.W. Washington, DC Megan Rae Poldy Associate General Counsel Northwest Airlines, Inc th Street, N.W. Suite 500 Washington, DC V. Michael Straus V. Michael Straus, P.C. Suite Connecticut Avenue, N.W. Washington, DC Naomichi H. Terazaki All Nippon Airways Co., Ltd th Street, N.W. Suite 401 Washington, DC Tomomi Tsuchiya First Secretary Embassy of Japan 2520 Massachusetts Avenue, N.W. Washington, DC D. Scott Yohe Senior Vice President, Government Affairs Delta Airlines, Inc K Street, N.W. Washington, DC