BEFORE THE FEDERAL AVIATION ADMINISTRATION WASHINGTON, D. C.

BEFORE THE FEDERAL AVIATION ADMINISTRATION WASHINGTON, D. C. In the Matter of Petition for Waiver of the Terms of the Order Limiting Scheduled Operations at LaGuardia Airport Docket FAA-2010-0109 COMMENTS OF THE DELTA MASTER EXECUTIVE COUNSEL OF THE AIR LINE PILOTS ASSOCIATION The Delta Master Executive Counsel of the Air Line Pilots Association ( Delta Pilots MEC) submits these comments in response to the FAA s Notice dated February 18, 2009. (75 Fed. Reg. 7306, hereinafter the Notice ). Delta and US Airway proposed a groundbreaking transaction that would enable both carriers use the limited slots that are available at LaGuardia and DCA more effectively, to better serve the public, and to provide important growth opportunities and good paying airline jobs. Approval of the transaction would result in: A new Delta hub at LaGuardia that will improve service and increase competition in New York. An increase of nearly 2.5 million annual nonstop seats at LaGuardia Replacement of all turboprops at LaGuardia with jet aircraft, including numerous new Delta mainline services. A broad network with sustainable service to small communities. Improved financial performance for both carriers, promoting jobs stability and job creation.

The Delta Pilots MEC strongly supports the proposed transaction -- and urges that it be approved without the onerous and unjustified divestiture conditions proposed in the Notice. Under the terms of the Notice, Delta would have to divest 20 slot pairs at LaGuardia, and US Airways would have to divest 14 slot pairs at DCA (fully 1/3 of the proposed transfer). It is unlikely that the transaction would proceed at all under these conditions, and the imposition of any divestitures would impair Delta s efforts to build a successful new hub at LaGuardia, to invest in the new terminal facilities that are required, and to deliver the improved service and competition benefits that are envisioned. Approval of the transaction, in full, will promote maximum job growth, maximum slot utilization, and maximum competition. We are not alone in our support for the transaction. Notably, Mayor Bloomberg, Governor Patterson, the Port Authority of New York and New Jersey, and a majority of the New York Congressional Delegation have all expressed their strong support. Against this backdrop of compelling benefits, strong public support, and a market-based deal consistent with decades of deregulation policy and the FAA s own buy-sell rule, we think it is wrong for FAA to substitute its regulatory judgment for that of the competitive marketplace. FAA s role is to promote the safe and efficient use of navigable airspace -- and FAA has found that the proposed transaction presents no problems with respect to safety, congestion or delays. That should be the end of the inquiry. At bottom, Delta and US Airways are simply trading their regional services at LGA and DCA, respectively, which will allow them to create hubs, increase aircraft size,

and improve service. The New York and Washington markets are served by multiple airports, which individually and collectively are and will remain intensely competitive. FAA has offered no support for its theory that increased operations at a given airport are competitively harmful. In fact, FAA s own data says the opposite. Continental holds 73 percent of the slots at Newark, but it charges a lower percentage of the Standard Industry Fare Level (SIFL) at Newark than carriers with a smaller percentage of slots at LaGuardia. (Notice at 7309). Clearly there are other factors at work than the mere percentage of slot holdings. There is no rational justification for allowing Continental to maintain a hub at Newark with 73% of slots while preventing Delta from developing a competing hub at LaGuardia with just 51 percent of slots. The onerous divestiture conditions also cannot be squared with the Department of Transportation s recent tentative decision to allow the American/British Airways alliance to receive antitrust immunity with a modest divestiture of just four slot pairs in total. See Attached Editorial, Perry Flint, Air Transport World, March 2010, p.2. In summary, the Delta Pilots MEC strongly urges the FAA to reconsider the terms of its notice and permit this highly beneficial transaction to proceed unimpeded. Delta and its pilots will benefit from a major new service expansion and improved

economics a rare feat for this beleaguered industry. Capacity and throughput at LGA and DCA will be improved -- achieving FAA s primary statutory change of managing the navigable airspace. We as employees will see enhanced job security. And finally, contrary to the findings of the Notice, competition and consumer welfare will be significantly enhanced. Respectfully submitted, Donald L. Moak Chairman Delta Master Executive Counsel Air Line Pilots Association

Editorial: A Tale of Three Cities By Perry Flint Air Transport World, March 2010, p.2 The US Dept. of Transportation's recent tentative decisions involving the oneworld antitrust immunity application and the unrelated slot transfer agreement between US Airways and Delta Air Lines, if finalized, suggest that a significant gap exists between how DOT and the Federal Aviation Administration evaluate domestic and international airline competition matters. In the international arena, DOT appears to accept that greater levels of concentration--in the form of global antitrust-immunized airline alliances--are both inevitable and desirable as long as the balance of competitive power is maintained among the networks of Star, SkyTeam and oneworld. But it continues to view the domestic market through the prism of market share at individual airports and between individual airlines, also the prevailing view in Congress and the Dept. of Justice (which has authority over domestic airline mergers). Explaining the tentative decision to grant ATI to oneworld members American Airlines, British Airways, Finnair, Iberia and Royal Jordanian and to approve the Joint Business Agreement among AA, BA and IB that will permit the three to coordinate schedules, manage capacity and share revenues, DOT argues that the proposed alliance "will enhance competition around the globe by creating a viable third immunized alliance that is comparable and more competitive with the product and service offerings of Star Alliance and SkyTeam, which have already received grants of antitrust immunity and are proceeding with their own alliance plans and integrated joint ventures." The Department's only conditions are that the partners agree to sell or lease four slot pairs at London Heathrow, two of which must be dedicated to Boston-LHR service, and that they modify their JBA "to ensure capacity growth." In return, AA, BA and IB will be permitted to enjoy a 47% share of the US-UK market--the largest transatlantic market with 25% of US-Europe traffic--and a 52% share in US-Spain markets. It is in the specific city-pair markets, however, where the biggest advantage accumulates. Between Dallas and London Heathrow, for example, ATI will give oneworld an 82.9% market share, up from 51%. Between New York JFK and LHR the oneworld alliance share rises to nearly 52% from 17%, and in the Boston-LHR market the share gain is 40 points to 68%. Turning to the domestic market, DOT/FAA share a different philosophy, as is evidenced by the tentative ruling concerning the agreement between Delta and US Airways under which DL is giving 42 pairs of "slot interests" to US at Washington National and US is transferring 125 pairs of slot interests to DL at New York LaGuardia. As a condition of approving the deal, FAA/DOT will require the carriers to divest 14 pairs of slot interests

at DCA and 20 pairs at LGA. And these must be transferred to "new entrant and limited incumbent carriers" (i.e., LCCs). Why are these slot surrenders necessary? According to FAA, it is because without divestiture, "Delta would ascend to a dominant position at LGA" and US would be by far "the dominant carrier" at DCA. US's share of departures at DCA would rise from 47% to 58% while DL's share of LGA departures would rise from 26% to 51%. How's that again? Isn't that figure pretty similar to what AA/BA will enjoy in the US-LHR market? How different is DL's 51% share at LGA from AA/BA's 48% share at LHR? Is there any city-pair in Delta's LGA route network that will exceed the 83% share of passengers oneworld will enjoy in the Dallas-LHR nonstop market? Furthermore, DOT agrees that London Gatwick is not a substitute for Heathrow yet accepts these levels of concentration at LHR. By contrast, the Washington and New York metropolitan areas are overflowing with reasonable alternatives to LGA and DCA. JetBlue is the largest carrier at JFK, Continental has a hub across the Hudson at Newark, Southwest is at LaGuardia, Southwest and AirTran Airways both maintain large hubs at Baltimore/Washington International and both have a small presence at Washington Dulles, as does JetBlue. Despite a popular belief to the contrary, the US domestic market never has been more competitive. The country's largest domestic carrier is also its most famous discounter, yields have fallen to levels not seen in more than a decade and the network airlines continue to beat a retreat. It appears that DOT needs to take a closer look at the two decisions to see why significant concentration is tolerable in US-London markets in which few nonstop alternatives exist but not tolerable in the New York and Washington markets, where several alternatives exist. A foolish consistency may be the hobgoblin of little minds, but consistency is not all foolish.