BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Application of DELTA AIR LINES, INC. for an exemption pursuant to 49 U.S.C. 40109, a certificate of public convenience and necessity pursuant to 49 U.S.C. 41102 and 41108, and an allocation of 7 U.S.-China frequencies (Minneapolis/St. Paul-Shanghai APPLICATION OF DELTA AIR LINES, INC. FOR AN EXEMPTION, A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY, AND A FREQUENCY ALLOCATION Communications with respect to this document should be addressed to: Joe Esposito Senior Vice President Network Planning Kurt Ford Director Network Planning DELTA AIR LINES, INC. 1030 Delta Boulevard Atlanta, Georgia 30320 Alexander Krulic Managing Director Regulatory and International Affairs Christopher Walker Director Regulatory and International Affairs Steven J. Seiden Director Regulatory Affairs DELTA AIR LINES, INC. 1212 New York Avenue, N.W. Washington, D.C. 20005 (202 216-0700 chris.walker@delta.com October 22, 2018 NOTICE: Delta is conducting a poll of the carrier representatives served with this application and will promptly advise the Department of the results.
BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Application of DELTA AIR LINES, INC. for an exemption pursuant to 49 U.S.C. 40109, a certificate of public convenience and necessity pursuant to 49 U.S.C. 41102 and 41108, and an allocation of 7 U.S.-China frequencies (Minneapolis/St. Paul-Shanghai APPLICATION OF DELTA AIR LINES, INC. FOR AN EXEMPTION, A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY, AND A FREQUENCY ALLOCATION Delta Air Lines, Inc. ( Delta applies, pursuant to 49 U.S.C. 40109, 41102, and 41108, and Subparts B and C of the Department s Rules of Practice, for an exemption, a certificate of public convenience and necessity, and an allocation of seven (7 weekly U.S.- China Zone 1 frequencies in order to provide new daily, nonstop service between Minneapolis-St. Paul International Airport ( MSP and Shanghai Pudong International Airport ( PVG. Delta s proposed service between Minneapolis/St. Paul and Shanghai will be the only scheduled service on this route, as well as the first nonstop service from Minneapolis/St. Paul to China. Specifically, Delta requests that the Department issue a single, show-cause order under its streamlined licensing procedures 1 : (1 granting the requested exemption authority for a period of two years, or until the effective date of Delta s MSP-PVG certificate authority, whichever occurs earlier; and (2 tentatively awarding Delta the corresponding certificate authority. As soon as possible thereafter, Delta requests that the Department 1 Departmental Notice of August 23, 2005 in Docket DOT-OST-2005-22228.
Application of Delta Page 2 issue a final order granting the certificate authority for a period of at least five years. 2 To implement its proposed MSP-PVG service, Delta requests an allocation of seven weekly U.S.-China Zone 1 frequencies. Delta urges the Department to act promptly on this application so that it can obtain foreign approvals, secure slots, finalize its operating plans, and begin marketing the Minneapolis/St. Paul-Shanghai flights to the traveling public well in advance of operations. Delta plans to commence daily service on this route on or around June 1, 2020 using 306- seat Airbus A350-900 aircraft, provided all necessary approvals have been secured. 3 Delta states as follows in support of this application: 1. Awarding MSP-PVG authority to Delta would clearly be in the public interest, as doing so will allow Delta to provide substantial benefits to the U.S. traveling and shipping public by offering new, nonstop U.S.-China service using Delta s awardwinning Airbus A350-900 aircraft. 4 The proposed flights will provide Minneapolis and St. Paul area customers with the first nonstop service to China and enhance service at Delta s hub at MSP, expanding connecting service options for consumers across the Upper Midwest and the United States. The new route will also facilitate the development of additional tourism and commercial trade between the Twin Cities and China. The Minneapolis/St. Paul metro area is currently the largest Central market without direct service to China. Delta s proposed new service between MSP and PVG will boost Minnesota s economy and create jobs by increasing travel and trade opportunities to China s financial and manufacturing 2 Although Delta s blanket route integration authority would be sufficient to cover the authority sought in this application (see DOT Order 2010-12-24, Delta is nonetheless requesting, for administrative efficiency and convenience, specific exemption and certificate authority to provide nonstop service on the Minneapolis/St. Paul-Shanghai route. 3 Proposed schedules and additional operational details regarding Delta s proposed Minneapolis/St. Paul-Shanghai service are provided as Exhibits DL-101 to DL-103. 4 Exhibit DL-201.
Application of Delta Page 3 centers. Delta s superior operational reliability and customer service will also benefit passengers who make use of this proposed flight. 5 Delta operates a major connecting hub at Minneapolis-St. Paul International Airport, extending the benefits of Delta s proposed nonstop Asia services to scores of cities throughout the United States. MSP also provides a seamless connecting experience for transiting passengers. 6 This new U.S.-China flight will add key inter-gateway competition for the traveling public. 7 The proposed flight will also connect with China Eastern and Shanghai Airlines partner hubs in Shanghai, allowing onward travel options for passengers seeking access to interior China. Delta and China Eastern have also made investments to develop PVG into one of China s premier connecting hubs. 8 2. The requested authority sought is consistent with the U.S.-China Air Services Agreement ( U.S.-China Agreement, as amended. 9 Under Annex I of the U.S.- China Agreement, U.S. airlines are authorized to operate from any point or points in the United States, via Tokyo or another point in Japan, to any point or points in the People s Republic of China open to scheduled international services subject, in pertinent part, to the Zone I frequency limitations specified in Annex V. With Hawaiian s notice to the Department indicating its intent to suspend its three weekly Honolulu-Beijing flights effective October 12, 2018, and to return its corresponding three weekly Zone 1 frequencies to the Department, seven Zone 1 U.S.-China frequencies are immediately available for allocation. 10 5 Exhibit DL-202. 6 Exhibit DL-203. 7 Exhibit DL-204. 8 Exhibit DL-205. 9 The U.S.-China Agreement was originally signed Sept. 17, 1980, and most recently amended July 9, 2007. 10 Following the Department s allocation of 7 frequencies to American for Los Angeles-Beijing service in Order 2016-12-14, 1 unallocated frequency remained available to U.S. carriers. Earlier this year, United returned 3 weekly U.S.-China Zone 1 frequencies, leaving four available for allocation. See Notice of Intent to Return Three U.S. China Zone 1 Frequencies, filed February 2, 2018 in Dockets DOT-OST-2016-0134 and DOT-OST-2014-0087. On October 11, Hawaiian
Application of Delta Page 4 3. Delta s decision to propose a start-date of June 1, 2020 for its new MSP- PVG service balances Delta s strong commercial interest to serve this route with the extensive administrative efforts and time generally required for U.S. carriers to secure commercially viable takeoff and landing slots at China s Zone 1 airports. Delta s proposed start-up date reflects a measured, realistic approach that should provide Delta sufficient lead time to overcome any regulatory or administrative hurdles. The proposed lead time is also consistent with recent Departmental and U.S. carrier precedent involving the launch of new service to Beijing and Shanghai. For example, United applied on November 13, 2014 for authority to launch a second daily San Francisco-Shanghai flight, but required four start-up extensions spanning 23 months before it was able to inaugurate the incremental service on that route, citing difficulty in securing workable slot times at Shanghai. 11 American required more than 19 months to start its Los Angeles-Beijing service after applying for the route in March 2016, citing as the basis for the delay American s inability to obtain commercially viable slots at Beijing and chronicling more generally the obstacles that U.S. carriers have faced in obtaining such slots. 12 And slot time challenges prevented United from ever commencing its third weekly Guam-Shanghai flight despite that carrier s three separate requests for start-up extensions. Had United started its third weekly Guam-Shanghai service on the date of its final proposed extension deadline (i.e., June 30, 2018, the elapsed time from initial application to service launch would have been 23 months. 13 In these three most recent returned the three Zone 1 frequencies it had been using to fund its Honolulu-Beijing service, bringing the total available frequencies to seven. See Notice of Hawaiian Airlines, Inc. of Return of Zone 1 China Frequencies and Notice of Cessation of Codeshare Services, filed October 11, 2018 in Dockets DOT-OST-2013-0071 and DOT-OST-2014-0010. 11 See United s Application and Motions in Docket DOT-OST-2014-0196. 12 See Motion of American Airlines for a Start-up Date Extension, filed February 13, 2017; and Motion of American Airlines for a Start-up Date Extension, filed August 7, 2017 in Docket DOT- OST-2016-0076. In that Los Angeles-Beijing case, the Department explicitly acknowledged U.S. carriers difficulty in obtaining slots from the CAAC and, consequently, granted American s two Motions for additional time. See Notice of Action Taken dated March 10, 2017 in that docket. 13 See United s Application and Motions in Docket DOT-OST-2016-0134.
Application of Delta Page 5 cases involving China Zone 1 frequency start-ups, the average time elapsed from application to actual start-up (or, in the case of United s weekly Guam-Shanghai flight, final proposed start-up was nearly 22 months. Thus, Delta s proposal to commence MSP- PVG service by June 1, 2020 (approximately 20 months from now is consistent with (and potentially more expeditious than the recent American and United precedents for launching new routes to Beijing or Shanghai. 4. Delta holds various certificates of public convenience and necessity and exemptions authorizing it to engage in scheduled air transportation of persons, property and mail between the U.S. and foreign countries. 14 Delta is fit, willing, and able to provide the MSP-PVG service for which it seeks authority. Pursuant to Rule 24 of the Department s Rule of Practice, Delta requests that the Department take official notice of all information and data that have been filed establishing Delta s fitness. 5. Delta expects no difficulty obtaining fuel for the proposed MSP-PVG service from its regular suppliers. The environmental impacts of the service will be de minimis, as Delta would otherwise deploy the aircraft elsewhere in its network. There will not be a near term net change in aircraft fuel consumption of more than 10 million gallons. * * * 14 See, e.g., Orders 2009-1-8 (transferring from Northwest Airlines, Inc. to Delta various authorities, and approving integration of the combined international authorities, 2007-4-27 (Blanket Open Skies, 99-2-8 and 2007-12-26 (Chicago-intermediate points- Shanghai/Guangzhou/Beijing and Detroit-Shanghai/Guangzhou.
Application of Delta Page 6 WHEREFORE, Delta requests that the Department grant this application for an exemption, certificate, and allocation of 7 U.S.-China frequencies for Minneapolis/St. Paul- Shanghai service as described herein, and any other such relief as the Department may deem appropriate. Respectfully submitted, Alex Krulic Alexander Krulic DELTA AIR LINES, INC.
Table of Contents Page 1 of 1 DL 101-103: Schedule Proposal Details DL 201-205: Public Benefits 1
Delta s MSP PVG Nonstop Schedule Summer Season Exhibit DL-101 Page 1 of 2 Daily Airbus A350-900 1530 Frequency Equipment Minneapolis (MSP GMT (-5 Daily Airbus A350-900 1205 1805 +1 Shanghai-Pudong (PVG GMT (+8 1140 13:35 Elapsed Time 13:25 Note: All times are local. Shanghai is 13 hours ahead of Minneapolis in summer. 2
Delta s MSP PVG Nonstop Schedule Winter Season Exhibit DL-101 Page 2 of 2 Daily Airbus A350-900 1445 Frequency Equipment Minneapolis (MSP GMT (-6 Daily Airbus A350-900 1130 1845 +1 Shanghai-Pudong (PVG GMT (+8 1230 14:00 Elapsed Time 13:00 Note: All times are local. Shanghai is 14 hours ahead of Minneapolis in winter. 3
Delta s MSP PVG Service Proposal Airbus A350-900 Seating Configuration Exhibit DL-102 Page 1 of 1 Seating Configuration Delta One Delta Comfort+ Main Cabin Total 28 48 230 306 Flat Bed seats with direct aisle access and closable door in Delta One All seats equipped with Personal Video and USB Power Ports International Satellite Wi-Fi in all cabins 110V Power available in all rows Statement on aircraft availability: Delta will use aircraft to be delivered in 2020 this will supplement existing 13 A350-900 aircraft in fleet by Year-end 2019 4
Delta s MSP PVG Service Proposal Airbus A350-900 Cargo Capacity Exhibit DL-103 Page 1 of 1 Cargo Capacity (Pounds per Departure (MSP Departing Runway 22 Summer Winter Direction Type 100% Load 70% Load Direction Type 100% Load 70% Load MSP-PVG A350-900 7,934 lbs 29,554 lbs MSP-PVG A350-900 14,902 lbs 36,522 lbs PVG-MSP A350-900 20,281 lbs 41,901 lbs PVG-MSP A350-900 33,195 lbs 45,287 lbs Source: Delta Performance Engineering Assumptions: Passenger weight 235lbs, Containerized baggage 5
Delta s A350 Flagship Delivers Industry Leading Comfort and Design on MSP-PVG Exhibit DL-201 Page 1 of 1 The A350 also features larger windows and optimized cabin pressure, temperature, and humidity to help customers feel more refreshed after travel. Delta's A350s also feature the world's first Business Class suite in Delta One, and new premium economy product Delta Premium Select. The Delta One Suite was recently awarded the Crystal Cabin Award for innovation. 6
Delta is the Top Carrier in Operational Reliability Exhibit DL-202 Page 1 of 1 Delta is consistently ranked in the top tier for on-time arrivals at 85.4%. Delta s 2017 operational performance was more reliable than its competitors, cancelling a much smaller percentage of flights. Only 0.4% of Delta flights were cancelled last year. Other network carriers cancelled at three times that rate. Delta is in the top tier for baggage performance in spite of the complexity of its network and high level of connecting traffic. Only 1.82 per 1000 passengers filed baggage complaints in 2017, far less than competitor network carriers. Source: DOT Air Travel Consumer Report; mainline aircraft only 7
MSP Airport Named the Best Airport in North America in in 2017 and Offers Efficient Local Options Exhibit DL-203 Page 1 of 1 MSP airport offers a convenient single terminal connecting experience for customers Local connection easily accessible via Light Rail to Downtown Minneapolis, St. Paul, and Bloomington Int l Arrivals G1-8 Source: Airports Council International (ACI, North American airports serving 25 to 40 million passengers a year 8
MSP-PVG Fills Gap in Central U.S. Service to China Recent cancellations and suspensions of China routes reduces Central U.S. service by 30%, or 452 seats per day Adding MSP-PVG would restore 2/3 rds of these seats, and balance capacity between the major metro areas in the Central U.S. Exhibit DL-204 Page 1 of 1 Central U.S. China U.S. Carrier Capacity As Currently Scheduled SDEW Apr19 Central U.S. Asia Service Post AA ORD-PEK/PVG Cancels TYO ICN 1,501-30% PEK PVG TYO MSP ORD ICN 1,049 HKG TPE PEK PVG TYO Jul 2018 Jul 2019 ICN HKG TYO PEK DFW IAH TPE Source: OAG 2018 SIN 9
Shanghai Pudong is Growing with Satellite Opening in 2019 Exhibit DL-205 Page 1 of 1 Shanghai Pudong handled 70 million passengers in 2017, up 6% Year-On-Year New satellite terminal opening in 2019 to add 83 gates, more than double current count of 70 between Terminal 1 and 2 T1 T1/S1 Check-in T2 T2/S2 Check-in T1/S1 Tram T2/S2 Tram S1 S2 10
CERTIFICATE OF SERVICE A copy of the foregoing Motion has been served this 22nd day of October, 2018, upon the following persons via email: Air Carrier Name Email Address American Robert A. Wirick robert.wirick@aa.com Hawaiian Parker Erkmann perkmann@cooley.com United Dan Weiss dan.weiss@united.com United Thomas Bolling thomas.bolling@united.com United Abby L. Bried abby.bried@united.com Brian Hedberg Robert Finamore Brett Kruger Ben Taylor Info brian.hedberg@dot.gov robert.finamore@dot.gov brett.kruger@dot.gov benjamin.taylor@dot.gov info@airlineinfo.co